Monroe Chat

Monroe Council Agenda
Regular Council Meeting
July 28, 2009 – 6:30 pm

Emergency Ordinance No. 2009-20. An Ordinance providing for the issuance of $2,800,000 Water System Improvement Bond Anticipation Notes, seventh (2009) renewal, by the City of Monroe, Ohio, in anticipation of the issuance of bonds of the City, and declaring an emergency.
Emergency Ordinance No. 2009-21. An Ordinance providing for the issuance of not to exceed $210,000 Fire Equipment Acquisition Bond Anticipation Notes, by the City of Monroe, Ohio, in anticipation of the issuance of bonds of the City, and declaring an emergency.
Emergency Ordinance No. 2009-22. An Ordinance providing for the issuance of not to exceed $1,600,000 Road Improvement Bond Anticipation Notes, by the City of Monroe, Ohio, in anticipation of the issuance of bonds of the City, and declaring an emergency.
Emergency Ordinance No. 2009-23. An Ordinance providing for the issuance of not to exceed $690,000 Road Equipment Acquisition Bond Anticipation Notes, by the City of Monroe, Ohio, in anticipation of the issuance of bonds of the City, and declaring an emergency.
Emergency Ordinance No. 2009-24. An Ordinance providing for the issuance of not to exceed $5,300,000 Various Purpose Bond Anticipation Notes, series 2009, by the City of Monroe, Ohio, in anticipation of the issuance of bonds of the City, and declaring an emergency.

I'll take new roads.

Out of respect I would hope they have more than 10 million.
What do you expect we are growing by leaps and bounds. I hope we get the Racetrack. Then you might see serious change to the city and our burbs. Les, pull your drawers out of a bunch. Wouldn't you expect a city to be able to allocate 10 million as needed?

This legislation is specifically related to those necessary appropriations required by the financing of improvements and equipment considered by the Public Works Committee and a replacement squad for the fire department. The Public Works Committee has previously recommended the below list of equipment for financing in the amount of $700,000. We have included fees for this portion in the amount of $5,000. The financing associated with the purchase of the replacement squad is $220,000 with $2,000 included. Finally, we have also included $800,000 in financing for the Gallaher Road Improvement Project. This project also received recommendation by the Public Works Committee.


This will be the seventh renewal of the Water BANs. We continue to pay down the amount of the notes by $200,000 annually. The recommendation continues to be that we roll these notes. We anticipate that as plans solidify for
water system improvements, we will take these notes long term with the intent on adding additional project costs into them.

We are requesting that Council approve financing for the replacement of a squad for the Fire Department. This is only advantageous to finance in this manner because it would be sold in conjunction with the water notes and the notes for the Public Works equipment and road improvements.

We are requesting that Council approve financing for the costs associated with improvements made to Todhunter Road, SR63 and for the future reconstruction of Gallaher Road. The Todhunter Road and SR63 costs have been
carried until we could put financing in place for those project related costs. We have a recommendation from the Public Works Committee to proceed with the Gallaher Road widening project that was designed in 2002 and shelved while the City was in fiscal emergency.

We are requesting that Council approve financing to the purchase of equipment, as listed below, for the Public Works Department. If approved the equipment can be ordered, but may not be in place for the upcoming winter.

International 7400 SFA 2 $66,294.00 / Dump Body, plow and spreader $56,000.00 $122,294.00 $244,588.00
International 4300M7 2 $64,000.00 / Dump Body, plow and spreader $40,000.00 $104,000.00 $208,000.00
Chevrolet 4WD 3500HD 3 $30,000.00 / Dump Body, plow and spreader $35,000.00 $65,000.00 $195,000.00
One ton crew cab 1 $40,000.00 $40,000.00


The proposed legislation will combine the previous four purposes into a single note issuance for the City. This allows the City to save on issuance costs and the larger amount helps reduce the percentage rate we will receive. All five pieces of legislation were prepared by our bond counsel. If approved, we will sell the notes in late August.

It appears that what the Public Works Committee wants, it gets, even if it means the city goes further in debt.
What's the emergency?

Given the public works committee takes in fire, police, streets, water and parks it gets a fairly large chunk of the budget. Many have been clamoring for Gallaher Rd, improvements, all the infrastructure for the mall and the interchange widening and other road projects have been paid from the general fund, those are all items that are normally financed via bonds in every city anywhere in the country. We do not have equipment to handle some of the wide roads currently under construction thus the equipment purchase. These have been discussed at several meetings open to the public for over 2 years now in anticipation of their need. The fire equipment has near a 1 year lead time.

The water fund notes as stated have been rolled and paid down for 7 years now and when the plan is complete they will also be converted to long term debt service. Also as stated the only reason they are all being done at once is to save the costs of issuance. Timing of these is everything especially in this market.

Please, if you require and additional information feel free to contact the City for the details you need, they would be glad to get you whatever you require.

Bob, thanks for the response - it helped clarify a lot.

I can certainly see the need for the plows, especially with the new overpass design and increased areas that will need services (ie. Home Depot) but will there be any staffing issues for their use? In other words, will staff & equipment be taken away from the neighborhoods to cover the new commercial areas? I'm assuming Monroe will be responsible for roads to the mall and the mall owners, the interior lots. The same for HD.

What is the timeline for the Gallaher Rd project? As many have stated elsewhere, the road is still in poor shape even after patching. Are we waiting for someone to kick the bucket to buy the old house at the corner of Lebanon St?

Where is the city in the process of where to locate the new fire station? Will the public have any say on it's location?

I don't think anyone is complaining about the budget itself, it's simply the vast majority of ordinances that are headed as "emergencies". If they are basic budgetary items all rolled up to streamline the vote, why not have the 2 readings and take the uneasiness out of the residents minds? They're gonna be approved anyway. Now add in the nightly news reports of our neighbors in Cincinnati, Dayton, Butler County, Hamilton, Middletown and their budgetary nightmares, we start to wonder, why isn't Monroe affected? While we have many great projects in the works, we still see Home Depot is not operational, the mall isn't open, Honda is delayed, the school is asking for a levy, we're fighting SunCoke, the police station is too small, we need another fire station, and our retail strip centers are half empty.

Council & Staff know what's going on but the residents don't. (and no, we don't need to know everything). But, we appreciate you alleviating our fears.

Why take on more debt, if the money is already in the general fund?
So we can go bankrupt just like the other cities do?
Let's get back in a fiscal emergency. That was fun.





Reuters
ANALYSIS-Fiscal woes to spur US muni defaults, bankruptcy
07.23.09, 3:20 PM ET

United States -
By Karen Pierog

CHICAGO (Reuters) - The economic recession, after severely depleting the budgets of U.S. states, local governments and school districts, may now push more municipal bond issuers down a rarely traveled path to debt default or even bankruptcy court.

"It's going to be probably the most we've ever seen since the Depression," said Richard Ciccarone, managing director and chief research officer at McDonell Investment Management in Oak Brook, Illinois, referring to both municipal bankruptcy, which only some states permit, as well as bond defaults.

The amount of defaults in the $2.7 trillion municipal market has jumped to levels not seen since the Washington Public Power Supply System defaulted on $2.2 billion of debt in 1982, according to Richard Lehmann, editor of Distressed Debt Securities Newsletter.

Defaults in 2008 zoomed up to nearly $7.77 billion in 150 issues from only $349 million in 31 issues in 2007. So far this year, 107 issues totaling $3.15 billion have defaulted, according to the newsletter.

The municipal bond market is usually regarded as a safer investment haven than for example the corporate debt market, where defaults, which topped $159 billion last year, stood at nearly $57 billion at the end of the second quarter of 2009.

"We're rising at a pretty good pace this year," Lehmann said, regarding muni defaults. He added that general obligation bonds, backed by the full faith and credit of the issuer, may be in more jeopardy than revenue bonds as the general funds of municipalities, schools and other issuers run dry due to recession and other factors such as reductions of federal and state aid to municipalities.

Meanwhile, Chapter 9 bankruptcy filings have been relatively infrequent with only 186 filings between 1980 and May 2008, with municipal utilities and special districts involved in most of the cases, according to data from Chapman and Cutler bankruptcy law expert James Spiotto. The biggest was Orange County, California, the sixth largest U.S. county by population, which filed for bankruptcy in 1994.

Chapter 9 is that section of the Bankruptcy Code providing for reorganization of municipalities, including cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts,

Increasing financial problems and a resort to Chapter 9's protection are likely to emerge in California, where a deal to fill a $26.3 billion state budget gap involved taking billions of dollars from local governments and schools, according to Lehmann.

That could lead other muni issuers in the state to join Vallejo, the biggest California city to file for Chapter 9, in bankruptcy court.

The potential for bankruptcy has also emerged in other parts of the U.S., most notably in Jefferson County, Alabama, which has kept a Chapter 9 filing as a viable option as it attempts to deal with $3.2 billion of sewer debt and associated swap costs, The county has been in default on some of its debt but has not been pressed by creditors for full and immediate payment in hopes that a negotiated settlement can be reached. The county currently faces a lack of cash to cover normal county services.

Facing a $259.5 million deficit, the Detroit Public Schools has been actively exploring a bankruptcy filing. Earlier this year, Michigan Governor Jennifer Granholm appointed an emergency financial manager to oversee the school district's finances.

In a recent survey by AlixPartners LLP, a global business advisory firm, 38 percent of bankruptcy and restructuring experts listed municipalities as a group likely to see "a surprising amount of restructuring" in the year ahead.

Spiotto at Chapman and Cutler said he has seen an increase in inquiries about Chapter 9 bankruptcy.

"The last resort is Chapter 9 and default," he said. "Once you default you've got a stigma on you."

Ciccarone said one way to help municipal issuers avoid defaults and potential bankruptcy would be for the U.S. government to loosen up restrictions on the frequency of bond refundings to allow issuers to restructure their debt to delay debt service payments.

(Additional reporting by Michael Connor in Miami) (Editing by Theodore d'Afflisio)

Les if you have questions regarding the fiscal position and why we are using bonds those can best be answered by Suzi Rubin and Lora Stillman as they are the finance committee and they review all of the information and give input to the rest of council. You can reach both of them through the City web site.

The city got into fiscal emergency via the very thought process you insist we use today, spent all the cash and had none for bills etc. Long term debt service provides for a more stabilized cash flow and allows stockpiles of funds for capital improvements among other things. The information I have seen suggests this is the best course of action for the city at this time. You may also request that information from the City so you can make an informed suggestion as to direction you feel we should take.

There is not any one sentence to eliminate the fears of residents, We are in better shape than our neighbors because we were in fiscal emergency for some time before all this hit. We had the belt drawn in too far to insure we could get back on stable ground in short order. Many of the things we are doing now were mandated by the state as part of that process. Hiring of employees for example, replacing equipment, investing in our roads was all put on hold during those times. We came through the process about 7 years ahead of projections and we did it because we hit the brakes on spending hard, in fact a little too hard. Now we have eased up on the pedal a bit to get better control. While our neighbors were spending money for maintenance of their infrastructure we did not, we have now been presented with the opportunity to tie substantial parts of those capitol improvement needs to the mall project and the tiff funds available from it. Gallaher road needs a million dollars in improvements, those need to wait until the interchange is complete as the state is working on the bridge over Mason. Knowing where the preferred alignment of the cox road extension is helps with planning and finally having a concrete project on the parcel where the mall stands also helps. Be careful what you wish for, Gallaher rd will be a major reconstruction project. Once started the road will be virtually useless until completed. Guess where all that traffic will go BN.....you guessed it, the Sackett hwy, right past your front door.

As to the emergency, again, it's all about timing. The ability to process these quickly at a time that all of the financial experts involved, feel is best for the City and the residents as a whole. We have port authority involved in some funding, we have had our bond councilor reviewing all of this, our finance director and the finance committee. Any statements that suggest this is a knee jerk reaction or that it's not been properly researched are grossly mistaken. This has been in the works for two years or better, reviewed at several open public meetings and presented in concept more times that I can remember. The last step in the process is making it bait for ratings and that seems to be going as planned.

catnipandcarrots wrote:Bob, thanks for the response - it helped clarify a lot.

I can certainly see the need for the plows, especially with the new overpass design and increased areas that will need services (ie. Home Depot) but will there be any staffing issues for their use? In other words, will staff & equipment be taken away from the neighborhoods to cover the new commercial areas? I'm assuming Monroe will be responsible for roads to the mall and the mall owners, the interior lots. The same for HD.

What is the timeline for the Gallaher Rd project? As many have stated elsewhere, the road is still in poor shape even after patching. Are we waiting for someone to kick the bucket to buy the old house at the corner of Lebanon St?

Where is the city in the process of where to locate the new fire station? Will the public have any say on it's location?

I don't think anyone is complaining about the budget itself, it's simply the vast majority of ordinances that are headed as "emergencies". If they are basic budgetary items all rolled up to streamline the vote, why not have the 2 readings and take the uneasiness out of the residents minds? They're gonna be approved anyway. Now add in the nightly news reports of our neighbors in Cincinnati, Dayton, Butler County, Hamilton, Middletown and their budgetary nightmares, we start to wonder, why isn't Monroe affected? While we have many great projects in the works, we still see Home Depot is not operational, the mall isn't open, Honda is delayed, the school is asking for a levy, we're fighting SunCoke, the police station is too small, we need another fire station, and our retail strip centers are half empty.

Council & Staff know what's going on but the residents don't. (and no, we don't need to know everything). But, we appreciate you alleviating our fears.

BTW BN, I will be at the Town Hall meeting tomorrow, I will be glad to answer any additional questions you may have or anyone has for that matter. All you have to do is show up and ask.

Wow! The Ole "Beas" is gonna have a fire sale on Popcorn tomorrow night!

Thank you Mr. Kelley for your responses. I will add if anyone has concerns or suggestions to either
A. Attend the town hall meeting and let your concerns be known or ask questions
B. Attend the council meeting and let your concerns be known or ask questions
Trust me the council does not BITE. You can only do so much sitting behind a key board and venting it is much better to stand in the public eye and let your concerns be known and you should ask questions. Just a friendly reccomendation!

I'm just curious as to why the title was changed from 10 million to 5 million? Addition error? False information/accusations?

I thought Monroe came out of fiscal emergency because they (finally) got a tax increase passed in a city-wide vote in February (not November, when most people vote).