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

tjdavis posted a blog post
9 hours ago
Doc Vega posted a blog post

First Week of July 1947 an Inflexion Point for Humanity!

The year is 1947 and sometime around July 4th the anniversary of the birth our nation, when a…See More
15 hours ago
Doc Vega commented on Doc Vega's blog post Government Issued Wearables? What’s Wrong With this Picture?
"cheeki kea Ha! Good one!"
yesterday
tjdavis posted a video

This is Paris Now… You Won’t See This in the Tourist Brochures

In this video, I take you through Marché Barbès and its surrounding neighbourhoods — an area that reflects the modern, complex face of Paris most tourists ne...
Friday
Doc Vega posted a blog post

Trump's Big Beautiful Bill Passes Amidst Democrat Lies About a Tax cut for the Rich Being Averted

AP Photo/Rod Lamkey, Jr.It’s over, folks. President Trump and congressional Republicans aimed to…See More
Thursday
Doc Vega posted blog posts
Wednesday
cheeki kea commented on Doc Vega's blog post Government Issued Wearables? What’s Wrong With this Picture?
"I wonder what wearables must have been like before the last reset. "
Wednesday
Burbia commented on Burbia's video
Tuesday
Doc Vega commented on tjdavis's blog post National Blueprint For Biodefense
"Another scare tactic to push people into anew regime of vaccinations! Either that, or this is a…"
Tuesday
Doc Vega posted blog posts
Tuesday
Sandy posted a video

Dr. Mike Yeadon Speaks Out Against Digital ID, CBDCs, and Agenda 2030

Dr. Mike Yeadon, ex-Pfizer VP, urges public rejection of digital ID, CBDCs, and Agenda 2030, warning of future restrictions on freedom and privacy.
Tuesday
Burbia posted a video

"EVERYONE'S BEEN SHOT UP HERE": Arsonists Set Wildfire In Idaho, Open Fire On Firefighters, Police

- Shocking news just broke that multiple firefighters and officers were shot in an ambush at the Canfield Mountain Natural Area in Coeur d'Alene, Idaho.Acco...
Jun 30
Doc Vega posted a blog post

Well Known Wilderness Photographer Disappears in the Cascades-Guess Why?

 In August of 2023 another aficionado of the great outdoors went missing. The chilling revelations…See More
Jun 29
Doc Vega posted a blog post

The Draconian Show

Sometimes I talk to my invisible friend, IkeHe comes from another dimension when magnetic fields…See More
Jun 27
tjdavis posted a blog post
Jun 26
Doc Vega posted a blog post
Jun 25
Doc Vega posted blog posts
Jun 24
Doc Vega posted blog posts
Jun 23
Doc Vega favorited tjdavis's photo
Jun 22
Doc Vega commented on tjdavis's photo
Thumbnail

Game Night

"Ha! Good one!"
Jun 22

© 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