Coral Gables’ Renaissance Debt Is Not Free

May 10, 2011 Leave a comment

Both the city manager and the city commissioner have bought into the silly idea that the new “Renaissance Debt” is free.   The taxpayers will surely pay for the new debt because that $2 million will have to be paid for by someone,  the money has to come from somewhere and the money could be used for other purposes, including reduce taxes.  Taxpayers will be losing a tax cut with by this debt.

Property tax appraisals are surely going down so it is likely that we will get another Kerdyk Tax (the rollback rate that keeps the property tax revenues the same–the millage rate that Mr. Kerdyk loves to approve).

In other words property tax revenues will probably have to be maintained, the Biltmore lease problem solved (unlikely), or salaries and benefits reduced (also not likely).

Taxpayers will be paying nearly $2 million for twenty years for the debt.

Why not use the “free”  $2 million to cut taxes?

Filed under Coral Gables

Cost of Coral Gables’ “Renaissance Debt” Near $2 Million Yearly

May 4, 2011 Leave a comment

A Simple Calculation.

Taking $22.5 million as the base, the cost of financing that over 20 years is said to be $35m.  That is about right at about 4 to 5 percent interest.

That is a cost of $145,000/month or $1,740,000 per year.

Also, the cost of maintenance of the new works should be added to the capital cost.

Give or take, the city will be spending $2,000,000 for the 17 capital projects.

No small sum and so quickly agreed to by the commission without much serious consultation with the taxpayers.

Are there any other better uses for all or part of this money?  Isn’t that the question?

Filed under Coral Gables, Finance

Why Coral Gables’ Refinancing and Capital Spending Decision Is Not Urgent–What Happened To Community Participation and Consultation?

May 2, 2011 1 Comment

The city manager of Coral Gables had a few cards up his sleeve, so to say, at the last meeting and he sold the commission on three bad ideas.

First, he said that it is urgent to refinance the city’s debt.  I take it that this is because he believes that interest rates will soon rise.  I guess he believes in that there is inflation at our doorsteps.

The economic facts don’t justify that view in the slightest.  Our economy is growing slower than thought, the Chinese are dampending their growth, Japan is stagnant and Europe, except for Germany, Europe is weak.  Inflation is a recent blip in energy and some materials caused pay political uncertainty in the Middle East.  The Fed has announced that it will continue with its low interest rate policy. There is at least one banker on the commission–he should have known better.

Conclusion:  It is not urgent to refinance without first thinking a bit more about the use of the monies and consulting with the citizenry.

Second, he sold the commission on the idea that the $22 million from the refinancing is free–but it will cost about $35 million.  He says we won’t spend more on debt financing than we are paying now.  That is wrong.  By refinancing existing debt we should spend less, not more.

Conclusion:  Refinancing of existing debt would reduce the amount we pay on the current debt and free up money for other purposes.

Third, the city manager has sold the commission on the idea that he has come up with a good list of capital projects.  But the city manager admitted that he had concocted this list pretty much on his own without community participation, and the new mayor and commissioner apparently did a sort of “shoe leather” test of what we need.  Shouldn’t a new, large spending program be consulted with the taxpayers.

Conclusion: What happened to open government, invited and active consultation and participation–on these terms, the new mayor’s and the commissioners’ campaign promises stand out as pure fiction.

Filed under Budget, Community, Coral Gables, Finance, Government

Namon on Coral Gables’ $35 Million Increase in Spending

May 1, 2011 Leave a comment

I reproduce the comments by Mr. Richard Namon on the first meeting of the Cason Commission.

On Tuesday April 26, Coral Gables had its first official Commission Meeting.  It’s clear who was in charge of the City Commission – City Manager Salerno.  He was decisive and dominating.  By restructuring the City’s current debts and increasing the years of debt obligation, the City Manager said he would raise about $22,155,000 of “new” money.

That money will be used for his vision of a Neighborhood Renaissance.  Using a tactic commonly used by conmen he urged: If you don’t act now, you will lose this once in a lifetime opportunity.   He pushed his vision for the City’s most important needs through the Commission.  The only other participant on the dais wearing pants was Commissioner Ralph Cabrera who voted NO on the proposal.  Ralph felt a Vision for The City Beautiful should come from resident meetings that would guide the Commission – not from the City Manager.  No one else dissented.  The City Manager keep pushing saying this was only an approval to go forward, not a final approval.

In his presentation Salerno droned away, making his $28 million Vision sound boring.  I wondered how much we would save in taxes if he only refinanced the existing debt.  No one on the dais asked.  After the meeting I asked Don Nelson, the head of the Finance Dept. how much this $22 million of found money would cost the taxpayers when it was paid off?  He estimated $35 million!

Our new Commission, at its first public meeting, has agreed in principal with the City Manager’s vision that costs $35 million over the next 20 years.  During the pre election campaigns, the main talking points were fiscal conservatism and dealing with City debt.  As a start this is not only ominous, it is disappointing.

Richard Namon, Sr.

via Home Page.

Filed under Budget, Coral Gables, Finance

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