“A decision by Warren Buffett’s Berkshire Hathaway Inc. BRKB +0.28% to end a large wager on the municipal-bond market is deepening questions from some investors about the risks of buying debt issued by cities, states and other public entities.”
“Some investors said the decision to end the bet indicates that one of the world’s savviest investors has doubts about the state of municipal finances“.
Read more of the Wall Street Journal article at the link below:
http://online.wsj.com/article/SB10000872396390443855804577601413630604118.html
So what I find funny in a scary way about all this is Rialto/RUA is looking to take out a $177 Million loan with $27.4 Million in existing debt. I was told that the overall rate is going to be between 7.25% & 7.5%. Yet the bulk ($144 Million) we will be paying 4.33% to 4.83% so the rates average out to be so expensive once we tack on existing debt. Why is that?
First of all because California has borrowed itself into a hole. That’s why governor Brown & a ton of other people have qualified tax measures for the November ballot. They have borrowed us into a massive hole and wont stop spending to save this state.
Second cities, school districts, counties and the state have been using bonds as a dirty band aide for their budget woes. Bonds were seen as good long term investments because municipalities made sure money was there for the bond payments to keep AA & AAA bond ratings or good credit scores. Now they just don’t have the money so they are defaulting on payments or just faulting altogether with Bankruptcy.
I have said time and time again, this deal isn’t good for the RESIDENTS in RIALTO! Yes the infrastructure needs to be upgraded but Rialto and the RESIDENTS are not in the position take on such massive debt while reaching into the pockets of struggling families. Do you know how we are going to pay the interest on this debt; we are borrowing money to pay the first three years. So that means we are borrowing more money than needed to pay interest on debt we cannot afford.
I have heard that this deal is worth $1 Billion to the parties involved. We need to stop this deal in its tracks, hold on and once our economy is back on track look into moving forward. Rialto will be $5 Million in the hole this year. Meaning we are using our reserves for what we can’t get out of our unions in the way of contract negotiations.
The amount of money we are in the hole ($5 Million) is the same amount that staff said was nessicary to bring all the county areas up to city code ($5 Million) since the city and the mangers of the Lytle Creek Development were strong armed by Josie Gonzales and the rest of the Board of Supervisors on the county board. They said if we wanted to annex the county areas in the proposed Lytle Creek Development we must also annex the areas already within our city limits. So when Ed Scott tells you that the water deal isn’t part of the Lytle Creek Development what are we supposed to think with this info. Looks like $5 Million is coming from the borrowed money to fund yet another project.
Warren Buffets recent actions means he dosent trust municipalities ability to re-pay the loans!!!! Said Ric Edelman of Edelman Finacial Services (see the podcast link below, fast forward to the last 7 minutes).
http://www.ricedelman.com/cs/radio_show/past_shows?id=1837
I have been told that this deal is also nessicary for attracting new development. What I find funny is In & Out is good to go for next year and Wal-Mart has won its lawsuits and plans to move forward with plans to re-locate to the empty lot on the corner of San Bernardino and Riverside Avenues (I don’t like this store). So why do we need 30 million dollars? To pay off the back room deals that Ed Scott and Ed Palmer have made with the Lewis builders (Target Developers) and Ron Pharrise the principle owner of the Lytle Creek Development. So once they have wasted the 30 Million dollars then what? Our CURRENT city government is so horrible at attracting real development that the community actually wants.
For example I have heard numerous council members say in reference to In & Out “we need more than another fast food place” or “we have enough burger joints”. We have too many crappy stupid chain fast food burger joints that hire the worst employees, pay the lowest wages and offer horrible customer service. On top of all that they offer a un healthy over processed food option.
In & Out is the best burger option in the State. They offer fresh quality food at a reasonable price. They also are and employer that looks for the best expects the best and pays a very fair wage. They are always clean, polite and productive. The next best option is Bakers but for some reason they are always right smack in the middle of the worst part of the city.
People in Rialto do you want to see this deal drag this city into ruin? How much more money do you want to give these defunct local legislators? Stop the back room deals and call them on this failed deal, also let’s vote for major change in November.
Below is a list of people tied to or working on this Water Deal call and email them and let them know what you think of their deal even if you already called or emailed do it again they have yet to get the message:
All Council Members can be reached at 909-820-2525 begin_of_the_skype_highlighting 909-820-2525 end_of_the_skype_highlighting
Grace Vargas vargasg@rialtoca.gov
Joe Baca Jr
Ed Palmer
Deborah Robertson
Contact Anthony W. Araiza General Manager
855 W. Base Line Road P.O. Box 920 Rialto, CA 92377 Ph: (909) 875-1804 begin_of_the_skype_highlighting (909) 875-1804 end_of_the_skype_highlighting ext. 703 Fx: (909) 875-7284
rialtonow 