S. Tahoe parking garage bonds to be refinanced
Bonds on the 10-year-old South Lake Tahoe parking garage are going to be refinanced.
While the interest rate will be lower, the payment date will be extended another 10 years from the original 30-year end date. However, financial experts have told the city it’s possible the debt could be paid off in 20 years. And a decade ago the city was also told this concrete structure would be a money-maker.
The paperwork is such that the garage would not be able to be refinanced in the next 10 years.
South Lake Tahoe’s parking garage has been problematic since Day 1. Photo/LTN
The interest rate is estimated to be about 6.3 percent. The goal is to have the transaction done by December before the next payment is due on the current bonds.
The City Council at its meeting last week unanimously agreed to this deal.
The original bond in 2002 was for $9 million.
The garage takes in about $650,000 in revenue. But the operating expenses and debt payment are close to $750,000. The $100,000 shortfall was been double that in past years before management changes were made.
The South Tahoe Joint Powers Parking Authority owns the garage. The council acts as that entity’s board of directors.
— Lake Tahoe News staff report
your editorial comment about the possibility seems a little harsh. The lenders are basing a 20 year payoff based upon historical data of the operation of the current garage, baring any unforseen event. Your story seems to be incomplete. The first question most journist would ask is why are they doing a refinance of the garage. I do believe this was done so that the city will no longer have to make up the shortage at the garage which was coming out of the general fund. I may be wrong but I think there is a loan that will be paid off in the redevelopment area and the tax money that was used to payoff that loan may then be used to paydown the parking garage.
Has this garage ever been a money maker? Just wondering, as I do not know the history on it. It seems out of place in the Tahoe community.
As for the refinance at 6.3%, that is a very steep rate in today’s marketplace. I have refinanced property holdings in the past few months for as little as 3% to as high as 4.95%, and generally, private sector borrowing is done at a higher rate than municipal bonds. Seems high to me, but perhaps there’s risks involved that are driving the rate higher than the market.
A.B. it has never made money and the only reason it was there is because it is needed for parking for heavenly, which was overlooked when it was planned. Munis have really taken a hit in the last few years because of resent city bankruptcys in the state, IE Mammoth, Visalia, detriot, ect.
Typical City SLT bungled fiasco, for which the taxpayers are now picking up the tab.
reloman has it right.
Is the City still using the consultant that told them the garage would be a money maker?
Remember when the City claimed property within the redevelopment area two was going to increase in value 6% per year componding??
Steve:
The City won’t be paying anything on the garage. The revenue generated from the parking garage and the special tax monies that continue to be collected which were levied on the Gondola, Marriot timeshares and the commercial space in the CFD 2001-1 Park Avenue Project will pay the debt. Part of the reason for the refinancing is to lower the annual debt payment amount so that a reserve account can be established and funded that will pay for future maintenance & repairs and capital expenses for the parking garage.
This item was thoroughly discussed at the Council’s October 1st meeting under the South Tahoe Joint Powers Parking Financing Authority Item (a). It was a very interesting discussion.
sunriser2:
The consultant who provided the initial report on what he thought the projected revenues would be has had nothing to do with parking garage projections or reporting since.
4-mer-usmc, as I understand it, the income generated by the garage will pay the debt down and build a maintance reserve. The taxes on the Heavenly Village go towards paying down another bond and after that is paid off that tax can then go towards paying down the garage. But I may be wrong on that.
It is great that people like yourself actually watch the online meetings to be a little better informed, instead of making commits without any information.
On another note I have been told that the barrers around the hole will be coming down in a couple of weeks, nice to see some progress on that.
4-Mer, are those special tax monies accounted for in a separate fund? But, in any case, the city is paying the debt service, it just might not be the general fund. Its still the city.
If those taxes don’t set up a separate fund then any reserve can be swept into the general fund.
I don’t know, so I don’t want to imply I do, I do however understand the accounting.
Reloman:
I think you may be correct but I couldn’t say so unequivocally without reviewing that discussion again on the City’s website. The good thing is, no money will need to come from the City’s general fund.
I haven’t heard anything more in the City Council meetings about the Chateau Project but it sure is nice that the project is moving forward again.
Moral Hazard:
I think any Resolution that was adopted or Contract that was approved related to the Park Avenue Project CFD 2001-1 stipulated that those special tax revenues be accounted for in a separate fund and they cannot be swept into the General Fund. Had there been no CFD and Park Avenue Project (Gondola, Heavenly, etc.) there would have been no special tax revenue and there would have been no garage. Those designated revenues and associated designated debts/expenses are generally contractually attached.
4-mer you need to get your facts straight. The parking garage is stand alone. The first revenue bonds issued cost the city plenty of lost money as the revenue never covered interest costs. Also the expenses attached to the bond issuance were extravagant. Now they are trying to sell these bonds with a 6.3% coupon which is a full percentage point more than other non-rated municipal bonds that have decent collateral or revenue to pay interest and principle pay down. The brains that run the city couldn’t blow their collective noses if they were dynamite.
4-mer you need to get your facts straight. The parking garage is stand alone. The first revenue bonds issued cost the city plenty of lost money as the revenue never covered interest costs. Also the expenses attached to the bond issuance were extravagant. Now they are trying to sell these bonds with a 6.3% coupon which is a full percentage point more than other non-rated municipal bonds that have decent collateral or revenue to pay interest and principle pay down. The brains that run the city couldn’t blow their collective noses if their brains were dynamite.
suspiciousmind:
I was addressing what was discussed at the October 1st City Council meeting and the accounting/contract matter was based on what I’ve experienced professionally, but thank you for your input of historical information regarding the parking garage and for sharing your knowledge of financing. I would very much like to obtain accurate historical information on this topic and would appreciate your directing me to where I can perform a thorough review. Thank you in advance for your assistance.
Since you hold the “collective” City Council members in such low regard have you considered running for one of the three seats that will be up for grabs in 2014? Your remarks would indicate that you believe you could do better than they. Maybe its time for you to show your ability and expertise.
4 mer usmc,
May I suggest getting hold of a copy of the Official Statement for the present bonds. I don’t know the cusip offhand but the city does and you can go online to EMMA (just goggle “emma”) and it takes you to the Electronic Municipal Market Access and you can put the cusip number in and go to the bond and see the official statement. If I remember correctly the total bond costs were about 9 million but after costs the city got about 7 or 7 1/2 million to build the garage. I don’t need comment on the “hole in the ground” and the malfeasance involved in that debacle. No performance or completion bond for the project points out the abject gross incompetence of the city moms and pops. Let’s not forget the millions of dollars of lost TOT that slips through their greasy fingers every year and continues to do so. A local vacation rental organization even complained they were never audited on TOT collections. And remember vacation rentals by owner are laughing all the way to the bank. Most of that money leaves the area and dollars to donuts very little in state or federal taxes is paid on the rental money or the TOT that the owners receive.
Enough already but you get the point. And I live in the county so no city council is not for me. And I do wish the city well.
One more grossly stupid idea the city had was to turn about of itself into a redevelopment area. Looney tunes at best and the state stopped all that nonsense about a year or so ago. Ask the city about the loaning of money to the RDA under the table (they hoped) until the grand jury got wind of it.
suspiciousmind:
Thanks for the info regarding the Electronic Municipal Market Access and CUSIP number. You’ve certainly made reference to numerous actions with which you don’t agree by numerous City Councils. Your moniker is appropriate. Too bad you live in EDC and can’t run for office, but glad to hear you wish the City well.