Buying Time

Still think GY’s not in serious financial difficulty?

This week GY council passed an ordinance  PIC refi ord 2011 10  allowing GY Finance Department (GYFinD) to put in place a refinance scheme to lower GY’s debt service, specifically for the stadium.  GY Finance appears to be interested in refinancing in excess of $27 million in future debt service for the stadium.  That’s nearly 10% of GY’s total debt of about $300 million for only an “up to” $1 million in savings over many, many years.

According to GYFinD, at current rates they will save the city as much as $1 million in debt service costs starting right now as a result of this action. That means that they can spend that money right now.  Basically what they plan to do is borrow money in order to buy back their own debt and try to re-issue it at lower rates.

But it gets better.

In the meeting Oct 17 where finance presented this scheme to GYCC, they told council that these financial shenanigans would not extend the payment length of any of the new debt to achieve the savings.  GYFinD’s power point presentation 2010 10 Lange ppt  shows on page 16 that the bonds in question extend until 2032. That’s about 20 years out.

But that’s not what the ordinance says that GYCC passed last night (ord link above).  The ordinance says GYFinD may issue new bonds for “a maturity not to exceed 30 years”.

More to come.


6 Responses

  1. And we are to believe them when they say they knew nothing about the ADC / GEO Corp. private prison corp. hearings for 5,000 additional prison beds? Turning people into commodities for their personal gain — not for the good of the people and the luxury communities they misrepresented to the buyers. A class action lawsuit is in order if the prison beds get put in Goodyear and the state of Arizona. They are part of the 1% the 99% is protesting about! They epitomize abuse of power. Hope to sell our home and get the hell out of Arizona police and prison state.

  2. Goodyear has been in the spend the money before we have it mode for many many years… Larry’s “financing” goes like this…
    Let’s spend as much money as we can. When we need to start paying the debt – that’s when we’ll sell the bonds. This is how they handled the “boom” years and this is what got them into trouble in the first place. The replaced money spent with bond money. The bonds were sold AFTER the money had been spent. I believe that in 2009 (during the fall), just before the fiscal year ended, Larry wasn’t able to sell all the bonds he put up to replace the funds they had already spent. i have the paperwork on a CD that I requested in a public records request back then, if you’re interested. How do you think the “road to no where” in Estrella got finished, or the improvements to the roads surrounding the ballpark that were REQUIRED to be improved got finished. Bullard was OVERSPENT BY MILLIONS to get it completed before the park opened.

  3. […] GY Council Debates $30k Savings Differential 7 Years in the Future. (But why won’t they just call Gilbert?) Posted on October 26, 2011 by Howard's Goodyear In their October 17 working session, GY council heard two proposals about reducing debt service at the ballpark by re-issuing debt from GY Finance Dept.  They can do one or the other. GY Finance wanted council to tell them which one council preferred so that GY council could vote on the measure at the next council meeting (which they did and it passed see […]

  4. The refinancing of the bonds for the ballpark are strictly for the construction of the ballpark. The bonds are paid via the secondary property tax. Sure, these revenues have declined, but that is because Maricopa County assessments lag two years. Will revenues increase several years from now? Probably and the refinancing will even the payback to more favorable terms. Again, this is strictly to pay for the infrastructure in and around the ballpark. It doesn’t not include the operating expenses of the ballpark. That is different concern.

    As for the comment on the Cotton Lane Bridge, I think it might be a bit misguided. The funds were in place before construction. How do I know this? It was a joint project between MCDOT and the City of Goodyear and it is listed in the FY2008-FY2012 Transportation Improvement Program. Goodyear contributed approximately $63 million and MCDOT contributed approximately $38 million. MCDOT managed the project through design and construction. The private portion of this project, between the Cotton Lane Bridge and just north of the Estrella/Cotton Lane roundabout probably did require some last minute funding. Why? Through a development agreement, what is left of King Ranch was responsible for a significant portion of this section. I believe somewhere in the range of $10-$20 million. Obviously, the City doesn’t have that kind of cash laying around, so I’m sure finance did have to scramble to find funding to complete the roadway. Was this intentional mismanagement? Very doubtful. Goodyear will recover this money, but not until the former King Ranch property develops.

    Projects can and do run over budget. To say it was millions of dollars over? Keep in mind items get added and subtracted from projects. Only way to know is to review the bid award and the change orders throughout the project.

    • Edward

      But take note, they continue to pull from the secondary tax burden to pay the primary GF subsidy. They will tell you it has been and will always be $1.60, but review CM last two budget cycles. Instead of leaving the 2nd tax alone they moved it to the primary with over 41% increase in the primary tax in the last two years. They say it is because of lower assessed property values, BS, it will not change when the assessments increase. Council is too blind to see it or unwilling to see it. Stop touching the 2nd voter approved bond debt tax, return it to where it was, and pay down the debt and still stay at $1.60 and manage the available revenues you have just like everyone else in the city.

  5. […] discussed at the Oct 17 meeting but I’m still trying to get it. However, in a recent post, I have documented that while in the work session council was told that no debt would be extended as […]

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