[mattduke]

Los Angeles' bond rating downgraded

Just when Los Angeles officials thought they had turned a corner in improving the city's recession-riddled financial standing, a major Wall Street rating agency Tuesday downgraded its bonds.

Analysts at Moody's Investor Service Inc. said their one-notch downgrade reflects the city's modest revenue forecast and mounting employee costs. The Aa3 rating, which is on par with assessments recently given by other rating firms, means taxpayers may have to pay higher interest for about $500 million in bonds that city officials are planning to sell later this month.

But within Moody's report was a kernel of good news: The agency raised its rating of the city's future financial outlook from negative to stable on expectations that officials will "capably manage" the fiscal challenges.

http://www.latimes.com/news/local/la-me ... 1991.story

[mattduke]

The small city of Central Falls, R.I., appears to be headed for a rare municipal bankruptcy filing, and state officials are rushing to keep its woes from overwhelming the struggling state.

Gretchen Ertl for The New York Times
Just over one square mile, Central Falls has a tightly packed population.
The impoverished city, operating under a receiver for a year, has promised $80 million worth of retirement benefits to 214 police officers and firefighters, far more than it can afford. Those workers’ pension fund will probably run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to exhaust its pension fund, after Prichard, Ala.

“Time is running out,” warns Robert G. Flanders, the state-appointed receiver, who recently closed the public library and a community center to save money. He has no power to cancel the city’s contracts with workers, so instead he has begun approaching retired police officers and firefighters with what he describes as “the Big Ask”: will they voluntarily accept smaller benefits in the name of saving Central Falls?

http://www.nytimes.com/2011/07/12/busin ... ss&emc=rss

[mad_marten]

The small city of Central Falls, R.I., appears to be headed for a rare municipal bankruptcy filing, and state officials are rushing to keep its woes from overwhelming the struggling state.

Gretchen Ertl for The New York Times
Just over one square mile, Central Falls has a tightly packed population.
The impoverished city, operating under a receiver for a year, has promised $80 million worth of retirement benefits to 214 police officers and firefighters, far more than it can afford. Those workers’ pension fund will probably run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to exhaust its pension fund, after Prichard, Ala.

“Time is running out,” warns Robert G. Flanders, the state-appointed receiver, who recently closed the public library and a community center to save money. He has no power to cancel the city’s contracts with workers, so instead he has begun approaching retired police officers and firefighters with what he describes as “the Big Ask”: will they voluntarily accept smaller benefits in the name of saving Central Falls?

http://www.nytimes.com/2011/07/12/busin ... ss&emc=rss

How do you get 214 ex officers/firefighters in what a 30-40 yr period for a town less than one square mile. That's like 5 new ones every single year. Unbelievable

I always ask myself who made these deals and how can I get in one?

[mattduke]

US municipal bonds may tip cities into bankruptcy
• Jefferson County, Alabama, poised to default on loans
• Downgrade threat to Maryland, New Mexico, South Carolina, Tennessee and Virginia

http://www.guardian.co.uk/business/2011 ... nomy-bonds

[mattduke]

The state-appointed receiver overseeing Rhode Island's cash-strapped Central Falls on Monday filed for bankruptcy on the city's behalf in an effort to solve its fiscal crisis.

Receiver Robert G. Flanders described the step as one of last resort after city taxes had been raised and services cut "to the bone," and after municipal retirees and current workers failed to agree on deep - but voluntary - cuts to their pensions and benefits.

"From the ashes of bankruptcy Central Falls will rise again," Flanders said at a news conference at City Hall.

Another city bankruptcy: the outer rain bands seem like a normal summer shower.
http://www2.turnto10.com/news/2011/aug/ ... ar-648187/

[mattduke]

The $2.9 trillion municipal bond market is preparing for “hundreds and hundreds” of downgrades after Standard & Poor’s lowered the U.S. one level to AA+, the first-ever reduction for the country.

“There will be hundreds and hundreds of municipal downgrades, which will not do well to bolster investor confidence,” Matt Fabian, a managing director of Concord, Massachusetts-based Municipal Market Advisors, said in a telephone interview. “Treasuries may be able to shake off a real impact from the downgrade. Munis I’m less sure about.”

http://www.bloomberg.com/news/2011-08-0 ... redit.html

[mattduke]

- American state and city governments already struggling to balance their books now must brace for the prospect of increased borrowing costs as Standard & Poor's plans to reevaluate their credit ratings.

Fresh off its unprecedented downgrade of the federal government's creditworthiness, the rating agency said that it will evaluate local governments -- many of which are still struggling to recover from the Great Recession -- after federal lawmakers announce specific spending cuts later this year. Lower ratings could make it more expensive for governments to borrow money in a market where investors use these grades to judge credit quality. With many localities already in the process of enacting difficult budget cuts, downgrades could heap strain on American communities.

"A downgrade means it puts the governor, the legislature and every elected local official in a tough position. Do you raise property taxes? Do you raise water and sewer rates?" said Frank Shafroth, director of the Center for State and Local Government Leadership at George Mason University. "Do you invest in the future, or do you stultify? It's not a good choice."

"It will translate into a significant rate increase and a significant tax increase," he added, "on hundreds of thousands of Americans."

http://www.huffingtonpost.com/2011/08/0 ... 22620.html

[Keith_McClary]

How do you get 214 ex officers/firefighters in what a 30-40 yr period for a town less than one square mile. That's like 5 new ones every single year. Unbelievable

I always ask myself who made these deals and how can I get in one?

Population 19,000 according to mattduke's other link:
http://www2.turnto10.com/news/2011/aug/ ... ar-648187/

[Keith_McClary]

Housing market slump leads Canadian marijuana growers to go south

An RCMP report reveals many organized crime groups involved in marijuana grow ops are moving from Canada to the United States to take advantage of lower property prices and the easing of U.S. marijuana laws.
...
A 2009 report prepared for the Canadian Standing Senate Committee on Legal and Constitutional Affairs estimates that the marijuana trade in British Columbia alone is $6 billion a year.

Grow ops are very careful to pay their property taxes.

[mattduke]

S&P: Get Ready For A Wave Of Muni Downgrades After The Final U.S. Budget Deal

http://www.businessinsider.com/standard ... eal-2011-8

[mattduke]

Moderators: can we please rename this thread back to "The Muni Crash Thread" please? Thank you.

[careinke]

S&P: Get Ready For A Wave Of Muni Downgrades After The Final U.S. Budget Deal

http://www.businessinsider.com/standard ... eal-2011-8

After saying earlier this month that most top-rated states and local governments would keep their AAA ratings, S&P said yesterday that more downgrades could come after the U.S. budget is finalized.

Read more: http://www.businessinsider.com/standard ... z1Vhq73ZeC

So no worries, the US has not finalized a budget in the last three years.

[Daniel_Plainview]

Jefferson County files for the Largest Muni Bankruptcy Ever

Jefferson County, Alabama, commissioners voted 4-1 to file the largest U.S. municipal bankruptcy after reaching an impasse over concessions with holders of $3.14 billion of bonds. JPMorgan Chase & Co. (JPM), which arranged most of the debt to fund a sewer renovation, will likely take the biggest loss. ...

...The vote by officials in Alabama’s most populous county occurred about a month after Pennsylvania’s capital of Harrisburg sought court protection citing millions in overdue bond payments tied to a trash-to-energy incinerator. A Jefferson filing would eclipse that of California’s Orange County in 1994. The action might reignite concerns among investors over defaults in the $2.9 trillion U.S. municipal bond market.

“It’s going to create attention-grabbing headlines, and the question is how retail investors react,” Peter Hayes, a managing director at BlackRock Inc., the world’s largest asset manager and the owner of $95.6 billion of municipal bonds, said before today’s decision. ...

[babystrangeloop]

Oh dear, no one has figured out what to do about the capital of the state of Pennsylvania minor situation incident concerning how they defaulted on Muni bond payments.

Harrisburg Receiver Ponders Sales, Tax Boost in Fiscal Plan
By Romy Varghese and Steven Church / Bloomberg / February 6, 2012

Harrisburg started skipping bond payments in 2009 and owes $310 million, including penalties, to surrounding Dauphin County and Hamilton, Bermuda-based insurer Assured Guaranty Ltd. (AGO)

Official: Harrisburg bankruptcy remains possibility if no agreement on plan to fix finances
Associated Press via Washington Post / February 6, 2012

HARRISBURG, Pa. — The state official in charge of figuring out how to fix an enormous financial shortfall in Pennsylvania’s capital city said in a proposed recovery plan released Monday that “significant and difficult” steps lie ahead, and Harrisburg may end up seeking bankruptcy protection.

[babystrangeloop]

[b]Business forum: Why a muni crash didn't materialize
TERRY FETTIG / Star Tribune / February 5, 2012[/url]

Actual payment defaults in the municipal bond market -- where investors don't get principal or interest payments -- totaled only about $2.4 billion

That's all, a mere $2.4 billion of anticipated money not coming true. No crash here.

[babystrangeloop]

Court Rulings Shake Up Muni Markets
Alex Anderson / MoneyShow.com / February 02, 2012

Big news broke in the municipal bond market over the New Year. California’s Supreme Court ruled to abolish Redevelopment Agencies (one of the biggest issuers of California municipal bonds) in order to redirect much needed funds towards the ailing state budget.

... Another instance of courtroom influence recently took place during the fall in Harrisburg, Pennsylvania. Harrisburg is the city that could not pay its $310 million in debt because of major cost overruns to a waste incinerator project. A judge dismissed Harrisburg’s bankruptcy filing, ruling that it was invalid under a state law. ...

... Another widely anticipated court ruling is expected in the bankruptcy of Jefferson County, Alabama sewer system bonds. The city sewer has filed for Chapter 9 bankruptcy protection.

At issue is whether the filing should block the current sewer system ...

How many times do I have to tell you not to do that with filings?

But the part about "abolish Redevelopment Agencies in order to redirect much needed funds towards the ailing state budget." could clog some sewer systems too.

County takes on more than $400 million in debt as Redevelopment Agency folds.
By Sara Rubin / Monterey County Weekly / February 9, 2012

With redevelopment slashed, the county now inherits its unfinished projects – and a debt bigger than the price tag on the now-defunct Regional Desalination Project. The estimated tab on what the former County Redevelopment Agency owed, mostly to developers, engineers and project consultants: more than $426 million. 


What a way to redirect funds toward the ailing state budget.

California Redevelopment Agencies: Shuttering Traps Billions In Local Government Loans
Kendall Taggart / California Watch / February 3, 2012

More than 400 redevelopment agencies were officially shuttered yesterday, leaving a trail of uncertainty - and a potentially staggering debt load.

Across the state, cities and counties have loaned more than $4 billion to their redevelopment agencies over the past few decades, but according to the law governing how agencies will be dissolved, they may not be able to recover that money.

[SeaGypsy]

I find the numbers on this thread amazing. Some towns nobody outside the state has ever heard of have more debt than entire countries in other parts of the world. How did this happen?

[babystrangeloop]

I find the numbers on this thread amazing. Some towns nobody outside the state has ever heard of have more debt than entire countries in other parts of the world. How did this happen?

They had a minor flaw in their business model. But it's just a minor issue and it will soon be fixed. It's not like they are in a predicament or anything.

[sparky]

.
the total liabilities of various state and local agency is estimated around 2 trillions
for memory the federal debt stand at 15 trillions with one trillion added each year
in the grand scheme of things , the munis are a problem but smallish in size
unfortunately it affect a lot of voters and a lot of pension funds

[babystrangeloop]

the munis are a problem but smallish in size unfortunately it affect a lot of voters and a lot of pension funds

Plus it's state money and only the feds can print money to paper it over.