Friday, June 18, 2010

Jackson will pay extra $8 million to refinance bonds


The Clarion-Ledger reported this week the Jackson City Council voted to restructure some bond debt:




" The city is anticipating a $9.8 million shortfall. The council took a step Monday to help plug that hole by voting 5-1 to restructure $25 million of the city's bond debt. Johnson told council members the city could see $5.4 million in savings with the deal. The deal stretches out some of the city's debt over more years. The gross cost of the deal to taxpayers is $10.8 million, but city officials peg the present value cost - a calculation that measures the value of the deal over time - at $1.3 million.

Despite the long-term cost, Johnson said it is the only way to get cash now to help balance the budget until the economy improves.
"Is it ideal? No, but we are not in an ideal situation right now," he said. City officials are contemplating further cuts to make up the rest of the $9.8 million.

Ward 1 Councilman Jeff Weill, who voted against the plan, said he is concerned about the increased debt it places on the city a decade from now. Ward 7 Councilwoman Margaret Barrett-Simon spoke for the majority by saying she expected revenue from growth downtown will allow the city to shoulder the debt. "I don't think we really have a choice," she said."

Lets look at some nuts and bolts on this deal. Unlike the "state newspaper" and Mr. Joyner, who blogs about his fights for open records while rarely providing any, Kingfish has included the paperwork given to the city council on this deal. Unfortunately for Jackson, the city council was given very little time to consider this matter. Rick Hill was supposed to bring this presentation to the work session Monday. Didn't happen. It was given to the council members less than a half hour before the regular meeting Tuesday. Our city council thus had only a few minutes to study the strengths and weaknesses on a TWENTY-FIVE MILLION DOLLAR LOAN!!! What exactly are the details of this refinance? Here ya go:

1. The city faces a $9.8 million deficit for fiscal year 2011.
2. Here is a breakdown of the fees:
Baker Donelson (Anthony Simon): Bond Counsel. $150,000
Malachi: Financial Advisor. $80,000
Rice Financial Products: Underwriters $5.50 price discount per bond ($140,000).
Tony Gaylor, Betty Mallet: Underwriter's Counsel. $95,000.
3. Malachi projects upfront savings of $5,520,779 for FY 2011.

It should be mentioned that nothing was opened up for bidding. Jackson might have been able to get lower fees, lower interest rates, or better terms but it will never know because it didn't ask.

Page 14 is where the devil appears. Jackson will have borrow $26,544,903 in general obligation bonds. However, read the savings column in the table posted above. Jackson will save half a million dollars a year for several years. Unfortunately, Jackson will start paying nearly a million dollars a year for four years. Then it will pay nearly $2 million and then around $4.5 million a year for four years and finally $6 million for the final year. Net cost IS $10,829,286. You read that right. For a few million dollars now, Jackson will PAY nearly ELEVEN MILLION DOLLARS down the road.

Its not unreasonable for council members to have problems understanding this stuff. Retired cops, school principals, loudmouths, and even lawyers have problems comprehending bond deals. However, they should have at least tabled the proposal so they could study it for a week or call in an independent adviser whose fee did not depend on whether a deal was closed. Even more disturbing is a councilwoman stating she hopes the downtown projects pay off. Hopes? What happens if they don't, Mrs. Barrett-Simon? Where are you going to come up with the five or six million a year to pay off the interest on these bonds? Page 17 states the old principal amount was $23,575,000 with interest costs of $2,969,903. Jackson will thus pay an extra eight million dollars in interest just to save some money this year while city council members hope "expected revenue" from unfinished projects will materialize.

20 comments:

Paul Mitchell said...

Oh good LORD.

Anonymous said...

They will say they didn't understand what they were doing when this all goes horribly wrong down the road... and it's true. They are too stupid to understand what they are doing.

Poor City of Jackson. Ruled by idiots.

Anonymous said...

Everyone except Weill is dumb as a box of rocks. Frankling said in a democracy people get the government they deserve. I don't plan to be around when this balloon mortgage blows up, when they find out there was no miraculous recovery, and they owe way more than they did in 2009. These people on the council are morons for not tabling this for further study before making such a huge committment on such an unreliable foundation, with no "Plan B" in sight.

Anonymous said...

KF - there's a big problem with things loading on this page today (e.g., all the links, the list of most recent posts)

Anonymous said...

The scariest thing is these bond refinancings are going on all around the U.S of A. We will have a double dip recession with higher unemployment. The writing has been on the wall for months. Not if but when.

Anonymous said...

KF, look deeper in the rocks. Check out Malachi - who are the principals there collecting $80k. And Rice Financial Products as an underwriter on a deal this size. Wouldn't happen in any other city!

Anonymous said...

Do not fear. With Kenny Stokes at the helm, we are in good hands.

Anonymous said...

"There's no need to fear,
Kenny Stokes is here."


Apologies to Underdog

Anonymous said...

Read these links if you want to know where to start asking questions.

http://wiki.answers.com/Q/What_was_MR_Beal%27s_involvement_in_West_Basin

http://webcache.googleusercontent.com/search?q=cache:qfO-XEC9lkgJ:www.ricefinancialproducts.com/about/t-stovall.shtml+tony+stovall+mississipi&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a

Hinds County Swaps see page 3:
http://www.co.hinds.ms.us/pgs/boardminutes/docs/02_02_06.pdf

More H8inds County see page 10:
http://www.co.hinds.ms.us/pgs/boardminutes/docs/01_02_07.pdf

Also this from California:
http://www.wavenewspapers.com/opinion/bottom-line/47731082.html

Anonymous said...

Two more links.

http://www.jacksonfreepress.com/index.php/site/comments/supes_advisor_sued_over_swap/

See page 3 for Swaps and more names.
http://www.co.hinds.ms.us/pgs/boardminutes/docs/11_21_05.pdf

Anonymous said...

Jefferson county, Ala, here we come!

Anonymous said...

There is a large hole in the ship and it is taking on water....the pumps have already begun to fail...

Anonymous said...

Anon at 2:57 P.M. this what you're talking about?

Or maybe there is something else to find?

Anon at 8:08 PM -that is right.

http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p017876.pdf

See page 15 for this-

"Firms Expelled for Failing to Pay Fines and/or
Costs in Accordance with NASD Rule 8320:
The Malachi Group, Inc.
Atlanta, Georgia
(September 7, 2006)"

Also this (does it settle the previous- or something else?)

http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p036462.pdf

see page 16 for
"Porter Bernard Bingham(CRD #1450227, Registered Principal, Roswell, Georgia) and
Hal Butts Jr. (CRD #4029277, Registered Principal,Marietta, Georgia) submitted an
Offer of Settlement in which Bingham was fined $10,000, suspended from association
with any NASD (and now, FINRA)member as a general securities principal for one year
and required to requalify by examination as a general securities principal prior to acting
again in that capacity. The fine must be paid before Bingham reassociates with any
FINRA member following the suspension, or prior to any application or request for relief
from statutory disqualification is filed. Butts was fined $5,000 and suspended from
association with any NASD (and now, FINRA)member as a FINOP for 15 business days.
Without admitting or denying the allegations, Bingham and Butts consented to the
described sanctions and to the entry of findings that they failed to cause their member
firm to maintain its required minimumnet capital. The findings stated that Bingham
and Butts prepared and/or were responsible for the preparation of inaccurate net
capital computations, trial balances and general ledgers for their member firm. The
findings also stated that Binghamand Butts prepared and/or caused the preparation of
inaccurate FOCUS reports for their member firm and filed the inaccurate reports with
NASD. The findings also included that Bingham and Butts failed to submit timely notice
to NASD of their firm’s net capital deficiency. NASD also found that Bingham failed to
file his member firm’s annual audit report in a timely manner.
Bingham’s suspension as a general securities principal is in effect from July 2, 2007,
through July 1, 2008. Butt’s suspension as a FINOP was in effect from July 16, 2007,
through August 3, 2007. (NASD Case #E072005021301)"

Anonymous said...

It's really a sad commentary that when the City of Jackson is clearly so eager and willing to be screwed out of money, the only ones to show up to help are some outfit no one has ever heard of.

I guess the NY firms were busy that day.

Anonymous said...

This will be the death of Jackson. They don't have the cash flow now to meet their debt obligations. They are going to use the money saved on paying down their debt to fund current operations. They are gambling that future increases in revenue will be enough to pay the refinanced bonds in ten to fifteen years.

Sounds a whole lot like individuals with debt problems who put off paying their mortages and credit card bills.

The unanswered question. What the hell is Jackson going to do if in the next 15 years they need to undertake a major infrastructure project? Revenue is now pledged for 15 years to pay the deferred obligations. I don't see sales taxes or property taxes increasing in the city enough to cover the baloon payments during the last five years.

Jackson has obligated themselves to stagnation for the next 20 years, and I doubt they will ever be able to dig themselves out.

They should have just called one of the 1-800 numbers for credit counselors.

Anonymous said...

9:22 You mean like replacing the water pipes that sprang over 100 leaks last winter? Is their plan to just hope for a warm winter for the next 15 winters?

Anonymous said...

Thank you for giving your readers such relevant, excellent investigative reporting.

Anonymous said...

The notion that all these dollars will be made up down the road by the happenings downtown is pure folly.

Kingfish said...

This aged well.

Anonymous said...

Old criminals, same as the new ones.



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
.