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| A certain kind of affluenza? |
Which also begs this perfectly loaded question. If the City knew about this, and I suspect they must have known for at least a little while, why did they keep it a secret? Shouldn't we have been told right away? I mean, if they want more of our dough for water, shouldn't they be walking that transparency walk they're always talking about? And don't they know that The Tattler finds out everything anyway?
Remember, there are no secrets in Sierra Madre. Just things that we haven't found out about yet.
And then there is this. Was there some kind of timing involved? Is it really just a coincidence that the notification of yet another Sierra Madre Water Bond ratings collapse and the delivery of our water rate increase information packet (with handy Prop 218 protest ballot included) happened on the exact same day? I mean, these are rather large events for the Foothill Village. So what are the odds of these two supposedly fortuitous events both happening on the same day? Like maybe lottery odds?
And by that I am talking about the Mega, not Super Lottery. Remember, you do have to be in it to win it.
Enough chat. Here is the Moody's press release. Linkhere. Be sure to read it to the end. That is where some of the really good stuff is.
Rating Action: Moody's downgrades Sierra Madre (CA) water revenue bonds to Ba1 from A3; rating placed on review for further downgrade
Global Credit Research - 12 Dec 2013
$3M debt affected
New York, December 12, 2013 -- Moody's Investors Service has downgraded to Ba1 from A3 the City of Sierra Madre (CA) water enterprise's 1998 Revenue Bonds, of which there is currently about $3 million outstanding. The enterprise has an additional $8.1 million in outstanding debt not rated by Moody's but considered in our analysis, including $6.75 million Series 2003 parity bonds. The 1998 bonds are secured by a senior lien on the net revenues of the water enterprise. Concurrently, we have placed the rating under review for possible further downgrade, pending the outcome of Proposition 218 rate increase process scheduled for late January 2014.
SUMMARY RATINGS RATIONALE
The downgrade primarily reflects significantly weakened operating results leading to continued rate covenant violation and rapidly declining reserves. The rating also incorporates a weak track record of implementing rate increases, the enterprise's moderately sized customer base with an above average socioeconomic profile, as well as aging infrastructure that requires significant improvements.
STRENGTHS
-Customer base with above average socioeconomic profile
-Fundamental enterprise with historically strong reserve levels
-Debt service reserve fully funded with cash
CHALLENGES
-History of rate covenant violations
-Weakened financial position with diminished reserves
-Aging infrastructure requiring significant reinvestment
-Historically lackluster political will to implement rate increases sufficient to maintain healthy operations
-Expected rise in operating expenses tied to increased water purchases
WHAT COULD MOVE THE RATING UP
-Sustained and material improvement of debt service coverage leading to compliance with rate covenants
-Significant improvement in reserves
-Long-term stable customer growth
WHAT COULD MOVE THE RATING DOWN
-Failure to implement Proposition 218 rate increases
-Further declines in debt service coverage
-Loss of customers and revenue sources
-Further violations of bond covenants
So I guess this water rate hike really is about bond debt after all. And that once again desperately needed water infrastructure upgrades and repairs will take a back seat to the requirements of the Bank of New York.
So I guess this water rate hike really is about bond debt after all. And that once again desperately needed water infrastructure upgrades and repairs will take a back seat to the requirements of the Bank of New York.
Here is the conspiracy theory. And just so you know, I love conspiracy theories. I know that some people use the term like it is a bad thing, but I run a blog. A real one that gets read by a lot of people. Conspiracy theories are my bread and butter. It's what doesn't pay the bills around here.
This is no coincidence. The timing is just too close. My take is someone who knows what they are doing, perhaps the knowledgeable but badly dressed gents from Raftellis, have been working with Moody's on our little water enterprise problem. The objective being to shock the ratepayers into believing that true doom is imminent, and protesting this water rate increase could only lead to even more awful things. Like an even more rapid descent down the Moody's alphabet bond rating system.
Which I guess is a bad thing. Or so some have said. But maybe not quite as bad as yellow water.
Allow me to point this out as well. The bonds they're talking about here are the 1998 issue. You know, the ones that we actually are paying off. Moody's hasn't even gotten to the real disaster, the 2003 "interest only" bond debacle our dear Uncle Bart left us. The one where the downtown financial geniuses turned a $6 million bond sale into nearly $15 million dollars in cold hard debt.
As Moody's so drily puts it: "Concurrently, we have placed the rating under review for possible further downgrade, pending the outcome of Proposition 218 rate increase process scheduled for late January 2014."
I do not think there can be any doubt that Moody's is working with somebody connected with our City government to get you to agree to a water rate increase. They certainly know all about our issues. These are heavy tactics, and the big money boys are playing rough. They're worried about losing a little cash, and they are smacking you upside the head.
I do not think there can be any doubt that Moody's is working with somebody connected with our City government to get you to agree to a water rate increase. They certainly know all about our issues. These are heavy tactics, and the big money boys are playing rough. They're worried about losing a little cash, and they are smacking you upside the head.
The only problem being that you weren't supposed to know about this bond rating problem yet. That was going to come later. Probably in a carefully prepared official City of Sierra Madre press release.
But now you do. Be sure to leave a couple of bucks in my guitar case.
But now you do. Be sure to leave a couple of bucks in my guitar case.
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