Posted on 02/01/2012 10:25:06 AM PST by SmithL
The Hercules Redevelopment Agency is in default on a $2.4 million bond interest payment due today.
"It was inevitable there would be a default because there's not enough tax increment," City Manager Steve Duran said late Tuesday after a session in Contra Costa Superior Court in Martinez with the bond insurer, Ambac Assurance Corp.
The redevelopment agency's bond debt obligations have exceeded revenue from property tax increments in recent years, and as of this week, the agency's non-housing component was $3.8 million underwater, Duran said.
"You can't get blood from a turnip," he said.
Ambac's suit accuses Hercules of misappropriating pledged property tax proceeds that were supposed to be transferred to trustee Bank of New York Mellon Trust Co. five days before the Feb. 1 due date of the interest payment. In a court declaration, Duran said Hercules deposited all of the $4.1 million in tax increments it received in December into a Pooled Cash Investment account that is drawn on to pay for various restricted and unrestricted activities. That account was tapped in August 2011 to pay $5.3 million in bond debt service, Duran said.
Ambac petitioned the court on Tuesday to force Hercules to turn over the entire $4.1 million, or alternatively, to freeze those funds or attach other Hercules assets such as some real estate.
The $2.4 million represents interest due Feb. 1 on two tax allocation bond issues dating to 2005 and 2007; a principal and interest payment totaling about $5 million is due Aug. 1.
But court Commissioner Judith Sanders declined Ambac's petition for immediate relief and scheduled a hearing before a judge for Feb. 21.
Hercules' outside attorney, John Killeen, did not dispute an assertion by Ambac's attorney, Jerrold Abeles, that Hercules was technically in default.
(Excerpt) Read more at contracostatimes.com ...
Freezing $4.1 million could cause the city to go bankrupt, he warned.And thus, it begins!"They (Ambac) don't care at all if the city shuts down," he said.
Just use Obama bucks.
Chapter Nine, here we come.
Next?
California says, I left my wallet on the nightstand. I’ll go get it right now. I will be right back..really.
“””Ambac’s suit accuses Hercules of misappropriating pledged property tax proceeds that were supposed to be transferred to trustee Bank of New York Mellon Trust Co. five days before the Feb. 1 due date of the interest payment. In a court declaration, Duran said Hercules deposited all of the $4.1 million in tax increments it received in December into a Pooled Cash Investment account that is drawn on to pay for various restricted and unrestricted activities.”””
Sounds exactly the same as what DEMOCRAT Corzine did at MF Global. Namely, rob accounts to payoff his buddies.
You know that in the case of Hercules, the money that was committed for the bond holders went to UNION workers and their bosses..
Another day, another bankruptcy.
A harbinger of things to come in the formerly golden state.
They violated their insurance contract AND defaulted on the bonds.
Expect more of this.
The Bond insurer will likely not be held liable and rightfully so.
Bondholders SOL.
I live in Contra Costa County. Here is the link to the county salaries over $100,000 for 2009 ( there were 1672 people making over that amount who work for the county, probably more now):
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/03/ContraCostaCoPay2009.DTL&appSession=872268890714645&RecordID=&PageID=2&PrevPageID=1&cpipage=1&CPISortType=&CPIorderBy=
The first 22 are the overpaid alien doctors who work at the county hospital ( some make over $300,000!). Number 23 on the list is a Firefighter who made more than $240k. No data for Hercules specifically, but these numbers should track to the PE employees of that city. Hercules, like it’s “sister city” across the Carquinez Strait, Vallejo, is headed for bankruptcy. Brown succeeded in wiping out all the Redevelopment Agencies in the state recently, but not the debt that they have. All of that falls to the cities where the “redevelopment” was done.
Interesting list. I don’t know what a civilian doctor gets paid, so I don’t know how this pay compares.
I suspect that a lot of the firefighter’s pay is overtime, and I have a hard time getting upset about overtime. Apparently, Contra Costa, like many employers, would rather pay overtime than pay the benefits for another employee. Some employees like getting OT and some don’t. As long as they’re actually providing services for their pay, I’m OK with it.
I recently looked at a list of Nashville’s high earners, and most of the big money went to Nashville Electric Service executives. It’s hard to say which government is getting the better deal.
In any case, I suspect you’re right about imminent bankruptcy, both in Hercules, and throughout the so-called Golden State. I’m not certain that the State can remain solvent. I’m glad that we left.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.