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:
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
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......
Bennie's big payday was the county jail when he was prez of BoS. He and ranged out of state
Contractors from California.
A racket pure and simple. Always has been. Always will be. The upright, first church row practitioners are racketers
From coaching the Braves to Adam's County bond pimp. I used to have a lot more respect for Bobby Cox.
Ya gots ta spend money to make money!
True con game
How about the bonds the City of Biloxi issued for the Shuckers. Like to know what those numbers looked like and who benefited.
October 15, 2017 at 1:22 PM = Expert non-expert
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.
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.
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...
$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.
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.
>>>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.
Dunn Construction built the Raymond jail. No one from California
Where do these guys buy their every-day go-to-work britches?
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.
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.
8:21 am
You go be a bond lawyer......do it for free.
Until then.....shut your pie hole.
12:36.....was there a point to your post? If so, it escaped the group. 'Pie Hole'? You sound so angry.
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.
BS. The BMW mechanics at H-G don't get paid any better.
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.
Post a Comment