Pearl Mayor Brad Rogers reacted very strongly to a Bloomberg story that claimed bond deals for Trustmark Park and the Basspro store were wrecking city finances. Pearl sold $78 million in revenue bonds to pay for the projects. However, those payments are causing problems for Pearl with ratings agencies such as Moody's.
Mayor Rogers told JJ that Pearl agreed to contribute $800,000 a year for ten years towards the repayment of the bonds. However, then-Mayor Foster and his crew back-loaded the deal. The city has to pay $950,000 per year for the next ten years. Its obligation ends after twenty years. He said the city is allowed to charge a $1 per ticket tax to Braves games. He said a 2% tourism sales tax on was implemented several years ago to help cover the shortfall.
However, Moody's downgraded $12.46 million of Pearl's general obligation tax bonds from Aa3 to Ba1. Consider the rating to be a credit score for cities. The city enjoys lower interest rates and higher capacity to borrow if the rating is high. Aa3 is considered to be a very strong rating of a city's creditworthiness. Unfortunately for Pearl, a Ba1 rating is considered to be below-average creditworthiness (See Municipalbonds.com for a better explanation of the ratings system.)
The report stated:
*Moody's downgraded Pearl's general obligation tax bonds. It affects $12.46 million of debt. The rating was placed under review for further downgrade.
*The general fund position is deteriorating due to the use of the general fund to support "other funds". FY 2014 yielded a deficit that was -6.7% of revenue (p.1)
*The city has potential exposure due to "contingent liabilities stemming from various dept financings used to construct a stadium in 2004."
*One reason the city is losing money is due to the higher rates charged by the city of Jackson for wastewater treatment. The city began charging the West Rankin Utility Authority a higher rate but Pearl did not pass the increase on to customers and ate the difference. (p.2)
*The city budgeted for a general fund deficit of $1 million in 2015 (p.2). The report states that the general fund cash account had a balance of -$2.7 million (see p.11 in audit posted below).
*Moody's considered the PERS obligation as well. The problem for Pearl is it is apparently one of the first cities to suffer under the new GASB rules. GASB is going to inflict a great deal of pain on many cities and counties. Time to make a little detour into GASB because most readers will have no clue what GASB is. Pensions & Investments reported in January:
The pressure will result from the new Governmental Accounting Standards Board standard 68 that requires employers participating in those plans to report in their balance sheets their share of a state's net pension liabilities.... Rest of article.Translation: New accounting rules mean cities will have to carry on their books an increased recognition of their pension liabilities even if covered by a state employees retirement system such as PERS. It may not be fair but as far as Moody's and other ratings agencies are concerned, a liability is a liability.
Mayor Rogers said Pearl was suffering from several projects that cost the city millions of dollars and did not provide revenue. He said the only money the city gets from Braves games was the $1 per ticket surcharge and the sales tax at the actual restaurant. The developer is responsible for the "stadium" bonds but Pearl agreed to make annual payments in the amounts stated above. Concessions, luxury seats, and souvenir revenue all go to the Braves organization. Mayor Rogers said the city does not get sales tax revenue from ancillary developments such as Basspro and Sam's Wholesale Club. The Outlets of Mississippi provide no sales tax revenue as well. He said MDA negotiated the deal and then brought it to the city as a "take it or leave it" prospect. However, the Mayor said the city will begin to receive sales tax revenue from the mall in two to three years when the five-year sales tax exemption ends.
Mayor Rogers also said his predecessor began five major road projects that were funded by bonds. The city is still paying the bonds for those projects.
Kingfish note: Keep in mind the report is based on the 2014 audit. The 2015 audit is due this summer.
Note: Mollie to rip off in 3..2....1.....
28 comments:
BUT
Pearl has a facility that any city in the state (several states, even) would love to have.
The facility helped spur retail economic development in the US 80-I20-US49 vicinity that is the envy of other cities in the state (several states, even) that will produce sales tax revenues into the city treasury for decades to come.
It would be sad if the Braves pull out, but not catastrophic.
The bond rating is important, BUT only if the city is planning to borrow a great deal of money for some huge project in the near future.
If they city doesn't need to borrow money, the bond rating is just bad public relations.
I don't live in Pearl, but I remember when all it had was an endless string of trailer home sales lots along U.S 80.
Now it has left Brandon in the dust.
So...pile on if it makes you feel better, but try to be realistic.
Pearl was once the butt of jokes but zoomed right past Brandon.
Disclaimer...I live off Spillway Road and I don't know anyone in Pearl City government or connected to Pearl city officials.
What about the Braves lease payment, 2% Pearl Special Tax & 50% of the Bass Pro sales tax? Brad Rogers was alderman at large when all this occurred. How did he vote? Did he vote on the purchase of family owned land involved in this project?
11:40 is exactly correct!
hello 11:40 Which bond law firm do you work for? You can't be this delusional unless you are on the payroll.
Pearl is still the butt of jokes. Drive the side streets and neighborhoods. It's still traler-park paradise. Hard to make a silk purse of a sow's ear.
Mississippi Braves aren't going anywhere.
Right on, 11:40. Risk for ultimate progress.
That's one hell of a resort area
They bring no money - TODAY. As you note, in two years they will be bringing a lot of sales tax dollars into Pearl. Investments aren't made looking only at today; investments by smart companies (and would apply to governments as well) look at the long term. Anybody that doesn't believe that BassPro, or the Outlet Mall shops, etc. won't be doing the same booming business in two years that they are doing today has their head in the sand. And without the TIF process tying up the first five year sales taxes, there would be no money coming in now, or for the next twenty years.
Who is responsible for upkeep and maintenance at Trustmark Park?
Who realizes a satchel-full of money from Trustmark Bank for marketing its Brand Name?
The sales tax from Bass Pro, alone, is enormous and some of that goes to the city.
12:54; It is, by definition. Did you think in order to be classified resort status you had to have a casino and high-dollar whiskey?
Remember, the area first defined Mississippi Resort Status with The Gold Coast.
Pearl will be fine. It has the lowest taxes around....so it has some head room to raise taxes. Residents will complain but it will happen to pay for some of this.
And Pearl is getting more and more attractive every single time someone else dies of a gunshot wound in Jackson. Blacks and whites alike are tired of the violence and death....terrible public schools....rotten infrastructure.....etc.
By the way...this same ratings agency was so far off and wrong about AIG and other huge institutions before the last huge crash I hardly think one can believe a word they say.
What's funny and not being mentioned on all of this is the where going to build the shopping center with out the tax breaks, but Yates has the money and the best lobbyists his money can buy. Why spend his money when Mississippi will give it to you for a free with a free big cigar, steak dinner and a little scotch from Ticos.
Amen, 1:16. Without what they have today, there would be NOTHING in the future.
What's wrong with that? If they were going to build it without the tax breaks, but then the state creates a program to provide them - and the other projects around the state are going to use them - why not take advantage of them yourself. That doesn't take even mediocre lobbyists to figure out.
Do you take deductions on your income tax when you file it? Legal deductions? Those provided by the IRS laws? Bet you do, assuming you make enough at your job flipping burgers to have to file a return.
No difference. The deductions are provided to all, so why not use them yourself. The legislature creates the program for the tax breaks, so why not apply them to a project you were going to do anyway? And you totally ignore that Yates still has tens of millions of dollars of his own tied up in that development. How much of your stash have you put into investments anywhere around the metro area? Or for that matter, anywhere?
Crack O The Bat The $150,000.00 added to the $800,000.00 contribution was for Capital Improvement on the stadium. Pearl taxpayers were off the hook the first 10 years. (paid by others) The bond debt has been fully serviced by the various revenue producing streams attached to the legislation.
KF, we know the original terms and the revenue sources that serviced the bond debt. Can you get all the changes made over the last 6 years?
Can you get all the changes made over the last 6 years?
Kingfish, can you tie our shoes? Kingfish, can you wipe our butts?
Kingfish, can you do the work for a bunch of anonymous imbeciles unwilling to do any of the heavy lifting on behalf of themselves?
HIT THE TIP JAR Losers !!!
6:48....Thanks, but you didn't answer any of my questions.
Attendance averaged about 246,000 per year for 3 years.
The next 5 years averaged about 194,000 (21% drop)
The past thee years averaged about 210,000 (8% increase)
This year is on pave for about 209,000.
[E]ven if covered by a state employees retirement system such as PERS. It may not be fair but as far as Moody's and other ratings agencies are concerned, a liability is a liability.
The PERS liabilities are real. It won't be long before they start to hit [5 - 10 years].
This is eminently fair. The payoffs are in the out years, if everything is still throwing off income. Moody's is taking account of the risk.
In my opinion this was a Pearl has made a number of horrible deals on so many levels:
It subsidized new businesses at the disadvantage of existing businesses, Bass Pro, Outlets of MS, etc...
Specific to the Outlets of Mississippi, it [the State] granted an entirely unnecessary huge tax credit to the developers of a development which was 90% built amd complete. This horrible decision opened us up to several more bad decisions.
So much for the bad news, now for the good:
I love going to Trustmark Park and watch the Braves. The construction of Trustamrk Park is a pleasure. Views everywhere are great. Last year I had the pleasure of running into a buddy who had luxury box seats. I highly recommend it. Free food, free beer, air conditioned rooms with closed-circuit video of the game, chair-back seats on the balcony, etc....
@10:50 PM massages the actual numbers to fit their agenda.
One reason the city is losing money is due to the higher rates charged by the city of Jackson for wastewater treatment. The city began charging the West Rankin Utility Authority a higher rate but Pearl did not pass the increase on to customers and ate the difference
I'm not sure about this fact.
The water bills in Pearl jumped from $12 for a residential home to around $42 approximately 2 years ago.
Was this not beacuse Jackson increased the rate for wastewater treatment to the surrounding municipalities?
Understand. Keep in mind the 2014 audit was for the fiscal year that ended on September 30, 2014. The report came out in December 2015. Data was well over a year old so that might line up with your argument.
If the Braves leave you can place all of the blame on the Clarion Ledger. There is never any articles about the team and about their games. It has only been since the last couple of weeks that the CL is even posting the standings of the league. In a cost savings effort, the CL quit publishing television schedules. Now they may be cutting costs again and we lose a baseball team in the process.
All the while, 11:48, obsessing over that potential Pulitzer for getting HB 1523 changed.
4:44 PM
Imagine your accountant discovered something that was unique about your business. You have great pull in the legislature and get a law passed that benefits you and, maybe coincidentally, two or three other people.
This "tourist attraction law" is not something we can all take advantage of. It's crony capitalism.
Pearl probably missed the chance to get on the EB-5 bandwagon. That thing might be just about all ponzi'd out.
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