One of the first posts I made two full years ago was saying that unless the city of Bend stopped throwing money at Juniper Ridge and the Bend Transit, that it wouldn't have enough money to repair the pot holes.
Paul-doh over at BB2 has been predicting bankruptcy.
Bruce has been nagging them about Juniper Ridge for quite a while.
Which is why it is maddening to read this comment in the Bulletin article, today, "There's not much left to cut..."
"Andrews said the city started dipping into its reserve funds, which are used to provide a cushion for emergency situations, years before the economy took a major downturn. as a result, she said, many departments don't have much wiggle room left."
Methinks they don't understand the words "reserve" and "emergency."
I predict that the city council will let Bend go bankrupt before they raise fees. Indeed, I predict they'll delay or lower fees.
I predict they'll keep pushing Juniper Ridge.
I predict they'll keep the Bend buses rolling.
I predict I'll have to replace my shock absorbers, and get another lock on my door.
But, hey!
Who could have predicted it? (Except me and paul-doh and buster and bruce and tim and quimby and bem and marge and lava bear and just about every other bubble blogger out there.)
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14 comments:
See Dunc has a thread today/yesterday about 'potholes', and BK, and we have long said Bend will BK, but so fucking what? Who cares?
Essentially city will always get money, from property taxes, even now with so much going back to the bank, the city is actually better off, cuz the banks pays, while under-water folk don't pay.
City, especially our city is MOSTLY about off-budget 'EMPIRES'; The BUS-EMPIRE ( propane purchases ); JR burning over $12M/yr since 2006, and now on target to do this forever. Pushing anybody it can into the black-hole, ... Knife-River(MDU-MOSS/CACB) getting all the money, who cares? Its borrowed money, on a BK all that money would be lost by the investors who bought the bonds.
So BEND today is held together by 'glue' a glue of MUNI debt, once BEND goes BK, the financing is over, and then the layoffs of BEND's most HOLY companys collapse.
Like the City purchase of land from the BULL, given them for free by HOLLERN $5M ( debt bond ), then last year Hap-Taylor sold the city land for $4M ( debt ).
The current theory of Bend is to use TARP money to float through the recession and keep all of BEND's most 'sacred' folks ( KR,brooks,cacb ) alive during the storm. Will it work? Probably not, but who cares?
The worst thing that will happen is that 'investors' ( OLD FARTS LIVING ELSEWHERE ), lose their principal for buying Bend Bonds, but who cares? All this bad-debt is going to get bought-up by the FED taxpayers.
See CITY,STATE,FED is the largest ponzi scheme in the world, and its all designed to keep feeding the public retirement system.
Oh, yes services, there will always be enough money for cops, and fire, and pot-holes, ... but that is NOT why people run for public office, people run this city to get rich, MOSS gets $200k/yr from MDU for directing business @JR to knife-river, that's is what makes this city work. But so what if the city goes BK? Then MOSS can loan the city money @18% interest because they have bad credit, and then MOSS will put CACB in the black, see its in EVERYONES interest to BK Bend, it actually makes the boss-hoggs richer.
Yes, its all 'stupid' but stupid works, and stupid has made a lot of people in BEND very rich.
So, in summary why worry? Everything will be fine, the rich get richer, and in ten years nobody will care, and the few that remain can tell newbies about old-times, just like US that knew Bend in the 1980's talk now, but who cares? The newbies now think these times are different, but they aren't, its always the same. Back in the 1980's everybody worked for 'TIMBER' computer jobs were with LP,GP,... all of PDX, everybody in ORYGUN lost their job, but we all survived. So fucking what.
Bend will BK, but everyone will make a ton of money, the lawyers and cpas will get a ton of work. So fucking what?
See how this end's, lawyers make a ton of money, public-unions fight to protect 'retirement turf', and in the end ten's of millions are added to the debt, sure you can null&void MUNI debt, but public-unions ( judges ) have a way of saddling the taxpayer forever. The result? Schools fail, no policing, ... but don't worry, city-hall staff makes $$$ forever...
Vallejo leaders should have seen crisis coming
San Francisco Chronicle - May 9, 2008
Even before the council voted on the bankruptcy, Vallejo city officials drastically cut funding to a variety of social services, including those for senior ...
Vallejo one of few cities to use Chapter 9 - San Francisco Chronicle
City of Vallejo goes bankrupt after property... - Independent
Bond Buyer - Times Herald - All 9 related - Related web pages
EMPLOYEE UNIONS FIGHT CITY BANKRUPTCY FILING
$2.95 - San Jose Mercury News - NewsBank - Oct 29, 2008
Vallejo employee unions said Tuesday they plan to appeal the city's bankruptcy ... Before the next bankruptcy hearing on that request, both city and union ...
Bay Area News In Brief - San Jose Mercury News
Union to challenge ruling - Times Herald - NewsBank ($2.95)
All 3 related - Related web pages
Vallejo retirees challenge city bankruptcy plan
$2.95 - Times Herald - NewsBank - Dec 24, 2008
A committee of Vallejo's retired employees described itself as "on the horns of a dilemma" in its challenge last week to the city's bankruptcy plan. ...
Related web pages
City unions win support in opposing backruptcy
Vallejo Times-Herald - Jan 5, 2009
Vallejo had spent about $2 million in bankruptcy legal fees between May and ... The city has to cover costs not only for its own bankruptcy attorneys, ...
Related web pages
See BEND is Vallejo, so if you want to know what our city of Bend is doing, then just look carefully at what they have done to date in Vallejo.
Press Releases
* Drive raises $15,569 for fire victims
* Bankruptcy Case Exposes Vallejo City Manager's 42% Pay Hike
* Vallejo Employees Fight City's Bankruptcy in Federal Court
* Vallejo City Council Rejects $10 Million Employee Offer to Keep City From Bankruptcy
* Vallejo Firefighters, Police and City Employees Propose Plan to Keep City Out of Bankruptcy
News
* Rio Vista works to regain its footing (Contra Costa Times)
* Rio Vista searches for ways to avoid going bankrupt (Vallejo Times Herald)
* Local governments sweat; markets in free-fall; More cities on the brink of fiscal void
(Sacramento Bee)
* Isleton needs $1 million -- or else (Sacramento Bee)
* Outgoing City Attorney Wants San Diego to Mull Bankruptcy (City News Service)
* Vallejo chief says crime may swell as police force shrinks (Vallejo Times Herald)
* Bankrupt Calif. city losing cops amid rising crime (The Associated Press State & Local Wire)
* Blaze kills elderly man, leaves dozens of others homeless (The San Francisco Chronicle)
* Tanner: It was my call - City manager admits order to block Times-Herald site
(Vallejo Times Herald)
* Web sites blocked for city workers (Vallejo Times Herald)
* 2 blogs off-limits to Vallejo city workers (The San Francisco Chronicle)
* Employees have rights, but only on own time (Editorial: Vacaville Reporter)
* Tanner's gag order assaults rights of employees, citizens (Vallejo Times Herald)
* Deadly Vallejo fire under investigation (The San Francisco Chronicle)
* Bankrupt Vallejo bleeding its police force (The San Francisco Chronicle)
* Tanner not a resident; breaks rule (Vallejo Times Herald)
* Bankrupt Vallejo wants to void 4 labor pacts (The San Francisco Chronicle)
* Taxes, pay cuts part of union's strategy to stave off bankruptcy (The San Francisco Chronicle)
* City employees file objection to bankruptcy petition (Vallejo Times Herald)
* 8 more leave Vallejo police (Vallejo Times Herald)
* City rejects unions' contract offer (The San Francisco Chronicle)
* City, unions meet with mediator (Vallejo Times Herald)
* Vallejo unions say their plan can avert bankruptcy (Vallejo Times Herald)
Bilbo, I thought these two post consolidated what you're trying to say about Vallejo bankruptcy.
All about dunc 24/7
Hey Ma, Are We Bankrupt Yet?
Written by H. Bruce Miller
Friday, 23 January 2009
If The Bulletin plays the story on its front page, it must be official: Bend is broke.
Well, just about. The paper reports this morning that the heads of city departments told the city council yesterday that they’ve slashed spending as deeply as they can.
“There’s no fluff left in our budget,” the story quotes Community Development Director Mel Oberst as saying. “We’ve eliminated all our overtime, and as a result of [reduced revenues from] our service level, we’ve spent down all our remaining reserves.”
Later in the story, Finance Director Sonia Andrews says that if the city doesn’t find some new revenue sources it will be running a $4 million to $9 million deficit by 2013.
And here’s what may be the most interesting part: According to The Bulletin, Andrews said the city “started dipping into its reserve funds, which are used to provide a cushion for emergency situations, years before the economy took a major downturn. As a result, she said, many departments don’t have much wiggle room left.”
That has a lot of people muttering (or screaming) “WTF???” including downtown merchant and blogger Duncan McGeary. “Methinks they don't understand the words ‘reserve’ and ‘emergency,’ he writes.
“I predict that the city council will let Bend go bankrupt before they raise fees,” McGeary continues. “Indeed, I predict they'll delay or lower fees. I predict they'll keep pushing Juniper Ridge. I predict they'll keep the Bend buses rolling. I predict I'll have to replace my shock absorbers [because there’s no money to fix potholes] and get another lock on my door [because there’s no money to hire enough cops].”
While The Eye agrees with McGeary that the city has displayed fiscal irresponsibility of eye-popping magnitude, we don’t think all its financial ills can be blamed on Juniper Ridge and Bend Area Transit, or even on the recent real estate bubble and subsequent bust. The root of the sickness is that the Good Old Boys who run the show here and the politicians they control have put all their eggs in the basket of GROWTH, GROWTH, GROWTH for the past 20 years instead of developing a balanced and sustainable economy with a solid base of living-wage jobs, and when the basket of growth fell all the eggs broke.
So what’s the new city council majority going to do now? Our guess is that they will follow the advice of the GOBs and prescribe more GROWTH, GROWTH, GROWTH as the cure. And McGeary’s right: They will sacrifice essential city services before even thinking about (horrors!) increasing fees on builders and developers.
Comments (3) >>
a guest said:
Builders and developers are already burdened with heavy fees (15% of the cost of a residential home), beurocratic tape and stagnant sales. The City has portrayed poor spending habits and bad financial decisions. The City should not be involved with Juniper Ridge they should leave development up to the private sector. This is what happens when our Government is not held accountable because the rest of us are too busy trying to make a living.
January 23, 2009
Ten Bears said:
I think it's been pretty thoroughly demonstrated, at least for those of the capacity to grasp such, that "growth" is a perpetual motion machine bound by the laws of nature to fail. Again. And again.
Been through 3 booms and 3 busts here.
January 23, 2009
HBM said:
Bears, you're right. But the psychology of boom-and-bust keeps us trapped in a perpetual boom-and-bust cycle. During the boom times everybody is so terrified of another bust that they're unwilling to restrain or manage growth in any way for fear of bringing it on. Of course the bust comes anyway, and in the end we're no better off than we were before the boom -- in fact this time we will be worse off, because we allowed a lot of development to occur without the infrastructure and public services to support it or adequate means to supply said infrastructure and services. We have more roads than we can plow or repair, more neighborhoods than we can adequately police, more kids than the schools can hold, etc. This in turn causes our quality of life (which, for most people, means good schools and safe streets rather than lots of mountain bike trails) to deteriorate, which makes recovery harder because fewer people want to live here.
I am King on this blog, and don't you forget it! Mine! I tell you! Mine!!!
Ok, JR & BUS, its NOT the cause of the BK, but just MAYBE had aber-pussy (mayor) not been working on 'castles in the air'(Thoreau) had they focussed on basics, then BEND wouldn't be FUCKED (BK).
JR is about MUNI debt keep knife-river and MOSS flowing with CASH. BUS is about Leonard selling billions of dollars of propane to the city, so these are in fact 'good' things in terms of 'jobs'.
In and of itself JR&BAT(BUS) didn't kill Bend.
The problem, is like Kathy Eckman, beautiful people who just want growth, and to build, and to grow, and to build, and sell, and promote, and talk shit, like 'money mommas' making 10%/yr ROI forever (her company), like MADE-OFF, whenever you hear that shit RUN, and now she's mayor.
The problem is of BEND is that only crooks run for public office, because working people are too busy making a living.
Vallejo went BK, because in good-times they over-paid cops,fire, ... city-hall and city-staff, and then when things went south, the budget imploded. Bend is the same, during the good times we paid for everything from COVA to Movies to Source Events and Promotion ( Swizter, Costa ). It all works fine during a BULL market bubble, but it all fails during a bust.
Today we have EDCO, CORA, COBA, ... all calling the shots, but these are all vampires that feed on the blood of the working, Bend really was NEVER a working town post MILL days, so Bend hasn't been a working town for over two generations.
Bubble's will continue, its not the end of the world. The media leads what we have, and the media is still a bunch of out of town hustlers and promoters.
Soon the city will BK, and they'll quit paying the debt load, and then there will be NO more Knife-River make-work projects at JR ( cost? $800k/acre to clear rock at JR ). Then un-employment will sky-rocket to over 25%. Depression is here now, but you ain't seen nothing yet.
All of Bend is Alice in Wonderland, even the 'good old boys' of Chamber of Commerce. Too much money was made, and now they're too drunk to even notice that the 'castle in the air' is coming down and hard.
Bilbo, I posted your rant, but I think words like "crooks" and such are too strong.
I don't know Kathy Eckman, and I'm not sure you're right about motivations.
I subscribe more to the 'denial' and 'mistake' reasons for our situation.
Never attribute to malice what can be attributed to incompetence.
They apparently never had anyone on the council who could cut through the crap.
I think a public dialogue needs to be opened on the question of whether Bend needs to be, should be, or even CAN be, a big city. - hbm
[ I thought we were a resort? But then DUY says that a resort has to be small. WTF is BEND? It seems that BEND is like OREO all things to all people, and nothing to nobody. ]
For many years the local movers and shakers have been pursuing a megalomanic vision of Bend growing into a city of 100,000, 200,000, half a million, whatever.
[ sure why not, the early birds all become billionaires, trouble of course is hair-lips rarely get rich in the long term in the real world. ]
But looking at it objectively, rather than through the COAR/COBA/Chamber/Bulletin distorting lens, there seems to be no rational reason for this little former logging town in the middle of nowhere to have a population of 100,000, or even 75,000. Now that the timber is gone we have no natural resources to sell. Because of the cold climate and the short growing season we never have been and never will be a major agricultural hub. There's no particular reason for major manufacturing facilities to locate here.
[ Well HOLLERN knew post 1991 there was another bubble coming, BEND is a bubble town, cycles will always continue limitation being amnesia and easy-money. ]
The only engines we have to propel the local economy are tourism and speculation-driven growth.
[ the little engine is PUBLIC TAXPAYER DEBT COVA that runs the growth engine of Bend. ]
But speculation-driven growth is unsustainable, and tourism doesn't provide enough decent jobs to support an economy of 75,000 people.
[ Who cares easy-money will go on forever, and now that OREO will print $2 TRillion, and just gave $60M to MOSS-CACB-MDU, Bend will soon be awash in easy-money. ]
So assuming that Bend is always going to be a tourist town with a smattering of small manufacturing and high-tech employers, what would be the optimal and practical size for Bend?
[ Bend will always be a place on I97 where people stopped to get gas, now with the bypass, why even stop in BEND? High-Tech, its gone HBM, small manufacturing, fuel is going up, peak-oil has passed, BEND will never be competitive EVER. ]
50,000? 30,000? Why can't we set a realistic target and aim for that, instead of blindly following a policy of "get as big as possible as fast as possible"? In the long run I believe we would have a better, more livable and more prosperous city, although not such a big one.
[ Because GET-RICH-QUICK, and sell and RUN is the BEND USA WAY. Do it slow, and nobody gets rich. BEND is a ponzi scam, and ponzi's only last until the the last fool has been fleeced, its NOW over, and amnesia takes a generation, before idiots and MONEY return to BEND. ]
It seems insane that they dipped into reserve funds DURING the boom, right? What were they thinking?
I'll tell you what they were thinking: they were thinking that Bend is growing so fast that revenues can only go up. They were only worried about "keeping up with growth" and making the town attractive and ready for further growth. They thought that the town was only getting more upscale, property values only going up - they really sincerely thought this.
It was like the mindset of a lottery winner who goes out the day after he finds out he has a winning ticket and runs up all his credit cards and buys a new car, new house, etc. before the lottery check comes in. That's how most people would act.
But I have to think that some people, maybe me, maybe Dunc, even if we saw that we have the winning lottery ticket we'd wait 'til the check clears to start spending a bunch of money.
Counting chickens. Another way to put it.
BEM,
Once again, to the point. Why aren't you blogging?
Man I wish BEM Blogged more.
It was like the mindset of a lottery winner who goes out the day after he finds out he has a winning ticket and runs up all his credit cards and buys a new car, new house, etc. before the lottery check comes in. That's how most people would act. - BEM
###
That's fine and dandy BEM. But your only looking at the tail on the elephant.
The real BEAST is the 100's of millions of MUNI debt the city has taken on, debt that MUST be repaid as interest, DEBT that MUST be defaulted on as there is no possible way for the entire budget to pay back this debt.
Some people like you argue that City-Council is stupid, or hysterical, ... I disagree, I use words like fraud, criminal, theft. Intensional stealing.
To this day MOSS sits on the JRMB board, and directs Knife-River to get the business of developing JR, but MOSS also sits on the MDU board who owns Knife-River and pays MOSS $200k/yr. But MOSS is also the Bank of BEND, and got $60M in TARP from uncle Bush.
There is NOTHING stupid or hysterical going on, just apologists for grand larceny.
The City just bought $5M worth of land from the BULL, land it got from HOLLERN for free, the city didn't need the land, but with MUNI debt they in effect pulled $5M out of the air, and gave to the BULL to keep them in Biz. The City last year bought land from Hap-Taylor for $4M, same deal MUNI-DEBT, ... goes on, and on, and on. Real MONEY is handed out to the big boyz, ... all debt, all easy MUNI money, that is off budget, but EVENTUALLY it has to be paid back, or was the DEFAULT (BK) planned all along?? I think so.
You fuckers talk about 'reserves', and 'general fund', and that Bend don't MATTER, but remember KUNTS we're BEND, I know you would rather talk about AIPAC, or bruce's pussy, or anything BUTT debating Bend. The two things that will sink Bend is writing CDO bets ( selling credit-swap's ) to get cash, and defaulting on all the fucking Muni-Bond debt the city has taken on to give 100's of MILLIONS to boss-hoggs. That interest MUST be paid, but can't be paid, and thus the city will default.
Vallejo, CA is just 100k people, slightly bigger than BEND, and they went down with almost $300M in muni-debt, how in the fuck? Can a city borrow so much fucking money for pet projects?? Will they did and so did Bend, like our round-abouts, ... all to keep Knife-River busy-busy.
Here people like BEM&DUNC say its the dipping into 'reserves' and chicken's, in Vallejo 'They' blamed it on paying the cops too much, like Bend the city is composed of PRO LIARS ( dunc&bem ), but the truth is what sent Vallejo-Ca into the toilet was $300M in DEBT, and Bend is close to the same shit hole, and everybody ignores it, because then they would have to ask "Where did the 100's of millions go?".
***
Muni Bond Default Parade Plays On
Jack Colombo, 01.15.09, 05:30 PM EST
Distress continues to bedevil the muni bond market, and the rest of the year looks even tougher.
To look at current municipal default statistics, your first reaction might be that we have erroneously displayed the corporate defaults for 2008. However, 2008 would have been a record year even without Jefferson County, Ala., and its $3.8 billion sewer bond issue default. The town of Vallejo, Calif., added $280 million as it became the first municipal Chapter 9 bankruptcy in over a decade that affects bondholders.
Other notable 2008 defaults were the Las Vegas monorail issue ($451 million) and a $709 million issue whose only collateral was a gas supply agreement with Lehman Brothers (nyse: LEHMQ - news - people ), which filed bankruptcy six months after the deal was made.
Municipal and corporate bond defaults are rising but this could spell opportunity for huge profits by bold investors. Click here for guidance in Distressed Debt Securities newsletter.
While housing-related issues are always a principal source of defaults, at least in numbers, 2008 proved to be a bumper year, with 62 issues totaling $1.2 billion. That's more than the total for all defaults in either of the last two years. The outlook for 2009 is for even worse to come, at least in terms of numbers of defaults.
The wave of defaults in housing-related issues in California and Florida can be expected to accelerate. Expect further defaults by small municipalities in California and elsewhere. Also vulnerable are sales tax dependent issues everywhere and "feel good" projects that depend on private or public support. The latter are vulnerable to the weak economy and, in the case of ethanol projects, a change in the underlying economics.
The federal government may well step in to provide indirect support to the states through municipal bond guarantees for issuers who otherwise couldn't sell more debt, which may postpone into future years some of the grief building up. However, no such help will be coming for the thousands of bond issues backed by corporate sponsors or a home builder with empty lots and incomplete infrastructures.
Special Offer: Banks are issuing preferred stock with yields of 10% and higher. Nice yields, but don't get suckered into buying bad paper. Click here for Forbes-Lehmann Income Securities Investor.
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Not helping is the cloud still hanging over the bond insurers. Their ability to provide coverage for new issues is in doubt, as is their ability to backstop deals previously insured and now in trouble. All in all, it looks like a busy year for this newsletter.
While municipal defaults broke all-time records in 2008, they pale in comparison to the massive volume of corporate defaults. The total of $157.56 billion easily broke the previous record year of 2002 when $107.9 billion in defaults was recorded, although that took 93 defaults. Setting aside the $127.5 billion contribution by the Lehmann Brothers default, the total for the year would still have made it the third largest year on record. While 2009 looks like it may challenge 2002 in terms of the number of defaults, we probably will not see a new dollar record even if General Motors (nyse: GM - news - people ) files a pre-packaged bankruptcy.
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