{"id":2000,"date":"2019-04-22T20:41:20","date_gmt":"2019-04-23T01:41:20","guid":{"rendered":"http:\/\/truthinaddison.com\/?page_id=2000"},"modified":"2019-04-22T21:00:48","modified_gmt":"2019-04-23T02:00:48","slug":"lets-talk-truth","status":"publish","type":"page","link":"http:\/\/truthinaddison.com\/?page_id=2000","title":{"rendered":"Let\u2019s Talk TRUTH"},"content":{"rendered":"\n

Let\u2019s Talk TRUTH
About Certificates of Obligation
And Candidates for Council
By Susan M. Halpern
Former Addison Councilmember (1992-1999)<\/strong><\/p>\n\n\n\n

Candidates for Addison\u2019s\ncouncil seek the votes \u2013 and, more importantly the trust \u2013 of Addison\nresidents.  Part of earning that trust\nMUST include efforts on the part of candidates to educate themselves about the\nissues, because sharing a vision for our town that is uninformed and not grounded\nin fact serves no constructive purpose.  That\nis why serious candidates take the time to educate themselves about our Town\nand how it works.  And it is also why\nfearmongering and making false claims have no place in the process.  <\/p>\n\n\n\n

I am prompted to write by\na mailer I received from one of the council candidates that evidences a significant\nmisunderstanding on his part regarding Addison\u2019s finances.  This candidate apparently thinks that there\nis $41 million floating around somewhere, missing.  From that false premise he asks ridiculous questions\nlike \u201cdo you know where it went?\u201d and \u201cdo you know who got it?\u201d  He also claims at one point that the City\nCouncil approved certificates of obligation (CO\u2019s) \u201cwithout your knowledge,\u201d\nbut then contradicts that claim, asking: \u201cDo you know who approved the\n$41,000,000?\u201d  <\/p>\n\n\n\n

The\nclear point of this mailer is to create a false issue and then claim to be the\nonly one who can solve the problem (elect me \u201cto find out what\u2019s going\non\u201d).  It\u2019s a formula straight out of the\nnegative spinners\u2019 playbook: pick an issue, circulate misleading and inaccurate\ninformation, claim that the sky is falling, criticize anyone who isn\u2019t them,\nand then claim that only they have a solution. \nHere, the faux issue is Addison\u2019s finances, based on the fiction that\n$41 million is unaccounted for, which is patently false and utterly\nridiculous.  It is fearmongering at its\nworst.  <\/p>\n\n\n\n

Start here: Addison\u2019s\ncouncil doesn\u2019t act in secret, and it didn\u2019t \u201csecretly\u201d approve $41 million in certificates\nof obligation (\u201cCO\u2019s\u201d) in the last five months.  These statements are false on many\nlevels.  The council\u2019s meetings are\npublicly posted and their votes are all taken in public, as is required by the\nOpen Meetings Act.  Addison also\nbroadcasts council meetings via the town\u2019s website, which is also the\nrepository of a vast array of reports, agendas, resolutions, minutes, and other\ninformation.  Had this candidate wanted\nto know the TRUTH, he could easily have educated himself by referencing these\nmaterials and studying the town\u2019s finances. \nHis mailer tells all of us that he did not do so, choosing instead to\nmisinform voters with his silly mailer.<\/p>\n\n\n\n

Let\u2019s turn to the\nnumbers.  On January 10, 2019, Addison\nclosed on the sale of $13.1 million in CO\u2019s (more about them later), from which\nAddison received $13.5 million.  $7\nmillion will be used to construct a new building for (a) U.S. Customs and\nBorder Patrol and (b) Airport Administrative offices.  The remaining $6.5 million will be used for\nvarious water and wastewater capital improvement projects.  These CO\u2019s are self-supporting, i.e.,\nrepayment will be funded from airport operating revenues and utility revenues,\nrespectively.  <\/p>\n\n\n\n

The process culminating\nin issuance of these CO\u2019s was anything but private.  On October 23, 2018 (Item R18), the council held\na public hearing that culminated in authorization for Addison to provide notice\nof its intent to sell $13.5 million of CO\u2019s on December 11, 2018.  This council meeting was properly noticed,\nand it was additionally referenced in the town\u2019s October 19, 2019 newsletter,\nwhich included a description of the proposed CO\u2019s.  <\/p>\n\n\n\n

Next, the public\nnotices authorized by the council were placed in the Dallas Morning News on\nNovember 10 and 17, 2018.  Then, as\nnoticed, bids for the CO\u2019s were taken on December 11, 2018 at 10 a.m.  There were seven bidders, and because of\nAddison\u2019s excellent financial health (more about that later), the CO\u2019s actually\nsold at a premium, hence Addison sold only $13.1 million in CO\u2019s to generate\n$13.5 million in revenue.  Later that\nday, the matter came back to the council (Item R19), and the council formally\nauthorized issuance of the CO\u2019s.  The closing\noccurred on January 10, 2019, when Addison received the $13.5 million, which it\nplaced in a segregated account.   The funds are conservatively invested to\noffset carrying costs, and are used to pay bills associated with the referenced\nprojects.<\/p>\n\n\n\n

No other CO\u2019s have been\nissued in the past 5 months, so this candidate\u2019s $41 million figure is utter\nfiction.  <\/p>\n\n\n\n

Perhaps he is referring\nto the policy discussion held by the council on November 13, 2018 (Item R18),\nwhich culminated in council guidance to City Manager Wes Pierson to the effect\nthat the council was in favor of using CO\u2019s to fund: (a) an additional $25\nmillion for completion of the Midway Road reconstruction, and (b) another $3.25\nmillion to fund the town\u2019s remaining obligation on Addison Grove.  <\/p>\n\n\n\n

Regarding Addison\nGrove, the money is committed, like it or not. \nPrior to the November 13, 2018 council meeting, the remaining $3.25 million\nof the obligation was to be paid out of current maintenance and operations\nbudgets.  That would have burdened the\ntown\u2019s operations and current residents. \nIt was never appropriate.  By\nissuing CO\u2019s, Addison will be able to spread the burden out over time, which is\na far better policy decision.<\/p>\n\n\n\n

Regarding Midway Road,\nAddison has opportunities to work with DART in conjunction with its rail\nproject, which should start soon. \nProvided that Addison has the funds available, it can consider using\nDART\u2019s vendors, which might yield a better price based on economies of\nscale.  Further, if Addison reconstructs\nMidway Road in conjunction with DART\u2019s construction, that will minimize the\ntime during which traffic flow on Midway will be disrupted.  The decision to issue CO\u2019s guarantees that\nfunds will be available so that Addison can move quickly, as appropriate.  And, the council undoubtedly felt confident\nin using CO\u2019s given that voters approved the Midway Road reconstruction project\nin the 2012 bond election. <\/p>\n\n\n\n

The council\u2019s reasoning\non these issues is sound, but no CO\u2019s have been issued at this time.  That means that currently, there is $13.1\nmillion sitting in a restricted fund as noted above.  You can easily see how absurd this candidate\u2019s\nmailer really is.<\/p>\n\n\n\n

Let\u2019s\ntalk briefly about Addison\u2019s financial condition, which was the subject of our April\n18, 2019 Bond Committee meeting.  First, Addison\nenjoys the highest possible ratings from Moody\u2019s (Aaa) and Standard & Poor\u2019s\n(AAA).  To be clear, those are literally\nthe highest ratings given by Moody\u2019s and S&P, and Addison is one of only\nten cities in Texas so rated.  Notably,\nAddison achieved the Aaa rating from Moody\u2019s in conjunction with the December\n11, 2018 sale of CO\u2019s, which is partly why the CO\u2019s sold at such a favorable\npremium.  In any event, Addison is healthy\nand prosperous and it most certainly is not, as claimed by the candidate\nresponsible for the ridiculous negative mailer, \u201csliding down the drain.\u201d <\/p>\n\n\n\n

It should be clear from all this that Addison is managing its debt appropriately and responsibly.  On this point, municipal debt is different from personal debt. I wrote about all this a while back (http:\/\/truthinaddison.com\/?page_id=1663<\/a>), so I\u2019ll be brief here. Municipalities aren\u2019t like people, who save money and strive for a debt-free existence so they can retire and pass assets on to their heirs.  Municipalities don\u2019t retire and they have no heirs.  Municipalities exist in perpetuity, and thus have a responsibility to plan for future residents who will need sound infrastructure.<\/p>\n\n\n\n

That raises the\nquestion of how municipalities fund infrastructure and other large capital\nprojects.  Clearly, it is neither\npractical nor advisable for municipalities to accrue large cash reserves just\nin case a capital project needs doing.  That\nwould mean collecting tax revenue from current residents to be used in\nconnection with future projects, and taxpayers would never go for that.  As well, it isn\u2019t fair to require current\nresidents to pay the full cost of projects that will outlive them and\/or their\nresidency in the town, benefitting future residents who would not bear any of\nthe burden.  What municipal debt does is spread\nthe cost of such projects out over time, so that the burden is shared both by\ncurrent and future residents. Municipal debt also stabilizes tax rates,\nensuring that they don\u2019t bounce up and down as the capital needs of the town change\nfrom year to year.  <\/p>\n\n\n\n

All of which means that\nunlike people, municipalities don\u2019t strive to be debt free.  Rather, they strive to manage debt\nresponsibly.  And Addison has clearly\ndone that, as evidenced by the fact that after many years, Moody\u2019s finally\nraised Addison to a Aaa status.<\/p>\n\n\n\n

There is also nothing\nunusual or inappropriate about issuing certificates of obligation.  Go back and review Addison\u2019s budgets\n(available online) and you\u2019ll see that they have always played a role in Addison\u2019s\ndebt package.  That makes this mailer as inexplicable\nas the statement made by Mayor Joe Chow\u2019s opponent to the effect that he will\nnever vote to use CO\u2019s.  Such statements\nare irresponsible and such policies would likely harm Addison\u2019s bond ratings,\nincreasing the cost to taxpayers of future borrowing.<\/p>\n\n\n\n

Back to the mailer one last time.  I couldn\u2019t help but notice that the mailer says the candidate is a \u201cresident\u201d of Addison, whereas at other times he refers to himself as a homeowner.  Turns out that the distinction is significant. If you go to the Dallas County Appraisal District website (www.dcad.org<\/a>) and type in the name of the candidate you get no results.  That means that according to DCAD, this candidate does not own ANY property in Dallas County, let alone a house in Addison.<\/p>\n\n\n\n

Well, as it turns out, this\ncandidate once owned the house at 5301 Paladium Drive in Addison, but he deeded\nit to his bankruptcy trustee in December 2015, as ordered by Bankruptcy Judge\nStacey Jernigan.  You see, this candidate\nfiled a personal bankruptcy case under Chapter 7 of the Bankruptcy Code on\nDecember 31, 2009 (Case No. 09-38820).  He\nwas prompted to do so by a multi-million dollar judgment entered against him in\nNew York that was revived when his bankruptcy discharge was revoked in 2014 (a\nwhole other story).  Nine years later,\nhis case is still pending, and his creditors are still chasing him for\nmillions.<\/p>\n\n\n\n

Back to the house\nissue.  At the 2015 trial that culminated\nwith the referenced order to transfer the 5301 Paladium house to bankruptcy\ntrustee Diane Reed, this candidate was also questioned about the house on Oaks\nNorth Place, where he apparently lives now. \nHe testified that the Oaks North home was owned by Continental\nPartnership, Inc. (\u201cCPI\u201d) and that CPI was owned by his brother.  He also testified that he did not hold any\nposition with CPI, whether as owner, manager or officer.  Perhaps things have changed since 2015, but DCAD\u2019s\nrecords still list CPI as that house\u2019s owner. \nSo it appears that this candidate is not, in fact, an Addison homeowner.<\/p>\n\n\n\n

Here\u2019s the thing.  Addison voters are entitled to TRUTH from\ntheir candidates.  As well, Addison voters\nshould expect candidates to take the time to inform themselves regarding the\nissues.  It is disappointing at best when\ncandidates fail to do so, and then employ fearmongering tactics based on\ndemonstrably inaccurate information.  And\nthat\u2019s before you get to the claims about owning home(s) in Addison.<\/p>\n\n\n\n

That is not the Addison\nWay.  Addison voters deserve better.<\/p>\n\n\n\n

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