In the August 24, 2013 edition of the Arizona Republic there is a story entitled Glendale ratings lowered by Russ Wiles and Caitlin McGlade. They report that Moody’s Investors Service downgraded Glendale’s credit ratings from A2 to A3. Even with the downgrade, Glendale’s credit ratings remain in the superior “investment grade” category. It is an omen of Glendale’s future if this council does not act boldly.
Moody’s says, “The downgrade of the GOULT (General Obligation Unlimited Tax) rating primarily reflects unusually weak management practices denoted by ongoing internal and state-controlled investigations of certain financial actions dating back to 2009. The report also cited the “outsized” risk exposure to the Coyotes under a new arena deal that requires the city to pay an annual $15 million management fee to the team’s owners.” Moody’s concerns relate to Glendale’s large debt burden and an overburdened General Fund. It went on to say, “Additionally, the outlook reflects our expectation that Glendale will remain challenged to balance its budget over the medium term due to a high level of fixed costs.” What does it mean and what effect does it have on Glendale?
It means that Glendale’s financial debacle on instituting the Employee Retirement Program (ERP) at a cost of over $6M taken primarily from its Trust Funds, the continuing high fixed costs to the General Fund and its commitment to pay Coyotes ownership $15M a year have been recognized and are of concern to credit rating agencies. The downgrade means that when Glendale has to issue bonds the interest rates will be higher, considerably higher. A simple analogy is that when you wish to buy a house you are pre-qualified. If you have a good credit score your interest rate is low. If you have a poor credit score your interest rate is much higher. Your monthly mortgage payment incorporates that interest rate causing your payment to be within a comfortable or decidedly uncomfortable range. It affects the size of and the quality of the house you can afford to buy.
Glendale ‘s Capital Improvement Program (CIP) will not see new parks, libraries or pools for quite some time because its bond issuances are impacted by the downgraded credit rating. But there are other needs. Bonds are issued to maintain and upgrade Glendale’s basic infrastructure. Moody’s kept the A2 bond rating intact for Glendale’s water and sewer bonds primarily because those services are funded by the users of those services and are not typically impacted by its General Fund. Although Glendale receives Highway User Revenue Funds (HURF) and other shared revenue funds they typically are supplemented by bond issuances for such projects as major road construction. One example is the construction of the Northern Avenue Parkway. Although the state and other cities are sharing in the costs of construction Glendale’s costs are substantial and it issues bonds to cover those costs. There will be impacts, immediate impacts to the issuance of bonds for Glendale’s aging and new but critical infrastructure.
What does Glendale need to do to reverse the downgrading of its bonds? How does Glendale fix it?
SOLUTION ONE: One issue cited by Moody’s is being dealt with now and is the implementation of the recommendations offered in the external audit report. Their adoption will strengthen Glendale’s financial policies, restore integrity to the system and send a signal not only to the bond market but to its citizens that it is serious about reform.
SOLUTION TWO: Another issue cited by Moody’s is the $15M payment to the Coyotes ownership. I can see it now. Members of the Coyotes nation saying here she goes again…blaming the Coyotes. I fully understand the desire to protect from and deflect away any unfavorable information associated with the deal or ownership. Yet it remains the “elephant in the room” that must be acknowledged. It is a decision that Moody’s has used as one of the factors in downgrading Glendale’s bond rating. That’s a fact. There is no immediate fix. Glendale is bound by a 5 year contract and expenses of $75M in management fees over the next five years. It will have to reassess its position after a year’s worth of hockey games to see if the “enhanced revenues” did indeed produce the $9M a year so desperately needed. If the goal is accomplished it provides Glendale some much needed breathing room. If the goal is not achieved Glendale will have to compensate for the revenue loss by making even further adjustments to its General Fund.
SOLUTION THREE: The last major issue is Glendale’s overburdened General Fund — not the Enterprise Funds of Water, Sewer and Sanitation. These funds derive their revenues from rate payers, you and me, when we pay our monthly water, sewer and sanitation bills. The General Fund’s expenses continue to outstrip the revenues it receives in the form of sales tax collection and state shared revenue. Options are limited: sell city assets (a short term fix); further employee reductions; create more efficiency; make draconian cuts; or a combination of all of these options. This is a painful and touchy subject for all. 60% of General Fund expenses are attributable to public safety. Glendale is at the point where it has gangrene in its leg. Do not amputate the leg and watch Glendale die as the gangrene rapidly spreads through the body or amputate the leg; stop the gangrene and Glendale will live long into the future. This is no time for political posturing. This council, each and every one of them, must adopt the will and the internal grit to do whatever is necessary, including cuts, to guarantee Glendale a healthy future. Can they? I hope so. There is no way around it. Their only mandate is to fix it.
©Joyce Clark, 2013
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Aug 13
12
They’re b-a-a-a-ck…City Council reconvenes after summer break
Posted by Joyce Clark on August 12, 2013
Posted in City Council Actions • City of Glendale • Glendale elected officials | Tagged With: Acting Assistant City Manager Julie Frisoni, City Manager Brenda Fischer, Glendale City Council, prayer, public comment, voting meetings, workshops | 1 Comment
Glendale City Council
Don’t expect any fireworks at this first voting meeting on August 13, 2013 of the Glendale City Council after their summer break. They are still feeling the warm glow of sand, surf, summer and best of all, having been away from one another. Wait until the contentious issues surface such as the results of the external audit. This item once had a relatively small price tag and has now ballooned to half a million dollars.
This meeting will probably last an hour or less. Although there are 24 items to be decided and voted upon 19 of them are on the Consent Agenda and can be voted upon in one action. Only 5 items are not on the Consent Agenda.
This is the last night meeting that will convene at 7 PM. Ordinance 2858 (which we can assume will be approved) will change the evening meeting time to 6 PM at the next meeting in two weeks. It seems counterproductive to move the meeting time up by one hour. To what end and to whose end? It makes it more difficult to arrive by 6 PM for those who work and want to attend. It is tied to another change whereby public comments will be at the beginning of the meeting rather than at the end. This change was made under the guise of accommodation of the hoards of citizens wishing to publicly comment and being made to wait until the end of the meeting. It accommodates the hoard consisting of Ken Jones, Arthur Thruston, Bill Dempski and the Marwicks, regular speakers at every meeting. After all they do go to bed rather early. Ironically, the Marwicks live in Phoenix, not Glendale. In Glendale they have a forum. In Phoenix they do not.
Other changes that will probably be approved on August 13th are: adjusting the term of the Vice Mayor from January to January, a calendar year rather than a fiscal year; instituting a two year term limit of service for councilmembers on subcommittees (too bad it’s not term limits as an elected official); granting staff more time to respond to council items of special interest. It had been 30 days, now it is 60 days; and formalizing the council workshop meeting location in B-3. Mayor Weiers had insisted workshop meetings be held in council chambers. That didn’t last long because it was more expensive and frankly, logistically it simply didn’t work. One action yet to be decided and that will be discussed at the council workshop on August 20, 2013 is the addition of time for prayer at the start of each voting meeting. This item alone could make that workshop session very entertaining.
City Manager
Fischer
Item 23, the next to the last item on the agenda, is interesting for the very nature of what it does not contain. It is an update of city signature authorization for banking transactions. It recognizes the new City Manger Brenda Fischer. It retains Horatio Skeet as Assistant City Manager and Jamsheed Mehta as Interim Assistant City Manager. Yet Ms. Fischer placed Mr. Skeete on paid administrative leave pending yet another investigation which she institued. This action to recognize signature authorization could merely be procedural. It is quite conceivable that in 2 weeks they will do it all again and add Julie Frisoni as Acting Assistant City Manager. In her role as acting assistant city manager she will oversee communications, information technology, community and economic development, planning and building safety, intergovernmental affairs and the mayor and council
Acting Assistant City Manager
Julie Frisoni
As an Acting Assistant City Manager, what is Frisoni’s expertise and what are her credentials? There is little public information to be had. She studied communication and broadcasting at Arizona State University – but did she graduate? With a degree in Communications? She worked at KPNX-TV and applied for a communications position with the city. She has no formal training in public administration or business administration and no credentials in managing in any field other than communications/marketing but she has plenty of political savvy. When the former Communications Director left Ms. Frisoni quickly rose to the position of Director of Communications/Marketing. She was part of former City Manager Ed Beasley’s inner power circle and worked closely with him in a position of trust. Which leads one to ask, when Beasley gave direction or approval to move Trust fund revenues was Ms. Frisoni in that staff meeting? Probably. What did she know about the transfers and when did she know it? Ms Frisoni’s temporary promotion shouldn’t come as a surprise since Ms. Fischer’s early career included public relations in Henderson, Nevada and communications in North Las Vegas, Nevada. Sisters under the skin?
So, folks, city council is back along with a new cast of characters. This season’s political dance, fascinating yet often cruel, is about to begin again. What will be the result for the people of Glendale?
©Joyce Clark, 2013
FAIR USE NOTICE
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to:http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
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