Fourth in a Special Series: How Council Is Asked To Squander MILLIONS Annually In Civic Center Deal
by Terry Jensen
(November 2, 2014) -- City staff is making a big deal out of telling taxpayers that the City doesn't want to borrow money to fix City Hall or build a new Civic Center. They want you to believe it shows fiscal discipline to build a new building and not fix the current building. They claim they can produce a new Civic Center without costing taxpayers more than they're currently paying.
Former Mayor Foster, Mayor Garcia, Vice Mayor Lowenthal and those likeminded want you to believe it demonstrates fiscal discipline to use a "Public Private Partnership" so they won't have to borrow money.
OH REALLY! What the Council is being asked to do is worse.
Most of you know the difference between a fixed rate mortgage and a variable rate mortgage. The interest rate on a fixed rate loan never goes up. It is clearly the better loan as the payments stay the same until the loan is paid off. In contrast, the interest rate on a variable rate loan can go up every year and so do the payments.
So what do you think the city staff proposes that Councilmembers do? Yep. Instead of borrowing at low interest rates THAT NEVER GO UP they want Councilmembers to approve signing a lease with payments that GO UP EVERY YEAR FOR 40 YEARS.
That $12.6 Million payment that city staff says is all taxpayers will pay annually actually escalates to $13.01 Million in the first year ballooning to $14.24 Million at the end of year 5 and will be over $23 Million annually in 25 years . By the end of the deal's term, the annual payment can easily grow to over $30 Million. And if inflation rears its ugly head, the payments could be even larger.
That's money that the City won't be able to use to provide taxpaying Long Beach residents and businesses with police, fire, parks and libraries or infrastructure..
So instead of having a free and clear City Hall, Library and park within 20 years with money to spare thereafter (I can show them how), Garcia, Suja and various enablers want taxpayers to pay MORE every year for 40 years. Such a deal!
And it gets worse. Stay tuned
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Previously in Mr. Jensen's Special Series on Civic Center: