I think I'm not even allowed to joke about wikileaks... but the potential puns of leaked emails out of the water authority are killing me. alas.
If I were to guess, and if I knew nothing of the whole story to date, I would infer from the news article that the PWSA had lost a check or something. Seriously. Folks looking aimlessly for 6 figure wire transactions? Must get a lot of those? Why else would local water bureaucrats need to be on a conference call with Oklahoma bankers. Why does Iron City have an Oklahoma banker in the first place any way. Actually it says OK bankers 'affiliated' with Iron City. Affiliated?
If only one lost check was the only problem they had down there.
Probably wasn't a lost check.. and the back story is too long to recount. If I were to humbly suggest what the real real story is in all of this. One can read the explanation for the recent downgrade on most of PWSA debt and you get a feel for some of the issues they have. What the story should be is this. It starts in 2008 when the PWSA issued bonds totaling over $414 million. An amount which represented the majority of it's outstanding debt no less.
Never has so little attention been paid to something which would cost us so much. If taken together, was that at the time the largest debt offering any city entity ever put out there at once?
Most of it was for refinancing old bonds; so supposedly it would lower the financing cost of a big chunk of PWSA's debt. That part turned out so well. But mixed in was just over $95 million in net debt. Common trick to mix refi and new debt in one bigger package so you can spend most of your time talking how the refi will 'save' money while not really spending time on the new debt. See the fixed and variable rate prospectuses (no, it's not prospecti) if you wish.
A water authority issuing new bond debt like that ought to be towards a goal of using the proceeds for needed capital investment. Somone really should audit the PWSA to see how much of that $95 million specifically ever actually made it into captial investment of any kind whatsoever. If nothing else, I am sure it would make a classic case study for a municipal finance class. I bet between fees and costs and things like penalty interest and covering other shortfalls, it would not be $95 million worth of new pipe.
If you want to get a feel for all the debt and financing issues that may be coming down the pike for the PWSA, read the fine print.
The saddest part about the whole PWSA variable rate bond imbroglio is that they issued that debt at a point in time that seems like it must have been just hours before it became apparent to the world that the variable rate debt market was going to blow up. You really have to parse the timing of it all to see how it was even possible they got into this mess. Even I was a bit slow on the uptake and for those of you crazy enough to have read this post to the very last sentence... even that was a month or two too late. As I recall, the main issue with the PWSA bonds at the time was that 1) city council had to extend the charter of the water authority in order to float the bonds and 2) there was not a comprehensive RFP put out for the bond services. Beyond that, nobody even questioned what they were doing and just trusted the folks who put the whole package together.
Again, it all comes down to trust.
and in what may be a first Cleveburgh story on the gridiron itself... Go Browns!