Thanks to the help of some good friends I have managed to get my hands on the Staff Report for Water Rate Increase 2017. Which is somewhat different from Water Rate Increase 2011, or Water Rate Increase 2014, though the spirit remains the same. While it actually is possible to access this report on the City of Sierra Madre website, it does take a little doing. I'm sure they'll get all of that fixed today. I can't imagine there is any other explanation for making access to this report so difficult other than simple human error. And isn't that why they put erasers on pencils?
Here is how the report kicks off.
As most readers here are aware, Raftelis Financial Consultants is the company the 2014 City Council hired to help them push through the previous water rate increases. And while the 2014 hike was marketed as a kind of final resolution of the city's water revenue woes, and for years to come, that turned out not to be correct. The result being Raftelis will get another shot at getting this right, and it will only cost residents of Sierra Madre $74,025 for the kindness.
There is a reason for this, of course. There usually is. City Hall is never wrong, though they do seem to have more than their share of bad luck. This is how the rationale for Raftellis II is being rolled out.
While I am sure there is some truth to all that, is it really the entire truth? After all, the pipes were leaking in 2014, too. And didn't the drought in question actually begin in 2012? Here is a link to an article that explains that controversial drought dating issue.
What happened is the City of Sierra Madre, and for whatever the reason (I like the "Failed DSP Theory" myself), rustled itself up around $6 million dollars from water bond sales back in 2003-2004 so they could build some big water tanks and other related stuff. There was also a matching Federal grant of some sort, which I guess was nice and all. But the temptation of all that free money did cause these golden oldie Mayors to make one quite colossal financial mistake. The consequences of which are about to fall upon the water ratepayers of 2017.
In short, these daft duffers decided it was really good fiscal policy to make only interest payments on their water bonds. Not one single dollar has ever been spent to pay down the principle. Think of this as only making the minimum payments on your credit card debt, and for the next decade and a half. Eventually you will end up having to pay a lot more money than was actually necessary.
Here is a breakdown of how this is all working out for you. The following was put together at the behest of then Mayor MaryAnn MacGillivray. No Mayor since has even dared to mention this. So I guess it is a kind of secret. Certainly Raftelis has never brought it up. They know where their bread gets buttered.
As you can see, by paying only the debt service on this 2003 water bond the cost of all that interest now exceeds the actual value of the bond itself. And by well over a million dollars.
Another other thing that should jump out at you is that the payments on the bond principle start in 2020. Which not coincidentally would fall within the next series of water rate increases. The ones that this City Council will start working on tomorrow night at 7PM in council chambers.
You get all of this, right?
Hopefully this City Council will find it within themselves to fess up. Even if it does upset good old Bart Doyle.