I attended the July 27th meeting of the City Council of Castle Pines North. Other than elected officials of the City, and people paid to be there, out of a community of 10,000 people nobody came - not one citizen attended the meeting. Nobody.
There was a request for additional expenditure for street repairs. An additional $80,000 was approved for pavement striping, asphalt patching, street sweeping, work on crosspans and aprons, and concrete pavement panel repair. With the $20,000 worth of repairs that was approved at the last meeting, 2010 expenditures on street repairs move from $200,000 to $300,000. In addition to these expenditures, there is still a great deal of back log in other street repair work that needs to be done. We should hear a detailed report on the condition of the street surfaces in the next few weeks, as well as how much money will be needed to bring the streets up to par.
A consultant was hired by Council at a cost of $7,500 to create three models. The first model will show what it currently costs to run the City using CH2MHill. The second model will show what it would cost to run the City using employees. The third model will show what it would cost to run the City if there is a merger with the Metro District. It is hoped the model will show savings from using employees, as well as further savings from a merger. The hope is savings from the City's merger with the Metro District can be used by the City to pay to fix our streets, though capital costs will not be included in the study. Council does not know whether or not the Metro District will participate.
It was reported zero citizens have volunteered for the committees Council has set-up.
Council met as the URA commission, and set up a new advisory committee to the URA commission. Council also discussed appointing a grievance committee to hear appeals to decisions made by the planning commission, which is also the council members. Council asked if it was a conflict of interest to be the URA, and the planning commission, and the grievance committee. Council's counsel advised there is no conflict of interest.
A special outside communications company was paid $10,500 for one month's work. They will be paid an additional $21,000 for two more months work. A brochure is being printed up at additional cost. The brochure is supposed to explain how the URA is good for residents of our community.
A Council member said that incorporation was supposed to be about combination of HOAs, and that a lot of savings were supposed to flow from the combination. It was pointed out that instead, a bunch of taxes and fees had been passed on to residents, and not any of the imagined savings have ever taken place. The councilmember asked if taxes could be cut. The answer given was not if you want the streets fixed.
Thursday, July 29, 2010
Saturday, July 17, 2010
America's Great Outdoors Initiative
On July 16th I attended a Federal listening session for the President's America's Great Outdoors Initiative. The purpose of the meeting was to hear the concerns citizens have with conservation, recreation, and reconnecting people to the outdoors.
Interior Secretary Ken Salazar attended and shepherded the proceedings. Eighteen years ago he and Harris Sherman formed Great Outdoors Colorado (GOCO). (A portion of lottery proceeds fund GOCO grants for waterways, bikeways, parks, and similar amenities. The LaGae park at CoCPN recently received a GOCO grant.) While this approach is unique to Colorado, Secretary Salazar went to the President to ask if perhaps an initiative could be undertaken to expand such an approach throughout the country. The purpose of the listening session series is to collect public opinion prior to Salazar's request of the President on November 15th.
Remarks were made by Sherman, who is now Under Secretary for Natural Resources and Environment for the US Department of Agriculture, Will Shafroth, Department of Interior's Deputy Assistant Secretary for Fish, Wildlife and Parks, Senator Mark Udall, Congresswoman Diana DeGette, and Congressman Ed Perlmutter, as well as a representative from the Council on Environmental Quality (CEQ), and a panel discussion between Salazar and the executive director of GOCO, the manager of Denver Parks and Recreation, and Christine Stanley, the state representative for Summit County.
After the session, participants broke out into a number of rooms to offer opinions on the topics. The following four questions guided the discussion:
What obstacles exist to achieve your goals for conservation, recreation, or reconnecting people to the outdoors?
Please share your thoughts and ideas on effective strategies for conservation, recreation and reconnecting people to the outdoors.
How can the federal government be a more effective partner in helping to achieve conservation, recreation or reconnecting people to the outdoors?
What additional tools and resources would help your efforts be even more successful?
Amongst all the comments, the thing that really struck me was the input from the youth who are working with the Colorado Department of Natural Resources this summer. Salazar asked them what they thought should be done. They said:
a) teach kids in school about the topic
b) reinforce that teaching with TV ads and social media such as Facebook
c) give kids additional opportunities to have greater connection with the topic
d) pay special attention to, and reach out to, at-risk students.
I don't know what the big thinkers will come up with, but out of the mouths of babes.....
For further information on this initiative: http://www.doi.gov/americasgreatoutdoors/
Interior Secretary Ken Salazar attended and shepherded the proceedings. Eighteen years ago he and Harris Sherman formed Great Outdoors Colorado (GOCO). (A portion of lottery proceeds fund GOCO grants for waterways, bikeways, parks, and similar amenities. The LaGae park at CoCPN recently received a GOCO grant.) While this approach is unique to Colorado, Secretary Salazar went to the President to ask if perhaps an initiative could be undertaken to expand such an approach throughout the country. The purpose of the listening session series is to collect public opinion prior to Salazar's request of the President on November 15th.
Remarks were made by Sherman, who is now Under Secretary for Natural Resources and Environment for the US Department of Agriculture, Will Shafroth, Department of Interior's Deputy Assistant Secretary for Fish, Wildlife and Parks, Senator Mark Udall, Congresswoman Diana DeGette, and Congressman Ed Perlmutter, as well as a representative from the Council on Environmental Quality (CEQ), and a panel discussion between Salazar and the executive director of GOCO, the manager of Denver Parks and Recreation, and Christine Stanley, the state representative for Summit County.
After the session, participants broke out into a number of rooms to offer opinions on the topics. The following four questions guided the discussion:
What obstacles exist to achieve your goals for conservation, recreation, or reconnecting people to the outdoors?
Please share your thoughts and ideas on effective strategies for conservation, recreation and reconnecting people to the outdoors.
How can the federal government be a more effective partner in helping to achieve conservation, recreation or reconnecting people to the outdoors?
What additional tools and resources would help your efforts be even more successful?
Amongst all the comments, the thing that really struck me was the input from the youth who are working with the Colorado Department of Natural Resources this summer. Salazar asked them what they thought should be done. They said:
a) teach kids in school about the topic
b) reinforce that teaching with TV ads and social media such as Facebook
c) give kids additional opportunities to have greater connection with the topic
d) pay special attention to, and reach out to, at-risk students.
I don't know what the big thinkers will come up with, but out of the mouths of babes.....
For further information on this initiative: http://www.doi.gov/americasgreatoutdoors/
Thursday, July 15, 2010
Group in Castle Pines North seeks to slow massive development
Our community made the papers again! Here's a recent story about the "Blight's Not Right" petition, which I signed this morning. No, there was not enough discussion in the community about the matter. If this process provides a chance for more understanding by Council as to why so many of their constituents are ticked off and why they're getting sued, or if the constituents come to understand why their elected officials voted for this, I'm all for the petition process. Here's the story by Carlos Illescas of The Denver Post:
A group of Castle Pines North residents is collecting signatures in an attempt to abolish the newly created Urban Renewal Authority, which blighted agricultural land to allow for a massive development.
So far, Blight's Not Right has collected about 300 signatures on its petitions, more than is needed to force the City Council, which acts as the authority, to abolish the URA or put the matter to voters.
Doing that, the group says, would slow down the project and allow more time for public input — something it says residents were not given. But city officials say the project was debated for two years.
The petition drive is the latest controversy for The Canyons, a 3,300-acre planned development east of Interstate 25. At build-out, it would have about 225 acres of commercial property and 2,500 homes.
"Our intent is to really vet it through the community properly," said Stacie Sneider, one of the leaders of the petition drive. "I certainly don't believe the community was well-informed on this."
The City Council took some heat in May for blighting the land a week before a new state law kicked in that would have, in most cases, prevented it from doing so.
Urban renewal allows cities to create taxing districts that funnel taxes generated from the authorized area toward public improvements.
Tom Ragonetti, attorney for The Canyons, said the development would pretty much continue as planned with or without the Urban Renewal Authority. It would just mean not being able to take advantage of a few tools a URA could offer.
"It really doesn't hurt us," he said. "It's not essential and never was."
However, City Councilman Doug Gilbert said, dissolving the URA would give the city less input into The Canyons development.
"If voters abolish the URA, it simply gives us less of a voice in what the developer is going to do," Gilbert said.
Sneider said she hopes to have more than enough signatures on the petition to force the issue on the ballot in November.
"We are doing what we can to slow down the process so citizens can understand what the Urban Renewal Authority is about," she said.
Regardless, Ragonetti said, the undeveloped area that is The Canyons probably won't see new construction for years, until the current economic situation improves significantly.
A group of Castle Pines North residents is collecting signatures in an attempt to abolish the newly created Urban Renewal Authority, which blighted agricultural land to allow for a massive development.
So far, Blight's Not Right has collected about 300 signatures on its petitions, more than is needed to force the City Council, which acts as the authority, to abolish the URA or put the matter to voters.
Doing that, the group says, would slow down the project and allow more time for public input — something it says residents were not given. But city officials say the project was debated for two years.
The petition drive is the latest controversy for The Canyons, a 3,300-acre planned development east of Interstate 25. At build-out, it would have about 225 acres of commercial property and 2,500 homes.
"Our intent is to really vet it through the community properly," said Stacie Sneider, one of the leaders of the petition drive. "I certainly don't believe the community was well-informed on this."
The City Council took some heat in May for blighting the land a week before a new state law kicked in that would have, in most cases, prevented it from doing so.
Urban renewal allows cities to create taxing districts that funnel taxes generated from the authorized area toward public improvements.
Tom Ragonetti, attorney for The Canyons, said the development would pretty much continue as planned with or without the Urban Renewal Authority. It would just mean not being able to take advantage of a few tools a URA could offer.
"It really doesn't hurt us," he said. "It's not essential and never was."
However, City Councilman Doug Gilbert said, dissolving the URA would give the city less input into The Canyons development.
"If voters abolish the URA, it simply gives us less of a voice in what the developer is going to do," Gilbert said.
Sneider said she hopes to have more than enough signatures on the petition to force the issue on the ballot in November.
"We are doing what we can to slow down the process so citizens can understand what the Urban Renewal Authority is about," she said.
Regardless, Ragonetti said, the undeveloped area that is The Canyons probably won't see new construction for years, until the current economic situation improves significantly.
Wednesday, July 14, 2010
If There's No Savings From Consolidation, and If Voters Won't Approve New Taxes.....
I attended the 7/13 City Council meeting. Zero citizens stayed through to the end of this meeting.
The meeting began at 5:30 with an on-site inspection of an erosion problem on one of the streets in the south part of the City. It's too early to tell exactly what the cause of the problem is, the extent of the erosion, or what the precise fix should be. Water is not flowing as it's supposed to, and some areas are being washed out from the erosion. Further research will be done on the problem over the next few days, and the Council may try to move pretty quickly to address this problem. Citizens living nearby believe the problem has been going on since around February. Storm related events may now be eroding what could be a couple hundred yards of area underneath the street.
The work session began at 6 at the HOA1 Clubhouse, with Council training on public records policy. The Citizens Emergency Response Team made a presentation. Performance measurements were suggested to monitor CH2MHill's contract. The air conditioning was not turned on early in the day, so the room was hot. We opened the doors to let outside air in.
The regular meeting began at 7 with the library district updating its summer reading contest. The City's auditor then presented her report on the 2009 books. She said things were better than a year ago, largely due to a one-time payment of almost two million dollars to the City from the Canyons developer. She said the audit looks backwards, and not forwards, and that the future would be more challenging without these one-time injections from developers. The new City manager chimed in, saying the City would have to live within its revenues. (Hooray!) The auditor said some practices in 2009 were not good, but in as much as a new accounting firm has just been hired, that's old news. (I don't know if anyone told her the new firm specializes in HOA management, and has never done accounting for a City before.)
Audited 2009 Revenues were:
Property Taxes - $661,417
Specific Ownership Taxes - $49,998
Sales Taxes - $716,088
Use Taxes - $694,192
Franchise Fees - $344,630
Intergovernmental Revenues - 6,237
Developer Fees - $1,976,400
Miscellaneous - $250
Audited 2009 Expenses were:
City Council - $24,309
City Manager - $134,871
General Operations - $451,000
Legal Services - $232,514
Finance - $98,441
City Clerk - $134,062
Incorporation Costs - $786
Public Safety - $695,833
Public Works - $551,049
Community Development - $380,404
The City began the year $737,496 in the hole, and with the developer payment of $1,976,400 on December 30th, ended the year at $2,008,804.
As to 2009 expenditures on roads:
Maintenance - $118,500
Traffic control - $9,873
Snow and Ice Removal - $163,033
General Administration - $92,735
Law Enforecement and Safety - $166,908
On the revenue side of roads in 2009:
$420,712 came from local taxes.
$130,337 came from the State of Colorado
The auditor states there was a material weakness in the City's financial reporting process in 2009. The auditor continues to believe the City's internal controls are inadequate to accurately and timely report financial information. The auditor suggests the City seek appropriate resources to prepare financial statements. The auditor says specific recommendations from the prior year were not put in place. Adequate supporting documentation was not found on several expenditures. It is suggested expenditures be reviewed and approved prior to payment, and that the approval should be in writing.
The meeting then moved on to extend the moratorium on marijuana related matters, and to adopt licensing regualtions for sexually oriented businesses. A representative of council was appointed to oversee the new manager's contract.
Money was approved to fix some curbs, gutters, and sidewalks, above the prior budget. Apparently the need for concrete is about six times what the available budget is for concrete repairs. The first draft of the recently conducted pavement study is being massaged, and a report will be presented at the next council meeting. There is no more money left in the budget to spend for the rest of the year. The budget for striping the streets has also seen a shortfall. Council does have $100,000 it could spend on streets. Polymers may be tried for patching some of the holes that can't be budgeted for repair.
A discussion was had about writing a Comprehensive Master Plan for the City, plus zoning regulations, and then design review guidelines. This will take a lot of money and at least two years. It can be done in house, or a consultant can be hired. (You may recall the County's 2030 Master Plan process.) This would be done to aim at the Canyons needs in five to eight years.
Doug will organize an authentic German Volksmarch for the Oktoberfest. This is a form of non-competitive fitness walking that developed in Europe. Participants typically walk 10 kilometers (6.2 miles) on an outdoor path. Participants enjoy recording distances and event participation in international record books. More of a social event than a 'HEALTHY OUTING', participants often bring along a Boda bag filled with wine or Apfelcorn. Maureen and Tara will also sponsor a fun run of some type. It is not known if these two events can be merged. Doug was asked if free beer would be provided to men who have the guts to wear lederhosen in the Volksmarch. He quipped that good Germans don't give away beer, they sell it.
A couple ward meetings had the URA lady come talk about the URA. The new city manager said the petition for a ballot question to repeal the URA has been has been approved to form. If enough signatures are collected, this question will be on the November ballot. (The City has a website that will likely have information FOR the URA. I believe the Blight's Not Right group has a website AGAINST the URA. There is a FaceBook page with a couple hundred supporters called "Are You In The Dark in Castle Pines North?" If you read all three you'll probably have a pretty good idea what the issue is about.)
Apparently a citizen asked City staff if it was ok to have a block party. They wanted to know about blocking off their street for the event. The City does not have a policy on block parties. A wide ranging discussion was then held on permitting block parties, how Castle Rock does it, how the County does it, and the Army's policy under the Clinton Administration on gays in the Military. (Don't Ask, Don't Tell.) It was finally determined the Clintons had it right, but instead it came out as a policy of "Block Partier Emptor", or some such.
Jim McGrady spoke to the topic of the notion of integration between the City and the Metro District. He's going to ask Clifton Gunderson how much it would cost to prepare three models. The first model would show the City operating under a CH2MHill contract. The second model would show the City operating under City employees. The third model would look at the City's 2010 budget and the Metro District's 2010 budget, and look at potential financial savings or improvement in delivery of services by merging the two entities functions. Jim will obtain a quote and have the cost available at the next City council meeting. He would like to have the work performed by September 1st, in time for 2011 budgeting. Jim was asked by Council if the Metro District board has bought into the notion of this study. Apparently that conversation has not yet been had, but needs to happen. Council expressed concern that the District's board may not embrace the study results if they do not participate in the study itself.
(It has long been asserted in some circles that there could be savings from merging the City and the Metro District. While that sounds good, no credible study has ever been presented to show how this desire might come true - or that any such savings are sufficient to fund the needs to the City. The Metro District has moved on to explore whether consolidation with other water providers in the area might in fact produce savings for citizens, or better service levels, or perphaps both. If the Council cannot demonstrate savings, and if needs for street repair and other items exceed the current budget, the Council is going to need to come to citizens and ask for a tax to fund the operation of the City. Development on the east side of I-25 might help with revenues, but it might take eight years to plan, develop, sell, and generate traffic on the east side of I-25 that produces such revenues. Until that cash flows, the City is going to need to pull in its horns, or ask for a tax, or both.)
Bond attorney Dee Wisor will come to the City Council on Monday, July 26th. He will talk about impacts of Amendment 60, and 61, and Proposition 101. (You can see his speech on YouTube.) Citizens are welcome to attend the speech. Citizens will then have to leave so that City Council can have an executive session with Dee to talk about a bond election in November to raise a new tax to support the operation of the City.
I then left, and the Council had an executive session to talk about Metro District matters. They were going to have a session about the URA, but there's no new conversation to be shared at this time. A report on the URA was circulated, and it was mentioned that a motion has been filed in Court to try to get one of the law suits against the City dismissed. I think it was 9:30 when I left.
If there are no substantial savings to be had from integration of the Metro District and the City (likely) and if voters reject a request for higher taxes to fund the operation of the City (way too soon to tell), then how will we pay for the upkeep of our assets, such as the condition of the streets? Does anybody have any good ideas on that score? And once again, shouldn't we have a thorough study of what our assets are worth, and how much money we need to save to pay for their replacement? Until we have that data, do we really have any idea what the financial needs of the City are? While there is only so much bandwidth, shouldn't we prioritize that study of reserves and capital budgets? Do we need to put away several hundred thousand dollars a month? A million a month? More? Less? Does anybody know? Where are we going to get the money needed to repair and replace the assets we already have, more less build other things we might want or need?
The meeting began at 5:30 with an on-site inspection of an erosion problem on one of the streets in the south part of the City. It's too early to tell exactly what the cause of the problem is, the extent of the erosion, or what the precise fix should be. Water is not flowing as it's supposed to, and some areas are being washed out from the erosion. Further research will be done on the problem over the next few days, and the Council may try to move pretty quickly to address this problem. Citizens living nearby believe the problem has been going on since around February. Storm related events may now be eroding what could be a couple hundred yards of area underneath the street.
The work session began at 6 at the HOA1 Clubhouse, with Council training on public records policy. The Citizens Emergency Response Team made a presentation. Performance measurements were suggested to monitor CH2MHill's contract. The air conditioning was not turned on early in the day, so the room was hot. We opened the doors to let outside air in.
The regular meeting began at 7 with the library district updating its summer reading contest. The City's auditor then presented her report on the 2009 books. She said things were better than a year ago, largely due to a one-time payment of almost two million dollars to the City from the Canyons developer. She said the audit looks backwards, and not forwards, and that the future would be more challenging without these one-time injections from developers. The new City manager chimed in, saying the City would have to live within its revenues. (Hooray!) The auditor said some practices in 2009 were not good, but in as much as a new accounting firm has just been hired, that's old news. (I don't know if anyone told her the new firm specializes in HOA management, and has never done accounting for a City before.)
Audited 2009 Revenues were:
Property Taxes - $661,417
Specific Ownership Taxes - $49,998
Sales Taxes - $716,088
Use Taxes - $694,192
Franchise Fees - $344,630
Intergovernmental Revenues - 6,237
Developer Fees - $1,976,400
Miscellaneous - $250
Audited 2009 Expenses were:
City Council - $24,309
City Manager - $134,871
General Operations - $451,000
Legal Services - $232,514
Finance - $98,441
City Clerk - $134,062
Incorporation Costs - $786
Public Safety - $695,833
Public Works - $551,049
Community Development - $380,404
The City began the year $737,496 in the hole, and with the developer payment of $1,976,400 on December 30th, ended the year at $2,008,804.
As to 2009 expenditures on roads:
Maintenance - $118,500
Traffic control - $9,873
Snow and Ice Removal - $163,033
General Administration - $92,735
Law Enforecement and Safety - $166,908
On the revenue side of roads in 2009:
$420,712 came from local taxes.
$130,337 came from the State of Colorado
The auditor states there was a material weakness in the City's financial reporting process in 2009. The auditor continues to believe the City's internal controls are inadequate to accurately and timely report financial information. The auditor suggests the City seek appropriate resources to prepare financial statements. The auditor says specific recommendations from the prior year were not put in place. Adequate supporting documentation was not found on several expenditures. It is suggested expenditures be reviewed and approved prior to payment, and that the approval should be in writing.
The meeting then moved on to extend the moratorium on marijuana related matters, and to adopt licensing regualtions for sexually oriented businesses. A representative of council was appointed to oversee the new manager's contract.
Money was approved to fix some curbs, gutters, and sidewalks, above the prior budget. Apparently the need for concrete is about six times what the available budget is for concrete repairs. The first draft of the recently conducted pavement study is being massaged, and a report will be presented at the next council meeting. There is no more money left in the budget to spend for the rest of the year. The budget for striping the streets has also seen a shortfall. Council does have $100,000 it could spend on streets. Polymers may be tried for patching some of the holes that can't be budgeted for repair.
A discussion was had about writing a Comprehensive Master Plan for the City, plus zoning regulations, and then design review guidelines. This will take a lot of money and at least two years. It can be done in house, or a consultant can be hired. (You may recall the County's 2030 Master Plan process.) This would be done to aim at the Canyons needs in five to eight years.
Doug will organize an authentic German Volksmarch for the Oktoberfest. This is a form of non-competitive fitness walking that developed in Europe. Participants typically walk 10 kilometers (6.2 miles) on an outdoor path. Participants enjoy recording distances and event participation in international record books. More of a social event than a 'HEALTHY OUTING', participants often bring along a Boda bag filled with wine or Apfelcorn. Maureen and Tara will also sponsor a fun run of some type. It is not known if these two events can be merged. Doug was asked if free beer would be provided to men who have the guts to wear lederhosen in the Volksmarch. He quipped that good Germans don't give away beer, they sell it.
A couple ward meetings had the URA lady come talk about the URA. The new city manager said the petition for a ballot question to repeal the URA has been has been approved to form. If enough signatures are collected, this question will be on the November ballot. (The City has a website that will likely have information FOR the URA. I believe the Blight's Not Right group has a website AGAINST the URA. There is a FaceBook page with a couple hundred supporters called "Are You In The Dark in Castle Pines North?" If you read all three you'll probably have a pretty good idea what the issue is about.)
Apparently a citizen asked City staff if it was ok to have a block party. They wanted to know about blocking off their street for the event. The City does not have a policy on block parties. A wide ranging discussion was then held on permitting block parties, how Castle Rock does it, how the County does it, and the Army's policy under the Clinton Administration on gays in the Military. (Don't Ask, Don't Tell.) It was finally determined the Clintons had it right, but instead it came out as a policy of "Block Partier Emptor", or some such.
Jim McGrady spoke to the topic of the notion of integration between the City and the Metro District. He's going to ask Clifton Gunderson how much it would cost to prepare three models. The first model would show the City operating under a CH2MHill contract. The second model would show the City operating under City employees. The third model would look at the City's 2010 budget and the Metro District's 2010 budget, and look at potential financial savings or improvement in delivery of services by merging the two entities functions. Jim will obtain a quote and have the cost available at the next City council meeting. He would like to have the work performed by September 1st, in time for 2011 budgeting. Jim was asked by Council if the Metro District board has bought into the notion of this study. Apparently that conversation has not yet been had, but needs to happen. Council expressed concern that the District's board may not embrace the study results if they do not participate in the study itself.
(It has long been asserted in some circles that there could be savings from merging the City and the Metro District. While that sounds good, no credible study has ever been presented to show how this desire might come true - or that any such savings are sufficient to fund the needs to the City. The Metro District has moved on to explore whether consolidation with other water providers in the area might in fact produce savings for citizens, or better service levels, or perphaps both. If the Council cannot demonstrate savings, and if needs for street repair and other items exceed the current budget, the Council is going to need to come to citizens and ask for a tax to fund the operation of the City. Development on the east side of I-25 might help with revenues, but it might take eight years to plan, develop, sell, and generate traffic on the east side of I-25 that produces such revenues. Until that cash flows, the City is going to need to pull in its horns, or ask for a tax, or both.)
Bond attorney Dee Wisor will come to the City Council on Monday, July 26th. He will talk about impacts of Amendment 60, and 61, and Proposition 101. (You can see his speech on YouTube.) Citizens are welcome to attend the speech. Citizens will then have to leave so that City Council can have an executive session with Dee to talk about a bond election in November to raise a new tax to support the operation of the City.
I then left, and the Council had an executive session to talk about Metro District matters. They were going to have a session about the URA, but there's no new conversation to be shared at this time. A report on the URA was circulated, and it was mentioned that a motion has been filed in Court to try to get one of the law suits against the City dismissed. I think it was 9:30 when I left.
If there are no substantial savings to be had from integration of the Metro District and the City (likely) and if voters reject a request for higher taxes to fund the operation of the City (way too soon to tell), then how will we pay for the upkeep of our assets, such as the condition of the streets? Does anybody have any good ideas on that score? And once again, shouldn't we have a thorough study of what our assets are worth, and how much money we need to save to pay for their replacement? Until we have that data, do we really have any idea what the financial needs of the City are? While there is only so much bandwidth, shouldn't we prioritize that study of reserves and capital budgets? Do we need to put away several hundred thousand dollars a month? A million a month? More? Less? Does anybody know? Where are we going to get the money needed to repair and replace the assets we already have, more less build other things we might want or need?
Thursday, July 8, 2010
More investors saying "no thanks" to muni bonds
Is this an interesting trend to pay attention to, or merely a short-term phenomenon all but forgotten by Labor Day? MS
(Reuters) - Warren Buffett isn't the only investor sounding alarm bells on municipal bonds.
A growing number of U.S. investors are either scaling back or dumping outright their positions in what was long considered the least volatile and safest of markets.
So far this year, municipal bond funds have enjoyed $5.1 billion of net new cash while U.S. government agency and Treasury bond funds have taken in $9.1 billion, extending a record-breaking year for bond funds and exchange-traded funds of $396 billion in 2009, according to Lipper.
The tax-exempt muni market has sheltered investors from the sovereign credit storm so far this year: Total returns year-to-date are 3.54 percent while the benchmark Standard & Poor's 500 index .SPX is down about 5 percent through July 7. For their part, U.S. Treasuries prices are up 6 percent for the same period, according to Barclays Capital.
But as financial markets enter the second half of 2010 with risks of a "double-dip" recession growing, U.S. investors are bracing for even harsher fiscal deterioration at states and localities and, consequently, are shying away from the $2.8 trillion municipal bond market.
"The balance sheets of corporate America are in much better shape than that of our governments, states and localities," said Tom Sowanick, chief investment officer of OmniVest, which oversees more than $1 billion.
"We are completely out of munis, and we don't plan on buying any even though some are yielding more than 5 percent. No thanks."
Sowanick said the relative performance of municipal bonds has been "nothing less than horrible." The total returns for munis between the March lows of 2009 and June of this year were 13 percent, while corporate bonds turned in 28.6 percent.
Christine Todd, a managing director at Standish Mellon Asset Management, said she has been scaling back the level of risk in her portfolios. "General obligations are of the highest quality but with GOs come more economic and political risk," she said. "We took down our exposure there and have gone into revenue or so-called essential bonds."
Revenue bonds are paid from the revenue usually generated from a particular public project, such as a road or a sewer system. General obligation bonds are backed by the full-faith and credit pledge of the issuer, and by extension, the ability to raise money through taxes.
Some mom and pop investors, too, aren't sticking around in the second half. U.S. municipal bond funds reported $232 million of net outflows in the week ended June 30 -- marking the first weekly outflows since mid-April, LipperFMI reported late last week.
A $140 BILLION PROBLEM
The Center on Budget and Policy Priorities said last week that U.S. states in fiscal 2011 could be facing the worst budget situation since the recession began in 2007. The cumulative budget shortfall of states "will likely reach $140 billion in the coming year, the largest shortfall yet in a string of huge annual gaps that date back to the beginning of the recession," according to the think tank.
Fiscal 2011 began one week ago for most states, which have turned to another round of cuts and tax increases to try to wipe out the gap. All states with the exception of Vermont must balance their budgets.
Concerns about budget deficits and funding shortfalls will probably lead to market-value declines in the municipal bond market and, perhaps, widespread defaults, technical analyst Robert Prechter said in a recent interview.
Conversely, U.S. corporations, not counting financial companies, have socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26 percent from a year earlier and the largest-ever increase in records going back to 1952, according to the Federal Reserve.
'TERRIBLE PROBLEM'
It is "one of those rare times -- approximately once a century -- when (munis) are at serious risk of default," Prechter said. "The whole municipal area is likely to see a decline in price and a rising yield ... over the next several years."
The amount of debt in municipal bond defaults continues to lag those of corporate debt this year, with 19 muni defaults totaling $1.028 billion through June, compared with eight corporate defaults totaling $2.787 billion, said Richard Lehmann, publisher of Distressed Debt Securities Newsletter. For all of 2009, $108 billion of corporate debt defaulted versus only $6.3 billion of munis.
While most of the muni defaults this year continue to be from risky Florida community development districts, Lehmann said he foresees more defaults as issuers struggle with climbing employee pension costs.
Billionaire Warren Buffett warned the Financial Crisis Inquiry Commission in June that municipal bonds faced a "terrible problem." He has trimmed his investments.
"There will be a terrible problem, and then the question becomes will the federal government help," Buffett said at the hearing. "I don't know how I would rate them myself. It's a bet on how the federal government will act over time."
Tom Metzold, co-director of municipal investments at Eaton Vance, overseeing $7 billion, said he is holding and buying high-quality revenue bonds for larger essential service projects. "People will still need electricity so they can watch TV, and they'll need to pay for water if they want to take a bath," Metzold said. "That said, I'd rather have the GO of Massachusetts than the water and sewer revenue bonds of a small town where the consumer demand is not very high."
(Reuters) - Warren Buffett isn't the only investor sounding alarm bells on municipal bonds.
A growing number of U.S. investors are either scaling back or dumping outright their positions in what was long considered the least volatile and safest of markets.
So far this year, municipal bond funds have enjoyed $5.1 billion of net new cash while U.S. government agency and Treasury bond funds have taken in $9.1 billion, extending a record-breaking year for bond funds and exchange-traded funds of $396 billion in 2009, according to Lipper.
The tax-exempt muni market has sheltered investors from the sovereign credit storm so far this year: Total returns year-to-date are 3.54 percent while the benchmark Standard & Poor's 500 index .SPX is down about 5 percent through July 7. For their part, U.S. Treasuries prices are up 6 percent for the same period, according to Barclays Capital.
But as financial markets enter the second half of 2010 with risks of a "double-dip" recession growing, U.S. investors are bracing for even harsher fiscal deterioration at states and localities and, consequently, are shying away from the $2.8 trillion municipal bond market.
"The balance sheets of corporate America are in much better shape than that of our governments, states and localities," said Tom Sowanick, chief investment officer of OmniVest, which oversees more than $1 billion.
"We are completely out of munis, and we don't plan on buying any even though some are yielding more than 5 percent. No thanks."
Sowanick said the relative performance of municipal bonds has been "nothing less than horrible." The total returns for munis between the March lows of 2009 and June of this year were 13 percent, while corporate bonds turned in 28.6 percent.
Christine Todd, a managing director at Standish Mellon Asset Management, said she has been scaling back the level of risk in her portfolios. "General obligations are of the highest quality but with GOs come more economic and political risk," she said. "We took down our exposure there and have gone into revenue or so-called essential bonds."
Revenue bonds are paid from the revenue usually generated from a particular public project, such as a road or a sewer system. General obligation bonds are backed by the full-faith and credit pledge of the issuer, and by extension, the ability to raise money through taxes.
Some mom and pop investors, too, aren't sticking around in the second half. U.S. municipal bond funds reported $232 million of net outflows in the week ended June 30 -- marking the first weekly outflows since mid-April, LipperFMI reported late last week.
A $140 BILLION PROBLEM
The Center on Budget and Policy Priorities said last week that U.S. states in fiscal 2011 could be facing the worst budget situation since the recession began in 2007. The cumulative budget shortfall of states "will likely reach $140 billion in the coming year, the largest shortfall yet in a string of huge annual gaps that date back to the beginning of the recession," according to the think tank.
Fiscal 2011 began one week ago for most states, which have turned to another round of cuts and tax increases to try to wipe out the gap. All states with the exception of Vermont must balance their budgets.
Concerns about budget deficits and funding shortfalls will probably lead to market-value declines in the municipal bond market and, perhaps, widespread defaults, technical analyst Robert Prechter said in a recent interview.
Conversely, U.S. corporations, not counting financial companies, have socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26 percent from a year earlier and the largest-ever increase in records going back to 1952, according to the Federal Reserve.
'TERRIBLE PROBLEM'
It is "one of those rare times -- approximately once a century -- when (munis) are at serious risk of default," Prechter said. "The whole municipal area is likely to see a decline in price and a rising yield ... over the next several years."
The amount of debt in municipal bond defaults continues to lag those of corporate debt this year, with 19 muni defaults totaling $1.028 billion through June, compared with eight corporate defaults totaling $2.787 billion, said Richard Lehmann, publisher of Distressed Debt Securities Newsletter. For all of 2009, $108 billion of corporate debt defaulted versus only $6.3 billion of munis.
While most of the muni defaults this year continue to be from risky Florida community development districts, Lehmann said he foresees more defaults as issuers struggle with climbing employee pension costs.
Billionaire Warren Buffett warned the Financial Crisis Inquiry Commission in June that municipal bonds faced a "terrible problem." He has trimmed his investments.
"There will be a terrible problem, and then the question becomes will the federal government help," Buffett said at the hearing. "I don't know how I would rate them myself. It's a bet on how the federal government will act over time."
Tom Metzold, co-director of municipal investments at Eaton Vance, overseeing $7 billion, said he is holding and buying high-quality revenue bonds for larger essential service projects. "People will still need electricity so they can watch TV, and they'll need to pay for water if they want to take a bath," Metzold said. "That said, I'd rather have the GO of Massachusetts than the water and sewer revenue bonds of a small town where the consumer demand is not very high."
Tuesday, July 6, 2010
Market Memo: Municipalities under more fiscal stress than states
(The following views were issued on June 28 by a municipal fund bond manager. I offer them here as food for thought. MS)
When it comes to state budgets, it’s a new fiscal year but the same old story: Days away from the start of a new fiscal year, at least eight state legislatures are extending current sessions or meeting in special session to try and hammer out a budget agreement by July 1. New York already has missed its budget deadline — its 2011 fiscal year started April 1. That brings to 9 the number of states that have entered or are in danger of entering the new fiscal year without a budget in hand, matching last year’s total that missed their deadlines.
And like last year, the issues behind this year’s showdown are the same: revenue and taxes. Hit hard by the recession and slow to participate in the recovery, many states suffered declines in virtually every revenue source — the Census Bureau estimates collective state revenues fell a record $67 billion for the 12 months ended June 30, 2009. Federal stimulus aid has helped, but the bulk of it runs out this year. And states are reluctant to close the gap through tax increases for fear of making their economies worse. Tax hikes that are being discussed tend to be limited in nature, such as on tobacco — not broad income tax increases. Finally, having taken the scalpel to spending the year before, they’re also finding it politically problematic to undergo another round of radical budget surgery. States face a cumulative shortfall of $89 billion for the coming fiscal year, the National Conference of State Legislatures estimates.
That’s the bad news. The good news is that as the state budget drama plays out in the press, the headline news will be worse than the underlying news. There are signs revenue is stabilizing — in this year’s first quarter, states reported their first year-over-year increase in revenue since 2008’s third quarter. Debt service payments among all states also continue to be current, with state revenues coming in at levels that are more than sufficient to cover scheduled payments on general obligation (GO) bonds, the most frequently issued and generally lowest-risk form of bonds issued by states. GO bonds generally rank high on a state’s incoming revenue pecking order. Moreover, a lot of fiscal challenges confronting states are more long-term in nature, such as pensions and infrastructure, and they have time to work it out.
Stringent credit analysis key
The news isn’t as good on the local government front. We share some of the concerns about potential default that have been expressed in recent articles in the financial press. While we don’t wish to remark on specific issues because circumstances vary widely, we believe local governments most vulnerable to a potential default share common characteristics — poor demographics and subpar fiscal management. Areas with older, declining, less educated populations that typically struggle with a dwindling tax base have seen their situation worsen in the wake of the longest and by many measures steepest recession of the post-World War II era. This is a bit of generalization, of course. Fiscal woes and mismanagement isn’t limited to declining areas. Many boomtowns in the Sunbelt also are suffering fiscal crises, in part because they relied too heavily on residential growth and failed to diversify their tax base. Then came the collapse of the housing market, which undermined a key source of revenue growth.
Dislaimers:
Views are as of June 28, 2010, and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security.
Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
Interest income from municipal funds may be subject to the federal Alternative Minimum Tax [AMT] for individuals and corporations, and state and local taxes.
Past performance is no guarantee of future results.
An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.
Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a prospectus, or if available, a summary prospectus containing this and other information, contact us or view the prospectus provided on this website. Please carefully read the prospectus before investing.
When it comes to state budgets, it’s a new fiscal year but the same old story: Days away from the start of a new fiscal year, at least eight state legislatures are extending current sessions or meeting in special session to try and hammer out a budget agreement by July 1. New York already has missed its budget deadline — its 2011 fiscal year started April 1. That brings to 9 the number of states that have entered or are in danger of entering the new fiscal year without a budget in hand, matching last year’s total that missed their deadlines.
And like last year, the issues behind this year’s showdown are the same: revenue and taxes. Hit hard by the recession and slow to participate in the recovery, many states suffered declines in virtually every revenue source — the Census Bureau estimates collective state revenues fell a record $67 billion for the 12 months ended June 30, 2009. Federal stimulus aid has helped, but the bulk of it runs out this year. And states are reluctant to close the gap through tax increases for fear of making their economies worse. Tax hikes that are being discussed tend to be limited in nature, such as on tobacco — not broad income tax increases. Finally, having taken the scalpel to spending the year before, they’re also finding it politically problematic to undergo another round of radical budget surgery. States face a cumulative shortfall of $89 billion for the coming fiscal year, the National Conference of State Legislatures estimates.
That’s the bad news. The good news is that as the state budget drama plays out in the press, the headline news will be worse than the underlying news. There are signs revenue is stabilizing — in this year’s first quarter, states reported their first year-over-year increase in revenue since 2008’s third quarter. Debt service payments among all states also continue to be current, with state revenues coming in at levels that are more than sufficient to cover scheduled payments on general obligation (GO) bonds, the most frequently issued and generally lowest-risk form of bonds issued by states. GO bonds generally rank high on a state’s incoming revenue pecking order. Moreover, a lot of fiscal challenges confronting states are more long-term in nature, such as pensions and infrastructure, and they have time to work it out.
Stringent credit analysis key
The news isn’t as good on the local government front. We share some of the concerns about potential default that have been expressed in recent articles in the financial press. While we don’t wish to remark on specific issues because circumstances vary widely, we believe local governments most vulnerable to a potential default share common characteristics — poor demographics and subpar fiscal management. Areas with older, declining, less educated populations that typically struggle with a dwindling tax base have seen their situation worsen in the wake of the longest and by many measures steepest recession of the post-World War II era. This is a bit of generalization, of course. Fiscal woes and mismanagement isn’t limited to declining areas. Many boomtowns in the Sunbelt also are suffering fiscal crises, in part because they relied too heavily on residential growth and failed to diversify their tax base. Then came the collapse of the housing market, which undermined a key source of revenue growth.
Dislaimers:
Views are as of June 28, 2010, and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security.
Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
Interest income from municipal funds may be subject to the federal Alternative Minimum Tax [AMT] for individuals and corporations, and state and local taxes.
Past performance is no guarantee of future results.
An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.
Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a prospectus, or if available, a summary prospectus containing this and other information, contact us or view the prospectus provided on this website. Please carefully read the prospectus before investing.
Saturday, July 3, 2010
The Good Thing to Do
Last night I attended the Independence Day celebration hosted by CoCPN at the Coyote Ridge Park. This was a really nice event, and sponsoring it was a Good Thing to Do. Special thanks to our attorney Linda, our city services providers at CH2MHill-OMI, the Castle Pines North Chamber of Commerce, Darwin and Chris, the Castle Pines Connection newspaper and website, as well as all the other local businesses and candidates for office who supported this community event. Our Mayor Jeff Huff did a good job of representing the community in the remarks he made. Our state respresentative Carole Murray also made good comments about why Independence Day is an important day to reflect upon what makes our country so very special. Sheriff Dave Weaver also participated in this community family event which featured a pervasive feeling of good will. The fire chief attended, and brought her big red truck - a perrenial favorite with the kids! Our City Clerk attended with her family, as I did with mine. The ladies chorus sang a number of patriotic songs in multiple part harmonies. The hamburgers were good. The weather was absolutely perfect, and the guitar player particularly enjoyed playing "Here Comes the Sun" at sunset. I believe the kids enjoyed the stage show that involved three hogs performing tricks. Apparently this hog act has been on The Late Show with David Letterman Show (Stupid Pet Tricks?). The MC thanks the Metro District for making it possible for this show to be staged for the kids a the Independence Day Celebration. For a couple hours our community leaders put aside differences and pulled together. It felt good to see our community behave like a bunch of neighbors gathering together. It was the Good Thing to Do. If you missed it, I think Tim will have a bunch of good pictures on The Connection website here in a few days.
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