Pension Bond Stuff
Local media recently reported on the City of Eureka borrowing money via pension bonds to fund city employee's pension funds. This Associated Press article published in the Fresno Bee takes a look at how that works. It seems a lot of cities are doing it and there is a risk involved.
The City Journal's Steve Greenhut takes a look at the City of Stockton trying to stiff pension bond holders as part of their bankruptcy filing.
posted by Fred Mangels @ 7:36 AM
10 comments
10 Comments:
There are always risks in investing. Pity the investor who thinks he can snatch up absurd bonds and not risk losing his money.
pension bonds = ponzi bonds
this is a ponzi scheme with a twist the taxpayers are the final unwilling investors.
for all you folks worried about washington dc you better worry about right here where you pay property taxes because they are going to go up
How do voters continue to put faith and trust into public employees and elected officials who are thugs, bullies, cheats and criminals.
Can't wait until the next civil unrest comes into fruition, got a handful of local government employees to seek out and punish. Local government employees ought to worry because to thieve is to injure, to injure is to be "retaliated against", and enough local and state loser government employees deserve their future pains and sufferings for their treasons. America sucks more every day when "do bad" government types cause division and unrest! HOJ has his "hit list" of those who need to drive off the side of the road dead. Good riddens to social treasonists....screw 'em! There ain't no such thing as "public civil service" when the public service provider is screwing people over...more like "civil dis-service".
Retirement is gonna be a blast! - HOJ
SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF HUMBOLDT CASE NO. DR120811 AMENDED SUMMONS (CITATION JUDICIAL) CITY OF EUREKA Plaintiff, V. ALL PERSONS INTERESTED IN THE MATTER of the Issuance and Sale of Bonds for the Purpose of Refunding Certain Obligations that the City of Eureka Owes to the California Public Employees Retirement System Arising Under Section 20000 et seq. of the California Government Code, and of the Certain Proceedings Leading Thereto, Including the Adoption of a Resolution that Authorizes the Issuance of Taxable Pension Obligation Funding Bonds and the Execution and Delivery of an Indenture Relating to the Issuance of Such Bonds, Defendants. NOTICE! YOU HAVE BEEN SUED. THE COURT MAY DECIDE AGAINST YOU WITHOUT YOUR BEING HEARD UNLESS YOU RESPOND NOT LATER THAN JANUARY 3, 2013, WHICH IS TEN (10) DAYS OR MORE AFTER COMPLETION OF THE PUBLICATION OF THIS SUMMONS. READ THE INFORMATION BELOW. AVISO! USTED HA SIDO DEMANDADO. EL TRIBUNAL PUEDE DECIDIR CONTRA USTED SIN AUDIENCIA A MENOS QUE USTED RESPONDA NO MAS TARDE QUE EL DIA 03 DE ENERO DE 2013, QUE ES DIEZ (10) DIAS O MAS DESPUES DE TERMINACION DE PUBLICACION DE ESTA CITACION JUDICIAL. LEA LA INFORMACION QUE SIGUE.
TO ALL PERSONS INTERESTED IN THE MATTER OF THE ISSUANCE AND SALE OF BONDS FOR THE PURPOSE OF REFUNDING BONDS THAT FUNDED OR REFUNDED CERTAIN OBLIGATIONS THAT THE CITY OF EUREKA OWES TO THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM ARISING UNDER SECTION 20000 ET SEQ. OF THE CALIFORNIA GOVERNMENT CODE, AND CERTAIN PROCEEDINGS LEADING THERETO, INCLUDING THE ADOPTION OF A RESOLUTION THAT AUTHORIZES THE ISSUANCE OF TAXABLE PENSION OBLIGATION FUNDING BONDS AND THE EXECUTION AND DELIVERY OF AN INDENTURE RELATING TO THE ISSUANCE OF SUCH BONDS: Plaintiff has filed a civil complaint against you. You may contest the validity of the above matter by appearing and filing with the Court a written responsive pleading to the complaint not later January 3, 2013, which is ten (10) days or more after the completion of the publication of this summons. Your pleading must be in the form required by the California Rules of Court. Your original pleading must be filed in this Court with proper filing fees and proof that a copy thereof was served on Plaintiff's attorney. Unless you so respond, your default will be entered upon Plaintiff's application, and the Plaintiff may apply to the Court for the relief demanded in the complaint. Persons who contest the validity of the matter described below and in the complaint will not be subject to punitive action, such as wage garnishment or seizure of their real or personal property.
DETAILED SUMMARY OF THE MATTER THAT PLAINTIFF SEEKS TO VALIDATE: The City has contracted with the California Public Employees Retirement System ("System") pursuant to the Public Employees' Retirement Law commencing with Section 20000 of the Government Code of the State of California, as amended (the "PERS Law") to provide its employees with pension benefits. The City participates in separate risk pools within the System for the City's fire and police retirees, pursuant to which the System has established "side funds" ("PERS Side Fund Obligations") which are obligations to be funded by the City pursuant to a contract between the City and the System dated April 1, 1970, as amended thereafter from time to time (the "PERS Contract"). The PERS Law obligates the City, among other things, to: (a) make annual contributions to the System to fund the value of pension and other retirement benefits for City employees (the "Normal Contribution"); (b) amortize the unfunded accrued actuarial liability of the City under the PERS Law, which is the liability that the System's actuary has determined to have accured under the PERS Law, but which the City has not yet paid to the System (the "Unfunded Liability"); and (c) appropriate funds for the purpose of making such contributions and meeting the City's obligation to the System under the PERS Law. The obligation of the City to make contributions to the System pursuant to the PERS Law represents an obligation imposed by law and, as such, the City is required to satisfy such obligation from any money available in the City's treasury. The City's obligation to make payments to fund such retirement benefits is exempt from the debt limitation of Article XVI, Section 18 of the California Constitution. On November 6, 2012, after public notice, the City council of the City of Eureka (the "Council") adopted the Resolution No. 2012 (the "Resolution"). The Resolution authorized the issuance of pension obligation bonds in one or more series (the "Series 2013 Bonds") and the issuance of future additional pension obligation bonds in one or more series (the "Additional Bonds"). As authorized and approved in the Resolution, the City will issue the Series 2013 Bonds (in an aggregate principal amount not to exceed $8,250,000, an interest rate not to exceed 6% per annum and a maturity date not later than 30 years from the date of issuance). Pursuant to the Resolution, Additional Bonds shall be issued pursuant to a Supplemental Indenture subject to limitations contained in the Indenture and Resolution. Pursuant to the City's obligation to the System under the PERS Law, the City must pay the System interest on its Unfunded Liability at an interest rate established from time to time by the System in consultation with the System's actuary. As of June 30, 2012, based upon the actuarial report issued by the System, the PERS Side Fund obligation of the City is approximately $7,782,683.
The City desires to issue Series 2013 Bonds in an aggregate principal amount equal to the sum of (a) the principal amount not to exceed the total combined amount of the PERS Side Fund obligations, (b) the costs of issuance of the Series 2013 Bonds (including underwriters' discount), and (c) the original discount (if any) on the Series 2013 Bonds, for the purpose of refunding the PERS Contract and thereby providing funds for the System to invest. In addition, the City desires to authorize the issuance of the Additional Bonds for the purpose of refunding any additional obligations under the PERS Contract in the future from time to time. The City has filed this validation action to obtain a judicial declaration of the validity of the matters alleged in the City's Complaint and described herein. In this action, the City seeks a declaration from the Court that, among other things, all proceedings by and for the City in connection with the Resolution, the Series 2013 Bonds, any future Additional Bonds, and the other related agreements, all as described in the Complaint and as authorized by the City pursuant to the Resolution, were, are and will be valid, legal, binding and enforceable in accordance with their terms, and that the Series 2013 Bonds, any future Additional Bonds, and the other agreements authorized in connection therewith, are obligations imposed by law and are valid, legal and binding obligations of the City under the Constitution and laws of the State of California.
YOU MAY SEEK THE ADVICE OF AN ATTORNEY IN ANY MATTER CONNECTED WITH THE COMPLAINT OR THIS SUMMONS. SUCH ATTORNEY SHOULD BE CONSULTED PROMPTLY SO THAT YOUR PLEADING MAY BE FILED OR ENTERED WITHIN THE TIME REQUIRED BY THIS SUMMONS. SI USTED DESEA SOLICITAR EL CONSEJO DE UN ABOGADO EN ESTE ASUNTO, DEBERIA HACERLO INMEDIATAMENTE. TAL ABOGADO DEBERIA SER CONSULTADO PRONTO PARA QUE SU REPUESTA ESCRITA PUEDA SER REGISTRADA DENTRO DEL TIEMPO REQUERIDO POR ESTA CITACION JUDICIAL. The name and address of the Court is (El nombre y direccion del Tribunal es): Superior Court of the State of California County of Humboldt 825 Fifth Street, #231 Eureka, California 95501 The name, address, and telephone number of Plaintiff's attorneys are (el nombre, la direccion y el numero de telefono del abogado del demandate, o del demandante que no toene abogado, es): Cyndy Day-Wilson City Attorney City of Eureka 531 K Street Eureka, CA 95501 (707)441-4147 Cynthia J. Larsen Cameron L. Desmond Orrick, Herrington & Sutcliffe LLP 400 Capitol Mall, Suite 3000 Sacramento, California 95814 (916)447-9200 Date: November 28, 2012 Clerk, by Cecile Nesslage, Deputy 11/30,12/7,14
"Henchman Of Justice" says,
Anyone else wonder that the reason the federal government kicked the fiscal cliff fiasco down the road a bit further?
One possible answer = So that government frauds could get the pension messes in various states sorted out to the benefit of the public employee BEFORE SERVICES GET CUT. Imagine how much less money can go around when "cuts in spending" and cuts in tax collections occur! Once again, government cares about its weight in gold while pooping and peeing on the private sector.
Who poops and pees along with a bank?
Answer = Government who shoulders-up all buddy, buddy with the financial sector
Why?
To increase societal costs that allow for higher tax collections based on super-inflated over-valuations.
Just think of all the current and former local elected officials who either flat-out were liars 24/7 or can be best characterized as dumb, naive, stupid, pandering idiots, etc.... - HOJ
How much debt does the City of Eureka have? How much of that is pension debt? How much of it is debt attributable to pension obligation bonds? What about non-pension debts? What are the payments on all these debts? What is the plan to sustain payments on these debts for the next year? 5 years? 15 years?
I dare anyone to ask these questions - AND get answers. Not just of Eureka, but Arcata, Fortuna, and the county. This entire place is dying a slow financial death because the local politicians are making commitments left and right and we the taxpayers will be left holding the bill.
I've wondered the same things and have hinted at those same question myself in the past here.
I'm especially curious whether pension obligations might have eaten up enough of the budget that the powers- that- be put that latest local sales tax increase on the ballot?
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