California Cities Using Their Streets As Collateral To Pay Down Pension Liabilities With Debt

California Cities Using Their Streets As Collateral To Pay Down Pen...

What happens when your state or city has massive unfunded pension liabilities, no direct access to the Fed's money printer and can't tax your state any further because you're driving people out in droves?

You take on more debt, using whatever you can think of as collateral. 

Such was the case in West Covina this July, where the city is paying off its $205 million debt to CalPERS by issuing bonds using its city streets as collateral, according to Forbes. The city of Torrance has done the same thing; it will issue $350 million in bonds using its streets as collateral, as well.

Both cities are using something called "lease revenue bonds" which means that:

Trump Blames California Wildfires on Forest Management, Not Climate Change

Torrance and West Covina are each using these bonds to, in principle, lease their city streets to a special Financing Authority, which will pay the city their up-front money, and “rent” the streets back to the city for the 25 year term of the agreement, in order to pay off the bonds.

In this structure, however, the bondholders don't actually have rights to lay claim to the streets. Rather the mechanism is described as a loophole to get around the voter approval that comes with "general obligation bonds". 

The purpose of the bonds is that they can be implemented quickly while still functioning as pension obligation bonds, the report notes. The trade-off is that lease revenue bonds are not rated as highly as a traditionally POBs.

“Depending on the legal structure, there may be added flexibility for use of proceeds to CalPERS or more strategic timing of investing in the market... These things aren’t possible under a traditional POB structure,” said Mike Meyer of NHA Advisors. 

The cities are in a rush to refinance while rates are low while, at the same time, CalPERS is in a desperate push to boost its returns, most recently taking on $80 billion in leverage to do so, as we noted this summer. 


As of now, the state of both cities' pension liabilities is as follows, according to Forbes:

  • The city of West Covina pension plan is 71% funded, but to pay down its underfunding and fund new accruals, must pay 44% of payroll.

  • The West Covina public safety plan is 62% funded and requires a contribution of 74% of payroll to fund new accruals and pay down underfunding.

  • The Torrance city pension is 79% funded with 24%-of-payroll contributions; the Torrance fire pension, 65% funded, 68%-of-payroll contributions; and the Torrance police pension, 62% funded, 78% of payroll contributions.

  • Hilltop Securities, who underwrote the West Covina bonds, said: “This is the fastest form which the city would be able to use and issue bonds.”

Views: 42

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Sandy posted a video

Civalyze meme

meme ad for a fake drug that would do away with black fatiguecivilyze you're not racist your just exhausted
3 hours ago
Burbia posted a blog post

Is the Timing of Alex Jones and Charlie Sheen Connected?

Alex Jones is sperging out.Charlie Sheen is coming out of the closet.Is this why Alex Jones is…See More
yesterday
Doc Vega posted a blog post

Buying the Last haunted House on the Left (A partial autobiography)

Note to the reader, there are events here that are true and some that are fictional.Chapter IIt was…See More
Friday
Doc Vega posted a blog post

In Memory of Those Who Served

 Bullets flew and ricochetedI was on that hill todayMy Company commander got blown awayI was on…See More
Thursday
Doc Vega posted blog posts
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea I was wrong Emperor Penguins are big and powerful but still alive but this,  A size…"
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"Cheeki kea here's another that they say there have been modern sightings of!  The name of…"
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea, did you ever hear of the giant Imperial Penguins? They were about 6 feet tall and could…"
Tuesday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea I do not think these giant two legged birds would need to have a bad attitude as long as…"
Tuesday
Olivia Brooks updated their profile
Tuesday
John Miller was featured
Sep 2
tjdavis's 2 blog posts were featured
Sep 2
Zfort Group's blog post was featured
Sep 2
Doc Vega's 6 blog posts were featured
Sep 2
Burbia commented on tjdavis's video
Thumbnail

“What’s His Motive?” - Inside The Mind of George Soros

"Trump calls for George Soros and son to face federal…"
Sep 1
Burbia commented on tjdavis's photo
Sep 1
Profile IconSeeta Sathe and Olivia Brooks joined 12160 Social Network
Sep 1
tjdavis posted a video

Mossad, Terrifying CIA Technology, Blackwater & The Most Secret CIA Unit | John Kiriakou

John Kiriakou served 15 years in the CIA as a Case Officer (Spy) and as CIA's Head of Counterterrorism Operations in Pakistan where he lead the raid that cap...
Sep 1
tjdavis posted a photo
Sep 1
tjdavis posted a video

A Critique of the Tavistock Institute - The Mother Of All Conspiracy Theories

An examination of the Tavistock Institute, a theory which seeks to explain how Western societies have been brainwashed by a cabal of social scientists and th...
Aug 31

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted