Proposed City Refinancing will Nearly Double City Debt for Tax Payers

You ask, "WHAT ARE YOU TALKING ABOUT?!!"  Yes, it's true!  City Officials probably don't even realize it themselves since they seemed oblivious when asked detailed questions regarding the amortization schedule of this new proposed municipal bond/loan.  Read on for more details.  We did the math.

Polk City is ready to spend approximately $800,000 of tax payer money for a piece of property that according to the Polk County Property Appraiser's office is worth approximately $70,000!  Here is a link to the details at the Property Appraiser's web site: Cardinal Hill Property - Parcel ID 252630000000021030  During the public comment at the end of the 2/23/11 city meeting, Laura Lambert asked the council and city attorney the question of how much the property is appraised at and how many acres the property consists of that the city is willing to pay over $800,000 for.  Laura was initially answered with dead silence and then Acting City Manager/Vice Mayor Trudy Block responded with something like, "I do not feel it would be wise to talk about this at this time since the city is still in negotiations with the property owner."  This was a simple question of fact and the city officials and attorney refused to answer the question.  This is public record and the city has already spent tax payer money to get an appraisal on the property in 2010, so they have this information.  Any time a land purchase is being considered these are questions anyone would want to know and would be entitled to know.  Ms. Block has been assuring the public that the price the city will pay will be under a million dollars for a piece of property that is only 38.9337 acres and valued at $70,000 on the Polk County Tax Record!!!  How is that wise use of taxpayer money?  Do they really think the public would have no way to find out this information??  No wonder Ms. Block was silent and the color drained from her face when pressured to answer the question.  The tension in the room was so thick that Attorney Tom Cloud felt the need to break the dead silence and started his "you may have a differing opinion argument" that he loves so much when he doesn't want to answer a direct question because he knows he's been cornered.

The "house keeping" plan to "refinance" some of the city's current debt and add several more millions is just further proof that the city officials have no common sense when it comes to business and fiscal responsibility.  City Officials are suggesting that this new loan for approximately $8.3 - $8.9M, financed over 30 years, plus the roughly $6M in interest is a "good deal" which could possibly reduce the city's monthly payments compared to what the city is currently paying for the $1 M loan to the county plus the $4 M loan to SunTrust.  Officials and Mr. Hartman from GAI would not disclose what interest rate they were making these assumptions at.  Simple math on an amortization calculator shows that they are figuring somewhere in the neighborhood of $8.3M at 4% for 30 years or $8.5M at 4% for 30 years, coming out to roughly $6M in interest.  Considering all the fees for this deal will be tacked on the bond/loan at the end, lets go with the $8.5 number to be conservative.

At no time at last night's meeting would anyone provide a straight answer of exactly how much NEW debt is being incurred.  Well lets do the math:

If we add this $8.5 M, plus the $6M in interest, plus the other debt that is not being refinanced that the city is conveniently not speaking about (see the 2009 Audit on P.C.'s web page, page 36 of the PDF file Polk City 2009 FY Audit to see the list of other long term debt obligations) we are estimating that the total debt the city would then hold would be approximately $19 Million Dollars!!  Congratulations Polk City Officials! You will have successfully nearly doubled the total city debt in one fail swoop!  With a population of only approximately 1,685 people, $19 M in city debt works out to be around $11,275 in debt for each man, woman and child living inside city limits.  How can this be considered fiscal responsibility by any stretch of the imagination?

$8.5 Million - New suggested "refinancing" bond
$6 Million - Interest on this "refinancing" bond
$1.676 Million - Existing Series 2007 Capital Improvement Revenue Bond
$2.728 Million - Existing Installment Note to Florida DEP
$63,282 - Existing Installment Note to Old National Leasing
$19 Million Total City Debt (roughly)

City Council Members, why don't you get your heads out of the sand and stop putting your blind faith in these high dollar experts who you have essentially allowed to make all major financial decisions for the city since you hired them!  Can't you see that they are all long term buddies padding each others pockets at the city's expense?  Now you have also agreed to pay Mr. Gerald Hartman, from GAI, engineering consulting fees on an as-needed basis, and the hourly fee schedule is only found in the little packets provided to council?  His fees must be pretty steep since after repeated questioning, not once did anyone directly state how much Mr. Hartman would be charging for his services.  Great example of transparent government at it's best!  NOT!!

Question of the day:  Would Mr. Cloud, Mr. Hartman, Mayor LaCascia, Vice Mayor Block, and Council Members Adorno and Blevin dare to invest their personal money or suggest their family members to invest their retirement funds in these junk bonds?  We highly doubt it!  How can they expect any financial institution in this economy to make such a financial commitment?  They would be insane!!

Here is a link to the Ledger article Mr. Keven Bouffard wrote about the meeting last night. Polk City Council Moves On Debt, Utilities  Page two of this article states, "The biggest items on the list for bond money, according to Hartman's proposal, are $3.8 million to refinance a $4 million loan in 2005 from SunTrust; $1.4 million for 10 additional water and wastewater capital improvements, including $565,000 on improvements to the Cardinal Hill sewage treatment plant; $897,412 million to pay off a $1 million loan to Polk County as part of the transfer of the Mount Olive water and sewer utilities; and $531,199 to pay the county impact fees the city withheld for several years through 2009."  Is this a Freudian slip?  The city officials have gotten so used to dealing with Millions of dollars, as if they were Thousands of dollars, even the reporters can't keep their numbers straight.  Sad state of affairs!

There is a lot more information that was covered during this meeting.  We will update the blog with new articles in the near future with more of this detailed information or this post would be way too long.  Thank you for your continued readership!