Friday, August 3, 2018

JPS Bond Issue: Golden Showers Yet Again

 This post was originally published on June 14.  Consider it a PSA for Jackson voters.

The "Million Dollar Bonds" should be the nickname for the proposed issue of JPS bonds for $65 million since the proposed professional service fees will be $1.1 million.  Rankin County's bond fees for a $100 million sale was slightly over $300,000.  The notorious Siemens deal only had fees of $640,000 even though the bond issue was $90 million.  However, JPS bonds must be really special because everyone is getting paaaiiiiiid on this deal.  JJ obtained a schedule of the fees through a public records request.  Read them and weep.


Steve Edds of Lord Snow (Bond Counsel): $225,000
Government Consultants (Financial Advisor): $207,500
Mays Law Firm & Young Law Group (Underwriter's Counsel): $100,000
Disclosure Counsel (Unknown firm): $15,000
Trustee: $10,000
Trustee Counsel: $10,000
Spence Flatguard (State Bond Attorney): $1,000
Rating Agency: $55,000
Mississippi Development Bank: $70,000
Mississippi Development Bank Counsel: $30,000
Miscellaneous: $5,000
Siebert, Shanks, & Cisneros (Underwriter): $410,690
TOTAL: $1,139,190

Kingfish note: Compare these fees to similar bond issues.  Start with the 2017 Rankin County School Bond issue.  RCSD issued bonds for $100,750,000. 

Lord Snow (Bond Counsel): $46,925
Government Consultants (Financial Advisor): $51,791
Balch & Bingham (Issuer's Counsel): $20,000
Mississippi Development Bank: $70,000
Peoples Banks (Trustee): $1,500
Harrel & Rester (District Counsel): $32,128
S&P (Rating Agency): $59,800
Adams & Reese (Underwriter's Counsel): $28,600
Spence Flatguard (State Bond Attorney): $1,000
TOTAL: $312,994.

The Rankin County fees do not include the underwriting fees of Morgan Stanley. The district said its fee would be $950,000 for an issue of  $178 million.  JJ will estimate it to be around $533,707 (100/178 = 53%).  JJ is attempting to obtain the amount of the fee from the district.  However, Rankin County will still pay under one million dollars for professional service fees for a $100 million issue compared to $1.1 million for a $65 million bond issue.

The Kingfish doesn't buy into the disparate impact theory but one should ask why some of the same vendors are charging JPS much more money than Rankin County even though Rankin's issue was $35 million more than the JPS proposed issue. However, let's not stop with Rankin County.  Check out the 2008 JPS $114 million bond issue:

$114,000 General Obligation Bonds for JPS (2008)
Mississippi Development Bank (Issuer): $70,000
Dorian Turner (Bond Counsel): $243,813
Balch & Bingham (Issuer Counsel): $25,000
Trustmark (Trustee): $3,604
Baker Donelson (Co-underwriter counsel): $75,320
Community Capital (Financial Adviser): $65,800
Image master (POS, printing): $3,448
Moody's (Ratings): $22,230
Spence Flatguard (state bond attorney): $1,000
Jones Financial Services (Financial Adviser): $28,200
TOTAL FEES: $538,416



Remember the JPS bond refinance from a couple of years ago of those same bonds?  The fees more than doubled.

Jackson Public Schools General Obligation Bonds refinance: $118,070,000
Mississippi Development Bank (Issuer): $42,500
Balch & Bingham (Issuer Counsel): $30,000
Malachi Financial Products (Financial Adviser): $328,500
Trustmark (Trustee): $9,250
Chambers & Gaylor (Bond Counsel): $295,750
S&P (Ratings Agency): $63,000
Arbitrage Group (Verification): $6,000
Hunton & Williams (Special Tax Counsel, ATL): $197,500
Betty Mallet (Co-underwriter counsel): $112,500
Baker Donelson (Co-underwriter counsel): $142,140
Image Master (POS fees): $6,684
TOTAL FEES: $1,233,824


Don't forget the infamous Siemen's deal - a $90 million bond issue:


Malachi Financial Products (Financial Advisor): $182,000
Baker Donelson (Bond Co-counsel): $90,000
Anthony Simon (Bond Co-counsel): $90,000
Hunton & Williams (Disclosure Counsel): $70,000
Mississippi Development Bank: $70,000
Balch & Bingham (Developer's Counsel): $48,000
S&P (Ratings Agency fees): $39,100
Moody's (Ratings Agency fees): $34,000
Trustmark (Paying agent): $9,500
Imagemaster (printing): $3,500
Spence Flatguard (State bond attorney): $3,295
TOTAL FEES: $639, 395


Compare similar-sized bond issues over the last few years.

2017 issues and fees
Desoto County Highway Construction Project ($43.8 million): $317,652

2016 issues and fees
Harrison County Utility Authority Revenue Refunding ($103.185 million): $572,740
MGCCC Facilities Construction & Refinancing ($73,620 million): $359,821

2015 issues and fees
 Marshall County highway refunding project ($39.565 million): $303,582
 Municipal Energy Agency Power Supply Refunding project ($87.22 million): $873,494
DeSoto County Hwy Refunding Project ($24.155 million): $185,486

2014 issues and fees
Biloxi Stadium Project ($21 million): $245,500
DeSoto County Hwy Construction Project ($82.9 million): $469,343
Gulfport School District General Obligation bonds ($41.2 million): $458,278
City of Gulfport General Obligation ($30 million): $188,937

2013 issues and fees
Harrison County Hwy Refunding Project ($64 million): $274,858
Hattiesburg Water & Sewer refunding ($28 million): $548,000
JPS Refunding (Two issues, fees combined. $36 million):  $415,808
Jackson Convention Center Refunding ($65 million): $381,118
Jackson Water & Sewer bonds ($90 million): $646,895

Madison County Hwy Refunding Project ($88.865 million): $380,690


This is what happens when a School Board is stuffed with nothing but Ph.D.'s and fancy titles.  People who are smart yet don't even know how to ask the right questions.  These fees are nothing short of highway robbery and show why JPS and Jackson are imploding.

JJ has warned for years that bond deals are where the real corruption takes place in Mississippi.  Reporters and politicians are clueless about bonds while the corrupt use them to reward their friends in ways few understand.
 
Don't expect any mention to be made of these fees at the city council, school board, or in the news media.  This is what happens when the School Board President is "not focused mostly on saving money." 


8 comments:

Anonymous said...

Kingfish,
I would love to post this on the nextdoor Fondren site... however I received so much blowback and called every name in the book last week when I encouraged others to look into this before voting to support this bond. It's amazing to me these white liberals are all about this bond issue must pass now. There kids don't even go to JPS. It's amazing.

Anonymous said...

So if the bond issue fails, what happens to that list of exorbitant fees?
Lawyers working for free?

Anonymous said...

12:31 - The way it usually works on bond transactions is that the professionals don’t get paid unless the deal gets done.

Anonymous said...

It is well known that selling bonds is a rip off and a way to pay back friends BUT the JPS takes it to a new level of stealing.

JWagner said...

Baker Donelson has been out of control with their fees for some time. Just waiting for the glass house at the District to explode.

Kingfish said...

And no one in the media will cover bond fees on any deal, much less this one.

So much for the Business Journal as well. They are too busy stuffing their faces at local eateries and writing about the newest restaurant to come to town.

Anonymous said...

Golden showers are too salty.

Anonymous said...

Where does JWagner get his information re Baker Donelson fees?



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