I wish I could tell you what Northampton County's Financial Adviser, Gary Pulcini, said during last night's Council meeting. He was there to review the swaption coming due on October 1. At this point, the County will have to pay Bank Of America $25.2 million. It's up from just $10.2 million at the end of 2009.
Pulcini spent the better part of an hour discussing LIBOR, variable rate demand bonds, the Debt Act, the fixed swap rate, refunding, etc. I have no idea what the hell he was talking about, and feel sorry for the reporters who have to try to explain it.
The one comment that made the most sense to me came from newly elected Bob Werner, who is disgusted by the 2004 sales pitch made by Concord Public Finance. "What can we do to make them accountable for what they have done to us?" he asked.
According to County Solicitor Karl Longenbach, not much.
Here are the only points I could understand from Pulcini's presentation:
1) There is no silver lining. The only question is which pill the County wishes to swallow.
2) The County will have to pay the swaption on October 1. Because of the way it as set up, you can't just refinance your way out of this mess.
3) Because the County reserved the money to pay this swaption off in its fund balance, its AA bond rating will probably remain intact.
4) The County can refund the debt service on its remaining bonds.
Today's one-liner: "The shortest way to the distinguishing excellence of any writer is through his hostile critics." Richard LeGallienne
Local Government TV
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Friday, January 06, 2012
33 comments:
You own views are appreciated, especially if they differ from mine. But remember, commenting is a privilege, not a right. I will delete personal attacks or off-topic remarks at my discretion. Comments that play into the tribalism that has consumed this nation will be declined. So will comments alleging voter fraud unless backed up by concrete evidence. If you attack someone personally, I expect you to identify yourself. I will delete criticisms of my comment policy, vulgarities, cut-and-paste jobs from other sources and any suggestion of violence towards anyone. I will also delete sweeping generalizations about mainstream parties or ideologies, i.e. identity politics. My decisions on these matters are made on a case by case basis, and may be affected by my mood that day, my access to the blog at the time the comment was made or other information that isn’t readily apparent.
Can you explain what is behing door #4 a little?
ReplyDeleteOnly a little. The County can refund what is left of the debt service, but still must pay off the swaption, must pay the debt service on the refunded debt service, and will still lose $6.8 MM.
ReplyDeleteI'm sorry if this is not clear, but I'm having trouble with it.
I suggest you have the top fiscal expert in the county come to a meeting and explain it. Mr. Barron will gladly appear and explain the entire bond issue in clarity and with precision.
ReplyDeletesee, THAT'S funny
ReplyDeleteDon`t worry Steve Barron is in control.
ReplyDeleteCould be worse. Bethlum just borrowed to meet payroll - again.
ReplyDeletetypical resonse from longenback
ReplyDeleteLOL! Baron will explain it? LOL
ReplyDeleteApparently it could have been paid off a few years ago and we would have saved millions..Why didnt that happen?
ReplyDeleteBecause hindsiht is 20/20, and the thought at that time was that the cost would go down. In 2010, when it continued to rise, Angle and Mazziotti both wanted the trigger pulled, but there was no consensus. And I will not blame any member of Council or Stoffa for not paying it sooner. They were all put in the unenviable position of being forced to gamble with the people's money, all as a result of Reibman's folly.
ReplyDeleteWhile the financial adviser made his presentation, Barron spent most of his time in the hall, plotting with county workers about asbestos. I'll have to write about that, too.
ReplyDeleteThat plotting with county workers is going to get us a HEFTY fine. Way to go Barron
ReplyDeleteGary Pulcini is one of the few straight shooters in the financial advisor role. He is no Concord ( sweat talker and counting the fee type.)Bethlehem govts and school districts were gold mines for slick sdvisors. Gary is a small firm and sticks to safe basic finance.
ReplyDeleteI have to agree with Anon 12:40. Gary Pulcini is an experienced municipal financial advisor who has helped us with the financial mess we inherited here in Easton. Unfortunately financial mumbo jumbo may be difficult to understand at times -- especially swaptions.
ReplyDeleteI was asked by several city officials in Easton about swaptions around the same time and told them to stay away. Fortunately Easton did stay away from these "great deals" as they were being pitched by Concord and others.
Unfortunately, the real problem was that the city at that time did listen to Concord and re-financed the $24 million pension bonds that were floated in the early 90's. Yes they did this at Concord's recommendation and advice. The problem -- the bonds are NON-CALLABLE. So now the city is stuck paying back these bonds at better than 7% when we can be borrowing money today at 3% and less.
I too tried to see what could be done about going after Concord. To date I haven't found a way to do it.
We retained Gary Pulcini a few years ago and what I really liked about him is that in our interview he told us right out that he wasn't sure he wanted us as a client. A few months later after observing that we were serious about our city finances he agreed. I am glad he did. He is a man of fine character and integrity and not afraid to tell you like it is. To date he has helped our financial team bring our city out of our deficits and into surpluses.
I might add that when we recently re-financed general obligation bonds not only did we save the residents money but he made sure that we weren't extending the term like so many other municipalities do. We are committed to stopping the practice of delaying the payback to future generations. As I say - " We make our financial decsions for the long term.....not the political term.
I have to agree with Anon 12:40. Gary Pulcini is an experienced municipal financial advisor who has helped us with the financial mess we inherited here in Easton. Unfortunately financial mumbo jumbo may be difficult to understand at times -- especially swaptions.
ReplyDeleteI was asked by several city officials in Easton about swaptions around the same time and told them to stay away. Fortunately Easton did stay away from these "great deals" as they were being pitched by Concord and others.
Unfortunately, the real problem was that the city at that time did listen to Concord and re-financed the $24 million pension bonds that were floated in the early 90's. Yes they did this at Concord's recommendation and advice. The problem -- the bonds are NON-CALLABLE. So now the city is stuck paying back these bonds at better than 7% when we can be borrowing money today at 3% and less.
I too tried to see what could be done about going after Concord. To date I haven't found a way to do it.
We retained Gary Pulcini a few years ago and what I really liked about him is that in our interview he told us right out that he wasn't sure he wanted us as a client. A few months later after observing that we were serious about our city finances he agreed. I am glad he did. He is a man of fine character and integrity and not afraid to tell you like it is. To date he has helped our financial team bring our city out of our deficits and into surpluses.
I might add that when we recently re-financed general obligation bonds not only did we save the residents money but he made sure that we weren't extending the term like so many other municipalities do. We are committed to stopping the practice of delaying the payback to future generations. As I say - " We make our financial decsions for the long term.....not the political term.
Sorry Bernie, you and I agree on a lot of issues. Once you get to know Gary you may change your opinion. Have a healthy and happy New Year.
ReplyDeleteYou can blame Reibman all you want but Stoffa should have listened to Angle and Maziotti and saved the County millions..He did not..Any cost after that is on his administration , not Reibmans..I know you hate Reibman and love Stoffa but both Councils ( then and in 2010) and both administrations deserve blame for the fix we are currently in..
ReplyDeleteThe fix is in for the Queen of the Farm Show in Harrisburg.
ReplyDeleteAnd the winner of the "butter sculpting contest.
Watch 69 News at 5
hint;
it ain't Rachel Stolfus
I'm suprised you don't cover this thing Bernie, we have alot of entries from NorCo
"Sorry Bernie, you and I agree on a lot of issues. Once you get to know Gary you may change your opinion. Have a healthy and happy New Year."
ReplyDeleteSal, I share your high opinion of Gary Pulcini. I've seen him before, and Vic Mazziotti spoke very highly of him. I just have to admit I was completely lost during yesterday's presentation. He certainly knows what he's talking about, but I think I need a few years of business school or a brain transplant before I understand him.
5:00 PM, I am sorry to say I have only ever attended one farm show.
ReplyDeleteSorry Sal, I like Mr. Barron's explanation better.
ReplyDelete"Gary Pulcini is one of the few straight shooters in the financial advisor role."
ReplyDeleteAgreed. I just had a hard time understanding him.
How can anyone blame John Stoffa for not making an executive decision on the bond issue. If he did that he couldn't endlessly blame Reibman. Besides doing that is leadership, something the country has been missing for some years now.
ReplyDeleteGo ahead and try to blame Reibman's 2004 folly on Stoffa. You put him in a position where he is being forced to gamble with the people's money. You really have an irrational hatred.
ReplyDelete6.8 MM....take the deal
ReplyDeleteI dated a girl who was thrown out of the Farm Show because she couldn't keep her calves together.
ReplyDeleteSay what you want but I live in Bethlehem and when I read about Easton and what their mayor posts here I can see why they are doing so well, especially financially. Most people don't realize this fact but Bethlehem's city finances are a mess.
ReplyDeleteI will be reading more about Panto and following his efforts. Just from his posts e seems sincere, passionate, and very intelligent.
And no, I am not looking for a job, I have a very fine job in the private sector and from what I see he doens't hire friends or political hacks.
His latest post here abot Concord was very well put and shows he has a handle on his city's finances.
Mr. Fleck you are trying way to hard. You are covered relax.
ReplyDeleteplease stop referring to Mr. Fleck. He has run Pawlowski's campaign in Allentown and Spencer's in Reading. If anyon is going to give him a job it would be one of them.
ReplyDeletePlease stop trying to distance Fleck from the Panto camp. He has and continues to be a big part of the Easton political machine.
ReplyDeleteI worked on the Panto committee and did not see him once. The only time I saw Fleck was at Easton Dem events. He was not invovled in the Panto campaign so if you know something that I don't know after volunteering prove it. If you can't prove it SHUT UP.
ReplyDeleteMore city Dem political machine threats.
ReplyDeleteFleck is earning his job today.
ReplyDelete