STANDARD & POOR DOWNGRADE THE CITY OF RIVESIDE’S SEWER BONDS FROM AA TO A!

Posted: May 13, 2014 in Uncategorized

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CLICK THIS LINK TO VIEW FULL S&P BOND RATING FOR SEWER

According to a August 2013 sewer bond rating by Standard & Poor, the outlook is negative.  One of the concerns S & P had was relationship between declining revenue and rising debt service, which almost tripled to $18.3 million in 2013, from $6.2 million in 2012 and from a mere $817,000.00 in 2010 and 2011.  These increases were directly related to $241 million in bonds issuance in 2009, of which $204 million were Build America Bonds.

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CLICK TO VIEW MOODY’S RATING

In 2011 Moody’s assigned a rating of “Negative Outlook,” as a result of the $241 million in bonds and the debt service associated with it.  Not included in the rating is the concern of debt service of $6 million of the proposed bond issuance of $100 million in 2015!  Therefore, one can visualize the grave concern and if extrapolated according to the current number, one can derive why S & P came to their opinion.

Standard & Poor’s view is that the sewer funds maintenance of strong cash levels is important for credit quality, this is reflected in their single A rating.  Further, the concern is the sewer funds inability to significantly improve margins and DSC ( Debt Service Coverage) from recurring revenue could lead to additional downward movement in the rating.

Another concern S & P argued was the application of large cash reserves to soften (lessen) rate increases.  According to S & P this is an acceptable practice in most cases,  though the degree of subsidization in the City of Riverside, historically (the city’s track record) and as projected (forecasted) for the next few years, in S & P’s viewpoint, appears “aggressive.”

An additional concern is the additional $100 million bond issuance scheduled for 2015 which is expected to increase debt service requirements further to the tune of $6million!

Currently, the City of Riverside is in a court battle with the City of Jurupa Valley a CSD ( Community Service District) which the our City wishes Jurupa, as well as other CSD’s such as Rubidoux, Edgemont and Highgrove to pay a portion of the sewer construction.  The City of Jurupa Valley responded with this press release.

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REGIONAL WATER QUALITY BOARD AFFIRMS RIVERSIDE’S EXISTING WASTEWATER PLANT

TMC was on it when it asked the question back in August of 2012 on the City of Riversides bond ratings.  Already then we were seeing downgrades from our pristine AAA to downgrades to AA & A.  The title of our Posting was “TO MOODY TO FITCH, OR WILL POOR BE THE STANDARD IN THE RATING SYSTEM IN CALIFORNIA MUNICIPALITIES?”

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TMC opinion of which this boils down to is the legacy of former City Manager Brad Hudson.  We are seeing the repercussions of his decisions which unfortunately, will impact the residents of the City of Riverside, the taxpayer, in the course of higher taxes.  Unfortunately, to some, as Mayor Bailey, he was are “Moral Compass.”  If only he knew of his background…maybe he did…

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As the City stated, Hudson got things done, you know now how he did it.  Even former Councilwoman Nancy Hart use to say, bless her ignorant heart,  “I just don’t know where you find the money Brad!”  The taxpayer and their children will pay for it dearly.

Even back in 2009, a PE article recognized the need for massive sewer upgrade in the City of Riverside, and the question even then of sewer fund monies being borrowed leads to the need for a forensic audit by the State Controllers Office.

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RIVERSIDE ONLY NOW RECOGNIZING NEED FOR MASSIVE UPGRADE TO CITY’S SEWER SYSTEM

TMC, RATED RIVERSIDE’S MOST “SLANDEROUS” AND MEZZSPELLED, “MISSPELLED” AND “OPINIONATED” BLOG SITE!  TEMPORARILY BLOCKED BY THE CITY OF RIVERSIDE AT PUBLIC ACCESS SITES WITHIN THE CITY, THEN UNBLOCKED.  I GUESS YOU CANNOT DO THAT ACCORDING TO ACLU.  NOW TAGGED LOCAL BLOGGERS OR LOCAL MEDIA?  RATED ONE TWO ONE STAR OUT OF FIVE IN TERMS OF COMMUNITY APPROVAL RATINGS..  TMC IS NOW EXCLUSIVELY ON FILE WITH ZELLERBACH’S DISTRICT ATTORNEY’S OFFICE, AND PROSSIBLY POSSIBLY ON FILE WITH THE CITY OF RIVERSIDE’S POTENTIAL SLAPP SUIT LIST… WE WILL HAVE TO ASK GREGORY ABOUT THAT ONE ( OUR PEOPLE WILL HAVE TO CONTACT HIS PEOPLE)… AGAIN, THANK-YOU COMMUNITY OF RIVERSIDE AND THE CITY OF RIVERSIDE EMPLOYEE’S FOR YOUR SUPPORT!   COMMENTS ALWAYS WELCOMED, ESPECIALLY SPELL CHECKERS!  EMAIL ANONYMOUSLY WITH YOUR DIRT OR FOR CONTACT!   THIRTYMILESCORRUPTION@HOTMAIL.COM

Comments
  1. Scott Siimpson says:

    Some times what the city does not tell you is most important to the decision to raise the sewer rates.
    1. Hudson changed the financing stategy for sewer capital improvements away from voter approval of municipal bonds or property assessments or special taxes. These would show up on your property tax billing. We are still paying off capital improvement bonds from pre-Hudson era on our property tax bill. Bonds in general are a 30 year repayment obligation. Hudson took away your right to vote No on ever increasing debt which is what is driving these outrageous sewer rate increases.
    2. Remember last night, staff kept saying the sixteen year period of no rate increases was pre-Hudson and bonds were financed differently. The truth is the operation and maintenance of the waste water facillity doesn’t out pace the cost of living. Especiallysince we experienced a recession that left 25% of our homes and businesses empty and thus not Flushing. This is the real reason they kept saying they have less waste water to treat along with less customer revenue.
    3. California courts have ruled that rates fees and charges for sewer sevices supplied to the land are only for the purpose of recovering the annual cost of operation and maintenance. The rates are to be set annually utilizing the accounting records of the prior fiscal year. The courts said, this is the true Variable cost of the sewer service.
    4. California courts also say that Fixed costs and Capital improvement cost and infrastructure replacement costs are not to be included in the sewer rates, fees and charges. They (fixed costs) must be a separate charge on the bill. They have also emphasized that capital costs are only lawfully recovered by voter approved municipal bonds, voter approved property assessments and/or voter approved special taxes. All of which will be collected on your property tax bill. The court specifically prohibited the inclusion of debt service in rates, fees and charges.
    5. The courts also said that all customers pay the same rate for the same service to their property. This includes tax-exempt educational customers and all governmental agencies recieving the service.
    6. The courts have also ruled that You as the indiviual property owner/renter recieving sewer services provided by a municipality can only be charged rates, fees and charges that do not exceed the actual (variable) cost of providing the service to your property. This means the city must individually determine the (variable) cost of the service you impose upon them.
    7. Finally, our courts have ruled that when a municipality enters into a new instrument of debt of any kind, this act automatically creates a new demand for new tax revenue which must be approved by the voters before the debt is entered intol.

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