"At Monday's City Council caucus, Business Administrator Brian O'Reilly handed out copies of the refinancing plan, prepared by UBS Investment Bank, which purports to give the city a "cash flow savings" of $26.3 million for the current fiscal year and projects additional savings each year through 2027."

http://www.nj.com/news/jjournal/index ... 36974334190420.xml&coll=3

So are the new taxes just a way to get public support for a debt refi since it failed under Cunningham? Anyone recall the issues that time?

I actually hope that it is! If they sent out the Q1 2005 tax estimates to push constituents into support of the refi, it certainly worked here.

I'm new to the council process. I'm already sending a letter to my councilperson, but how can I find out what concil meetings are going to be relevant to this discussion. Perhaps, there is an agenda posted somewhere? Quote:

Are they pulling the refi and keeping debt flat or are they borrowing more and keeping payments flat? Appears the former.

If it is the former, that they will not be borrowing any more but instead will be looking to refi at a lower rate, there is no excuse I can think of for not going for it.

JC is BBB right now. Even a refi that improves the cashflow isn't going to do much there. Also, the fact of the matter is all the refinances in the world, even if they did the fiscally irresponsible thing and borrowed more to keep payments flat, they still haven't addressed the major problem: The City spends more than it takes in.

You can restructure and refinance yourself to death, but eventually you have to make some hard decisions. I hope this isn't another kick of the can down the road, because the bad news is it will be a temporary fix at best.

Yes, lower debt service is real and (semi) perpetual. But I don't believe for a second that, once the immediate budget heat is off, that the spending party will take off again, full swing.

I believe Mr. Fulop is a muni guy. What say you?


GWB

Stevefulop.com posts items that are on the council's agenda

the next council meeting is tonight, beginning, well, now...

the Vibe has such calendars

Stevefulop.com posts items that are on the council's agenda

the next council meeting is tonight, beginning, well, now...

the Vibe has such calendars

... Of course Brewster I think they are definatly a way to
get public support....
There has to be a better way to fund this city!
Property Taxes hurt the middle class and retirees on fixed income who own their own home. Sales taxes hurt the small businessman. Why can't this city impose a small capital gains tax or income tax on people making more than say, 250K a year? Or stop giving out tax abatements like shots at a frat party? Or how about cutting spending? Or doing all three?
Also, why not have a better bank than UBS preparing
Jersey City's refinancing plan? Why not, for example, have BNP Paribas prepare a refinancing plan? I am sure you will have far more solid results.
Also ( hypothetically speaking) I would not be shocked if Brian O'Reilly some sort of an "understanding" with UBS, this is after all the town haunted by the ghost of Frank "I am the Law" Hague.
http://en.wikipedia.org/wiki/Frank_Hague

Quote:

GWB, Since bonds are your thing, it's reassuring that this refi ain't crazy. I wonder why it failed last time?

Here's a softball for you, hit it out of the park:

Where's the fat in the JC budget? We'd all love to know where JC spends more per capita than other cities. Only real nonsense like the parking authority losing money actually bubbles to the surface.

GWB, WTF are you talking about???? This is Jersey City, in Hudson County. The city is spending more than it is taking in, so Healy wants to take this debt and push it off onto the next adiministration. The next mayor will come in, make a statement that we are in a financial mess due to the prior administration, and raise taxes or borrow more money. By this time Healy and his crew will be long gone, or working for the county. The city has to bite the bullet now, instead of pushing problems off to the future. And the more "refinancing" - the lower the city's bond rating, and higher cost to borrow money, since JC is more of a credit risk. From what I understand Steve Fulop is against the refinancing for this reason.

Quote:

Isn't it possible to keep "pushing" this debt forward until more tax abatements expire and the cash flow changes? While the debt maintainence would get expensive, it wouldn't be as big of a hit as massive tax bills.

Anything is possible, but in the short term the politicians will consume all the funds they have at their disposal.

Quote:

Brew- Sorry, I am far from an expert on JC's spending. What I was saying is the way the refi is being handled will to me be a big indication of how serious the politicians take their responsibilities.

Taking on more debt at a lower rate is kicking the can down the road. You're getting liquid for more TODAY but you're not doing anything to lower your debt service. It's as if your 20% credit card cut your payments to 10%, and instead of saying, "Great! Smaller payments!" you say, "Great! Let's go shopping!"

In a short term crunch that extra liquidity can help keep things moving. But any benefit would also be short term. Eventually you eat through the extra cash, because you haven't solved the original problem- You're spending more than you are bringing in.

If, for example, they took $200mm in debt (and I have no idea what their debt load is) that was at 7%, which they were paying $14,000,000 in interest every year, and refinanced it down the same $200mm at 5%, they'd save $4,000,000 a year because their new payments would be $10,000,000 per annum. Super!

However, if they decided that $14,000,000 a year was fine, and that they'd rather borrow more and keep the payments flat, they'd go borrow $280,000,000 at 5% and then have $80,000,000 to go throw around and not make tough spending/tax increase decisions. Boo.

The numbers above are purely hypothetical. I know that JC has no chance of refinancing at 5% for anything approaching a longer maturity.

I'm sure fair minded people can differ on the solutions (less abatements? More to stimulate growth? Less spending? Less staff? More services?) but I don't think there's any getting around the fact that a refinance, if used to take on more debt, is a short-term solution.

As for Shipwreck- Sure it's possible. But I'd agree with Super that it's not likely. If there's cash available on the credit card, someone's gonna spend it.

GWB