tag:blogger.com,1999:blog-8236405782975490260.post1713088151122255388..comments2024-03-20T22:55:32.772-07:00Comments on Valley Economy: What happens if Measure A fails?Jeffhttp://www.blogger.com/profile/10344751623916759400noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8236405782975490260.post-72571551515974653582013-10-22T04:02:33.653-07:002013-10-22T04:02:33.653-07:00Jeff,
Thank you for the information.
I believe t...Jeff,<br /><br />Thank you for the information.<br /><br />I believe the Vallejo sales tax was after bankruptcy and not part of the plan of adjustment. So after bankruptcy a sales tax was enacted, and today even after the "cram down" and negotiated revisions in various contracts and debt agreements as part of the bankruptcy plan, there are substantial concerns about the fiscal health of Vallejo.<br /><br />That is what we want to avoid in Stockton. And that is why we should have greater confidence that comprehensive, effective fiscal discipline is in place in Stockton before we exit bankruptcy and before we vote for a sales tax hike.<br /><br />Thank you again. <br /><br />Ned<br />Nednoreply@blogger.comtag:blogger.com,1999:blog-8236405782975490260.post-58930889169608061122013-10-20T21:18:23.445-07:002013-10-20T21:18:23.445-07:00The term sheets for the creditor settlements are a...The term sheets for the creditor settlements are appendices at the end of this document, http://www.stocktongov.com/files/10_10_2013_PlanAdjustment_145pages.pdf<br />You can compare them to the information in the AB 506 documents to see how this differs from the original loans, and the initial ask by the City.<br /><br />If Measure A does not pass, I don't think Assured Guaranty's demand for repayment will increase. There is a "contingent" payment sweetener in this deal and that depends on Measure A passing. It is possible the City could have gotten this creditor to receive a larger loss through a bankruptcy "cram down", but there would be risk, cost, and delay in pursuing this route.<br /><br />Vallejo did pass a sales tax increase by a few votes, but I believe it was after the court approved its exit from bankruptcy. I always thought that was the plan in Stockton too, but I think the Mayor's Safe Streets campaign may have forced the City Manager and legal team to support a tax now to head off a restricted tax.<br /><br />As for the water fund, it is helping the City's General Fund somewhat. The debt from the Howard Jarvis case will no longer be paid from the general fund, thus increases to water bills will have to replace these payments from the General Fund. Also, the pension bond repayment has been extended 15 years to 2052, including payments allocable to the water funds which have never been missed. Thus, the water funds will end up paying more than they originally were supposed to pay on the pension bonds. I am not sure if there is any legal way that the City could use the value of its water fund assets to help with bankruptcy.<br /><br />It is a good point about the audits, and I am not convinced that the City Council is fully committed to long-term cost control and who knows about the next City Manager. <br /><br />The vote is a close call. However it comes out, there is still a lot that needs to be done to improve the City's finances.<br /><br />Jeff<br />Jeffhttps://www.blogger.com/profile/10344751623916759400noreply@blogger.comtag:blogger.com,1999:blog-8236405782975490260.post-64424140346236964642013-10-19T13:28:23.190-07:002013-10-19T13:28:23.190-07:00Professor,
You said: "I have reviewed the se...Professor,<br /><br />You said: "I have reviewed the settlement with Assured Guaranty, and I think it is reasonable.”<br /><br />Were you able to read something other than the disclosure documents, if so, is it available for others to review? If so, do you have a link we can follow?<br /><br />If Measure A does not pass, why would the demand of Assured Guarantee increase?<br /><br />Did Vallejo require a sales tax increase to exit bankruptcy?<br /><br />Looking at the Water Fund Audit report (issued by management without the knowledge, review or approval of the City Council, the Audit Committee or the Mayor), it seems that the Water Fund and by analogy all the enterprise assets may be considered assets of the city subject to bankruptcy protection and perhaps akin to assets of a bankruptcy estate. Those are very valuable assets. Should we consider the realizable value of these assets to repay creditors and fund city services? <br /><br />You said: "I have been assured that City leaders understand the long-run budget reality and will hold the line on costs."<br /><br />Financial statements and audits are very delinquent. Moss Adams, the City's own "internal auditor" recently issued a very damming report on internal controls, consistent with the reports by the Grand Jury, State Controller's Office and prior external auditors. Would not your acceptance of "assurance" be much stronger, if these problems were corrected before a vote on the sales tax measure?<br /><br />Thanks.<br /><br />Ned<br />Nednoreply@blogger.com