TMC: Thirty Miles of Corruption

In an unprecedented act of desperation the City of Riverside buys $65,000,000.00 in their own bonds, due to Riverside Counties refusal to buy as a result of the low rating.  According to many, it’s never been done before.  It appears the taxpayer will get screwed again.  Buying your own debt by buying your own investment bonds means the bonds are not investment quality.  You know the end of the road is near when no one is willing to see enough value in your bonds to purchase them.  Of course, the original City-County plan according to Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, said the proposal raises red flags.  Therefore being creative with your own debt appears to be the only answer, and I would imagine this would raise double red flags.   This would be like printing your own money so that you could take it out and replace it against your own debt.  This could never happen in the private sector, how can this possibly occur in government?  First, you would have to classify what city fund to remove money from.  Secondly, the taxpayer money taken for other proposed funding purposes is replaced with the issuance of a bond, or in other words, and IOU.  The money is taken, but there is still a void in the fund that needs to be paid back at the maturity of the bond.  City Charter states the City of Riverside cannot buy bonds under a AAA rating.  Well the Utilities and Water Bonds are AAA, but that’s because the City of Riverside own their own utilities and own water rights.  So how do they explain the downgrade to AA? But our Redevelopement Bonds, may be in the BBB rating or lower.  Riverside’s Chief Finance Officer Paul Sundeen said repaying the debt is not a concern as long as the city’s property values don’t take a large plunge.  But property values are diving, and will continue to decrease according to real estate statistics through 2012.   Emerald City’s Paul Sundeen went on to state, “What is the risk? It is zero,” he said.  The interest rate wouldn’t be as good as what the city negotiated with itself, he said. But, he added, “I typically don’t invest in our own bonds, (so) as an opportunity would present itself I would simply get out of it.”  Does City Hall continue to believe their own story that their is not a problem, and that creative financing is the answer, when others in the finance world do not?  What is the truth, or is this at all legal?  Hopefully are Renaissance Man, Mayor Loveridge can answer that question for the community of how it relates to the rebirth and future of our Fare City of Riverside, California.   TMC  investigates and  will be waiting, in the interim, keep tuned-in for Updates. Please give your comments!