More good news from the city. When will the hits stop rollin' in?

This is a copy of a Report that Standard & Poor's wrote about the City five (5) years ago:

Research: Return to Regular Format
Sunshine State Governmental Financing Commission, FL
Coral Gables; Tax Secured, General Obligation; Tax Secured, Miscellaneous Tax
Publication date: 23-Dec-2003
Credit Analyst: John Sugden-Castillo, New York (1) 212-438-1678; Robin Prunty, New York (1) 212-438-2081

Credit Profile
US$29. mil rev bnds (Coral Gables) ser 2004AB dtd 01/22/2004 due 10/01/2028 AA
Sale date: 22-JAN-2004

DOWNGRADED To From
Coral Gables, Florida
Coral Gables, Florida
Coral Gables ICR AA+ AAA

OUTLOOK: STABLE


Rationale


Standard & Poor's Ratings Services has lowered the issuer credit rating (ICR) on Coral Gables, Fla. to 'AA+' from 'AAA', based on consecutive general fund drawdowns, poor budgetary practices, dependence on enterprise fund transfers to balance general fund operations, and diminished fund balance reserves.

In addition, Standard and Poor's has assigned its 'AA' rating to the Sunshine State Governmental Financing Commission, Fla.'s revenue bonds series 2004A and 2004B, issued on behalf of the City of Coral Gables, secured by the city's covenant to budget and appropriate from non-ad valorem revenues.

The 'AA+' ICR rating and the 'AA' rating assigned to Sunshine State Governmental Financing Commission obligations reflect:

* A strong economic base, characterized by the presence of more than 150 multinational corporations and strong ties to the Latin American marketplace;
* An affluent residential population of 40,000, which nearly doubles during the daytime; and
* Low direct outstanding debt.

Coral Gables' financial position has weakened over the past three fiscal years (2000-2002) as a result of nonbudgeted expenditures and general fund drawdowns for capital improvement projects. The city, which renegotiates its contracts with public safety employees on a yearly basis, does not include a contingency for salary increases in its yearly budget. As a result, the city posted operating deficits prior to transfers of $6.6 million, $3.3 million and $5.4 million in fiscal years 2002-2000, respectively. In the past, management has relied on the general fund balance and transfers from its enterprise funds to make up for nonbudgeted expenditures. Transfers in from enterprise funds, which amounted to $4.2 million, $5.5 million, and $4.8 million in fiscal years 2002, 2001, and 2000, respectively, provided some cushion, but are not sufficient to maintain reserve levels.

The unreserved general fund balance, which stood at just under $10 million at the end of fiscal 1998, declined to $6.9 million in fiscal 2000, due to a drawdown for retroactive collective bargaining payments. In fiscal 2001, the city commission approved a fund balance drawdown to pay for capital improvements. The unreserved general fund balance had declined to $607,000, or a very low 0.8% of general fund expenditures at fiscal year end 2001. In fiscal 2002, the unreserved fund balance increased to $4.6 million, reflecting an $18.9 million upward adjustment in the beginning fund balance due to the blending of several funds into the general fund under GASB-34. Although financial statements are not yet available, management anticipates the fund balance to stabilize in fiscal 2003, despite the impact of retroactive collective bargaining payments. Management plans to bring the unreserved fund balance to 10% of expenditures in the next three to four years, but there is no plan to achieve this target and the city has no formal fund balance policy.

Coral Gables' debt levels are low. Although the city has no GO debt, it has $65 million in direct outstanding debt, including this issue. Self-supporting revenue debt is $7.6 million, with the balance made up of special obligation bonds issued through the Sunshine State Governmental Financing Commission. The city's net direct debt is a low $1,358 per capita and roughly 1% of market value. Overall net debt is also low at $1,661 per capita and 1.1% of market value. Prior to this issuance, all of the city's debt was variable-rate debt. This issue will bring the city's fixed-to-variable debt ratio to a more balanced level. Bond proceeds will be used to convert $11 million in variable-rate debt to fixed, and to fund $16.3 million in new projects.

Outlook


The stable outlook reflects the expectation that the city will address budgeting issues in order to maintain or improve its general fund balance. Further deterioration of general fund balance reserves would indicate credit deterioration and could lead to additional rating action.

Economy


The City of Coral Gables, located southwest of Miami, Fla. in Miami-Dade County, is a premier residential and business community. An affluent residential population of 43,000 in 2002 is complemented by a significant business employment center of roughly the same size. Per capita income levels are very high in the city and average over twice the state and national levels.

The city's tax base continues to expand and has grown by an average 6% annually since 1999 to reach $6.5 billion in 2002. Home to over 150 multinational corporations representing a variety of businesses, the city benefits from its proximity to Miami International Airport and the Port of Miami. It continues to expand its commercial base, with 600,000 square feet of office space being added to its existing 6.5 million square feet inventory. Additionally, the city is home to the main campus of the University of Miami (10,000 students). Leading city employers include the university (4,000 employees), HealthSouth Doctor's Hospital (1,225), the City of Coral Gables (864), and Dade County Public Schools (737). City employment levels have consistently reflected the diversity and resilience of the city's local economic base.



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That was 5 years and about 20 scandals ago.

It truly is amazing to see the level of incompetence in city government. The term "den of thieves" is probably the most appropiate to describe these government officials.

Get ready for major staffing reductions and overtime reductions in Public Safety -- thats where the hole in the budget and pension come from. The unions did a great job securing their well paid positions over the years -- but the pension liabilities and propertry tax revenue drop will wipe all that away in this year's budget. Fewer police and fire fighters are the result of the unsustainable growth in their budgets. Thats poor planning by city officials and the unions -- nobody thought the good times would stop, and of course, they did.

I would rather pay more to have a fine fire dept in Coral Gables than give it to the county. Good services costs money. Be glad that you live in an area where you can afford it!

Hey, Class 1, take a paycut pal. I did and I get no pension plus I got to pay you an inflated salary and benefit package that I would die for.

HEY JAGUAR..YOU DONT KNOW YOUR FACTS. CGPD OFFICERS HAVE NOT RECEIVED A PAY RAISE IN OVER 2 YRS GOING ON A THIRD WITH A PAY CUT COMING. THE CITY HAS TOLD THE CGPD FOR THE LAST FIVE YEARS TO CUT BUDGETS TO THE BONE OVER AND OVER. MINIMUM STAFFING HAS BEEN DECREASED TWICE IN THE PAST YEAR. SOME OF THE COMPUTERS IN OUR POLICE CARS ARE OVER 7 YRS OLD. THEY ARE HAVING TROUBLE FINDING FUNDS TO PAY FOR AMMUNITION JUST TO PRACTICE WITH. ALL THAT AND THANKS TO AGGRESSIVE POLICE WORK AND GREAT ARRESTS, THE CRIME RATE HAS STAYED THE SAME OR ACTUALLY DECREASED IN SOME AREAS. THIS IS EVEN THOUGH JUST OUTSIDE OUR BORDERS CRIME HAS INCREASED. NEXT TIME YOU HEAD EAST PAST 37 AVE INTO MIAMI OR WEST OF 57 AV INTO THE COUNTY JUST KEEP IN MIND THE CRIME RATE JUST INCREASED BY 20-30%. GOOD LUCK!!!

What Ponzi scheme it turns out our pension is! I'm not going to vote to contribute to this money pit. It's just a terrible investment. I'm better off to just keep buying Lotto tickets on the way home.

Our police force has been attacked by Anderson and Slesnick for years because they simply did not toe the line with overdue pay raises thats been held back and a much tougher set of rules of negotiations compared to the golden boys and girls at Fire and Rescue. Now sh*t hits the PD although we have never caught up with the rest of the CG employees. We will never endorse Slesnick or Anderson in any political race and seek opponents that are far more fair minded like we did with Sanabria

What a city and what a disaster! The state of the city is not something that has happened overnight. It has been going on for a long time with the full knowledge and participation of the City Commission, City Manager, the Finance Director and the Department Heads. Those at the top do not have to worry as much about the pension as they have already lined their pockets and bank accounts.

What is this about the average of 16.8 percent for employee's wage increases? How and who approved these increases? I sure never heard of such an average when I was employed with the City.

I am very concerned about the idea of the pension fund going into "bankruptcy." My pension is not that large but I sure depend on it and need it.

Why was the former police chief Skinner paid until he could be eligible for a pension? Why is David Brown collecting a pension when he was a "thief", an unethical and immoral manager? What about all the other former employees who were allowed to retire rather than "face the music" for their misdeeds and misconduct? Do they deserve a pension? I guess the higher -ups decided they do so they would not incriminate the powers-to-be.

Why aren't all government employees required to sign a statement acknowledging that they are aware that if they do not follow city rules and are deceitful and commit acts that are immoral, criminal or harmful, they will get no pension? Our pension fund would not be in the trouble it is now.

I agree with the above poster. Brown should have his pension revoked. He should also be made to reimburse the City for all legal and settlement costs associated with his concubine. The City has a long history of allowing assorted thieves, bums and bimbos to receive their full pensions. Some examples: Sury Nieves, formerly of Public Works. Fired for stealing time (ie: getting paid for not showing up at work). B&Z's Pass...fired w/full pension and DROP $$$. The upcoming Trial Board is irrelevant...she still keeps the $$$. And most recently, the blond bimbo....gets vested in 2010. Oh, almost forgot...the cushy $80K "buying time" towards his pension that former CM Eads received. Add to that the financial wizardry of Don Nelson and its no wonder that the plan is in trouble!!!

Hey not a problem folks.... If the the tax payers don't want a Coral Gables Fire Dept. any longer just merge them with Miami-Dade county. Then you won't have to worry about it again!!!!!

me

Can we get someone to look at the War Memorial Youth Center in Coral Gables. What's going on there with the RFP's? Is the Gymnastics program now suing over the corrupt slection process? All we need now is another "surprise".

The Coral Gables pension system can't be that bad; I know of two retired fire chiefs driving around in new corvettes!

The Bond Buyer: The Daily Newspaper of Public Finance
Vallejo Union Digs in Heels

Plans to Appeal Court-Sanctioned Rejection of Contract

Bond Buyer | Friday, September 4, 2009

By Andrew Ward

SAN FRANCISCO — In an action that stands to drag out Vallejo, Calif.’s already 16-month-old bankruptcy proceedings, the International Brotherhood of Electrical Workers plans to appeal a court ruling allowing the city to reject its collective bargaining agreements.

Michael McManus, chief judge of U.S. Bankruptcy Court for the Eastern District of California, earlier this week allowed the city to reject the union contract. A lawyer for the IBEW, which represents frontline non-public safety workers, said the union plans to appeal the ruling to the Ninth Circuit Court of Appeals.

“This is the first time a court has ever really rejected a public employee collective bargaining agreement,” said union bankruptcy attorney Dean Gloster, of Farella Braun + Martel LLP in San Francisco.

He said the precedent is bad for public workers across the country, unfair to Vallejo’s lowest-paid workers, and based on an incorrect interpretation of the U.S. bankruptcy code.

The union’s legal team can appeal to the Ninth Circuit or the Bankruptcy Appellate Panel in Pasadena, Calif. Gloster said he plans to file with the Ninth Circuit because its judges are more accustomed to dealing with labor law and may be more willing to question the idea of throwing out a contract than bankruptcy judges.

McManus subjected the city’s motion to reject the labor contracts to a three-part test defined in the U.S. Supreme Court’s 1984 case National Labor Relations Board v. Bildisco & Bildisco.

The Bildisco standard required the city to prove that the contract was burdensome; rejection of the contract was equitable to the parties to the bankruptcy; and the parties had tried to negotiate a solution and were unlikely to reach an agreement.

McManus this week said Vallejo met that standard. If his ruling stands, the IBEW will have to renegotiate its contract, which was good through June 30, 2010.

The city is pushing for new contracts because it believes overly generous labor agreements bankrupted it. Labor costs account for about three-fourths of the Vallejo general fund, or about $60 million a year.

By contrast, the city’s general fund municipal market debt is small. It has just over $50 million of certificates of participation outstanding.

Gloster said the U.S. Congress overturned the Bildisco precedent when it enacted Section 1113 of the Bankruptcy Code, which says a company can void labor contracts only if that action is necessary to prevent liquidation of the business. Gloster also argued that the bankruptcy court couldn’t simply allow the city to ignore California’s public sector labor laws.

McManus rejected those arguments in a legal memorandum he issued in March. At the time, he wrote that the Congress had declined to incorporate the changes into the Chapter 9 municipal bankruptcy law. He also said the state had waived local labor law when it authorized its municipalities to file for Chapter 9 protection.

The March memo was his interpretation of the law. He applied it to the Vallejo case by rejecting the IBEW’s contract earlier this week after forcing the parties into mediation with a bankruptcy judge for several months.

Vallejo, which has four public employee unions, reached voluntary agreements on new contracts with the Vallejo Police Officers Association and the Confidential, Administrative, Managerial, and Professional Association.

The International Association of Firefighters last month agreed to rejection of their contracts and to begin an expedited schedule of negotiations that will either yield a new contract agreement or a contract that’s imposed in binding arbitration within several months.

Vallejo, a city of 117,000 people, sought Chapter 9 bankruptcy protection in May 2008. It’s the biggest municipal ­bankruptcy since Orange County, Calif.’s in 1994.

“There aren’t many municipal bankruptcies, and I think Vallejo is one of the first — if not the first — to really concentrate on employment contracts,” said James Spiotto, head of the head of the special litigation, bankruptcy, and workout group at Chapman and Cutler LLP in Chicago. He agrees with McManus’ interpretation of the law.

He said the judge’s ruling is “unusual, but not unanticipated” because of the law and the economic conditions of local governments.

Spiotto said he hopes the ruling and Vallejo’s experience will show public officials and public employee unions that they need to negotiate seriously to avoid bankruptcy.

Vallejo’s lawyer, Marc Levinson of Orrick. Herrington & Sutcliffe LLP, said the IBEW’s appeal is a waste of time and money for both the city and its workers. He said the city has already spent millions on legal fees that could have been put to better use paying firefighters and IBEW members.

“If they’re going to appeal it, which is their right, it’s just more time, more money, more delay,” he said.

Levinson said it’s better to start negotiating a plan to adjust Vallejo’s debts. A “plan of adjustment” is a legal term for a schedule of payments that the economically battered city can actually afford to pay after the bankruptcy. It’s the last stage in a bankruptcy, and requires the parties to come to an agreement on the damages that unions and bondholders will be paid for their losses under the bankruptcy.

“We still have to fight about damages, which could be substantial, but at least we’re at the point now where we really have to move forward on the formulation and negotiation of a plan,” Levinson said.

Bankruptcy damages are generally paid at pennies on the dollar from the leftover funds in a bankruptcy. The payments are often stretched out over years or decades.

Gloster said the IBEW will continue to negotiate on a new labor contract, even as it appeals McManus’ ruling to higher courts. He said the city could end the case now if it would offer its front-line workers the same sort of terms as it offered managers.

His comments suggest the union’s appeal may be both a principled stance on the sanctity of its contracts and a way of keeping pressure on the city to offer the IBEW the best deal possible.

Gloster said he couldn’t discuss the precise details of the labor negotiations, but said the main point of contention for the IBEW is that its workers — Vallejo’s lowest paid — are being offered less generous health benefits than police, firefighters, and management employees.

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