Sunday, October 15, 2017

Bonds: Where the real action takes place.


Where can a good ole boy make an easy $20,000 without anyone knowing about it in Mississippi? Bond sales.  Eyes glaze over when bonds are mentioned.  Reporters who can barely add ignore the topic.  Politicians who can not add just trust their good ole boy friends to do right by them.  Adams County is a prime example of such a conundrum.  The  Mississippi Business Journal reported last week:

The proposed refinancing of some bond debt would save Adams County about $25,000 a year.The Natchez Democrat reports that the Board of Supervisors got the news last week.
Supervisors heard from Duncan-Williams Investment Bankers representatives. The county is considering refinancing a 2013 bond used to purchase the former International Paper site for industrial development purposes.

Board of Supervisors President Mike Lazarus said he expects the board will vote to refinance. He said that, over the lifetime of the bond, the county would save approximately $400,000. Article.

It never occurred to the reporter to actually report what the fees might be.  However, JJ loves to look at bond fees.  The professional service fees that are associated with every government bond transaction are  where the real rackets take place.  This boring topic is actually interesting because it is where the politically-connected are greatly rewarded. 

The rule of thumb for bond fees in Mississippi is that they should be no more than 2% of the amount of the bonds sold although rule is used to justify exorbitant bond fees.  The 2013 fees for Adams County were:



Bond amount: $3.3 million
Mississippi Development Bank (Issuer): $5,000
Government Consultant's Inc. (Financial Advisor): $30,000
Balch & Bingham (Issuer's Counsel): $5,000
Regions Bank (Trustee): $1,250
Butler Snow (Bond Counsel): $90,000
Scott Slover (County Counsel): $13,250
Bobby Cox (Special Counsel): $5,000
Spence Flatguard (State Bond Attorney): $1,000

Total: $150,000
Percent of Bond Amount: 4.5%

A review of similar bond sales* shows that Adams County paid much more for professional services fees than other counties and cities paid for those services.

Compare the bonds fees for Adams County's 2013 sale to similar sales over a period of five years. 

Columbia (2011) $3.5 million 
Fees: $118,500 (3.4%)

D'Iberville (2011) $4 million
Fees: $106,541 (2.7%)

Greene County (2011) $4 million
Fees: $137,510 (3.4%)

Pearl (2011) $3 million
Fees: $109,700 (3.6%)

Horn Lake (2012) $5.2 million
Fees: $112,737 (2.1%)

Columbus (2013) $2.4 million Special Obligation Bonds
Fees: $80,000 (3.3%)

Gautier (2013): $3.5 million Special Obligation Bonds
Fees: $98,200 (2.8%)

Lee County (2013): $8 million Special Obligation Bonds
Fees: $268,000 (3.3%)

Columbus (2014): $5 million Special Obligation Bonds
Fees: $195,500 (4%)

Jefferson County (2014) $4 million Special Obligation Bonds (Stadium)
Fees: $190,160 (4.7%)

Ridgeland (2014): $5.1 million
Fees: $157,000 (3%)

Magee (2015) $2.8 million
Fees: $75,000 (2.6%)

Tupelo (2015): $4 million
 Fees: $87,000 (2.2%)

Only one city or county paid a higher percentage for fees than Adams County.  Adams County paid bond fees that were more than double what it should have paid.  The Board could have opened up some of these services for competitive bidding.  The Jackson Municipal Airport Authority and Rankin County School District did so on their most recent bond transactions.  However, such good government is rarely practiced when it comes to bond sales in Mississippi.   The money is simply too good to pass up, especially when no one is looking.

Adams County will probably save money refinancing the 2013 bonds but its Supervisors should perhaps question whether it is receiving the best deal it could possibly get on bond fees.

The media should start reporting the fees and questioning how the professional services are awarded every time it reports on a bond deal.  

*All fees are posted on the Department of Finance and Administration's website.

24 comments:

Anonymous said...

It his is how Bennie got wealthy
Damn sure wasn't from salary as mayor of Bolton or Hinds county supervisor
Or his congressional salary

Anonymous said...

There are costs associated with liability when dealing with bonds.

Insurance premiums are expensive and the expertise required to perform the task properly is valuable.

You can Monday morning quarterback legal fees all you’d like but the truth is you pay up for qualified people to perform the task correctly.

And by the way....bonds are about to be under tremendous pressure with existing debt loads....see Puerto Rico where bonds will probably not exist.

But keep stirring the pot......

Anonymous said...

Bennie's big payday was the county jail when he was prez of BoS. He and ranged out of state
Contractors from California.

Anonymous said...

A racket pure and simple. Always has been. Always will be. The upright, first church row practitioners are racketers

Anonymous said...

From coaching the Braves to Adam's County bond pimp. I used to have a lot more respect for Bobby Cox.

Goober Pile said...

Ya gots ta spend money to make money!

Anonymous said...

True con game

Anonymous said...

How about the bonds the City of Biloxi issued for the Shuckers. Like to know what those numbers looked like and who benefited.

Anonymous said...

October 15, 2017 at 1:22 PM = Expert non-expert

Kingfish said...

There is nothing stopping these governments from bidding out these services. RCSD did so for bond counsel and there was a range of $100,000 among the submitted quotes. You seem to think getting good services and competitive bidding are mutually exclusive.

Kingfish said...

There is nothing stopping said governments from placing minimum requirements for experience to keep out the cheapo lawyers who don't know what they are doing. State law does allow for lowest and best.

Sixth Floor Corner Office said...

I'm admittedly one who knows nothing about the bond game; but, don't $30,000 and $90,000 sound outrageous? And if you are paying me for my bond knowledge, assuming I had any, why would my knowledge be more valuable as the amount of the bonds goes up? Do you pay a surgeon more to remove your lung than you do your gall bladder or isn't his rate the same? Or is your mechanic charging you more per hour to replace your A/C coil than he is your spark plugs?

No wonder so many are packing the law-halls up at TSUN. Eventually, when you look out your office window to the north you can see all the way to Madison's spires and towers and to the south, there's Cowboy Maloney's van out by the frontage road. When the girl brings your coffee, there's the flight from Atlanta circling southward over the Rez. Line four is for you...

Anonymous said...

$100,000 for legal fees?

Let's imagine that bond counsel are so incredibly rare that they bill $300 an hour. (I doubt this btw. And note that $13.5K went to the county attorney, not to a bond savant.)

A bond sale took 330 billable hours?

I call b.s.

Anonymous said...

9:59 am

Call bs all you want. Let’s see you do it.

By the way...some lawyers routinely charge $450 an hour and up...even in Jackson.

Rates topped $1000 an hour in DC.

Anonymous said...

>>>By the way...some lawyers routinely charge $450 an hour and up...even in Jackson.

Rates topped $1000 an hour in DC.<<<


Why we can't all have nice things.


Anonymous said...

Dunn Construction built the Raymond jail. No one from California

Anonymous said...

Where do these guys buy their every-day go-to-work britches?

Anonymous said...

I don't know much about the bond market or legal fees but, generally speaking across most industries, the value of the knowledge increases as the value increases. I'm unsure if 2:20's questions were rhetorical so I'll answer. Yes, a surgeon removing your lung (cardiothoracic surgeon) makes a significant amount more than a surgeon removing your gallbladder (general surgeon). General surgeons tend to make between $250-$350k depending on the state and city/town. Cardiothoracic surgeons can easily make double that depending on the state and city/town. I'll add here that you want the person removing your lung to make more than the gallbladder person; there are more variables and more complexities with a lung removal than with a gallbladder removal.

The same is true of mechanics, but it is a little different than how your question reads. Auto mechanics make significantly more if they are certified to work on certain types of cars or types of engines. Example, a Ford technician (lower level mechanic) makes around $35-40k while a Ford master mechanic (top level mechanic) can make around $70-95k. A BMW C-technician (lower level) makes about $40k while the BMW master technician makes about $120k. So while the average labor rate may be the same for the AC coil repair and the spark plugs, the rate amount itself depends on whether the mechanics have the specialized knowledge to work on higher value cars. The German automotive shop is going to charge more than the shop that will work on anything that comes through the door.

Sixty Floor Corner Office.. said...

12:28 - Thanks for your 'hautier than thou' lesson in Bull Shit. Now, next time you pull into a car repair shop (not a dealership where you usually pay triple for your BMW oil change and you look around to check out everybody's shoes), try to convince me that the price you pay for repair is based on the training level of the technician. I didn't mention his rate of pay. You did. I mentioned what you pay to have your coil replaced as compared to a tuneup (if they still do those), the rate per hour that you are charged by the shop. If your suggestion were true, you'd bargain at the counter to be sure you got a mechanic out in the shop that you could afford.

My medical example was, admittedly, a poor one. Perhaps I should have (and now you can) compared the salary of the guy who did my knee surgery with the one who put steel rods in my toe so it won't bend.

Can you deny that taxpayers are getting up the ass every time these bond merchants come out of their caves? But, sigh, they're lawyers.

Anonymous said...

8:21 am

You go be a bond lawyer......do it for free.

Until then.....shut your pie hole.

Anonymous said...

12:36.....was there a point to your post? If so, it escaped the group. 'Pie Hole'? You sound so angry.

Anonymous said...

8:21, I agree with you. The point of my auto mechanic example needs clarification. Mechanics that work on higher value vehicles earn more than ones that only work on standard value vehicles (by the way, I don't drive a BMW). I didn't mean to suggest that a person should pick the technician at the front desk; rather, mechanics working in shops specializing in higher value cars are paid more because their knowledge is more valuable. The difference between an AC coil or tune up doesn't matter. The difference between a Ford or a BMW does.

Regarding this post (remember the post is about the bond issue), my first thought is does it matter how much the attorneys make if it saves tax payers $400,000 over the life of the bond? At what point would there be public outrage if we found out the city had an opportunity to refinance at a lower rate but didn't take advantage of the opportunity? On the other hand, JJ asks a good question - is 4.5% fee structure out of line with similar deals? I don't know enough about the bond market to have an opinion. I do know that with other financial transactions, the fee dollars paid will often increase as the value of the transaction increases but the overall fee percentage decreases. For example the advisor may charge a higher percent on accounts less than $1m and a lower percent on accounts over $1m.


Kingfish said...

BS. The BMW mechanics at H-G don't get paid any better.

Anonymous said...

Bond sales cannot be rocket science, folks. Counties, etc. do them all the time. It's a matter of following the checklists, changing the names on the forms from the last bond sale, etc.

I'm a lawyer, and while some things we do are difficult, we also manage to create an air of mystery around things that really aren't hard at all, at least once you've done them the first time.



Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel

Archives

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS
.