On Tuesday, May 29th, the City of Oakland’s Oakland City Council quietly approved what’s called a “revenue anticipation note” of $105 million. The resolution clearly states the following:
WHEREAS, pursuant to Section 53850 et seq. Of the Government Code of the State of California (the “Law”) contained in Article 7.6 thereof, entitled“ Temporary Borrowing,” on or after the first day of any fiscal year (being July 1), a city may borrow money by issuing
notes for any purpose for which a city is authorized to expend moneys, including but not
limited to current expenses, capital expenditures, and the discharge of any obligation or indebtedness of a city; andWHEREAS, pursuant to Section 53853 of the Government Code, the City Council
(the “Council”) of the City of Oakland (the “City”) has found and determined that the sum of up to $105,000,000 is needed for the requirements of the City to satisfy obligations payable from the General Fund of the City, and that it is necessary that an amount up to said sum be borrowed for such purpose at this time by the issuance of the note (the “Note”) in anticipation of the receipt of taxes, revenues and other money to be received by the City for the General Fund of the City during or allocable to Fiscal Year 2018-2019; andWHEREAS, it appears, and the Council hereby finds and determines, that the principal amount of the Note, when added to the interest payable thereon, does not exceed eighty-five percent (85%) of the estimated amount of the uncollected taxes, income, revenue, cash receipts and other moneys of the City anticipated to be received for or accrued to the General
Fund during Fiscal Year 2018-19 that will be available for the payment of the
interest on and the principal of the Note; andWHEREAS, no money has heretofore been borrowed by the City in anticipation of the receipt of, or payable or secured by, any taxes, income, revenue, cash receipts or other moneys of the City to be received for or accrued to the General Fund during Fiscal Year
2018-19; andWHEREAS, the City wishes to authorize the issuance of the Note in a single series, to be purchased by Bank of America, N.A. (the “Bank”) from the City in accordance with that certain Note Purchase Agreement between the City and the Bank, as originally executed and as it may be amended from time to time in accordance with its terms (the “Note Purchase
Agreement”); andWHEREAS, pursuant to the Law, certain taxes, income, revenue, cash receipts and other
moneys of the City which will be received for or accrued to the General Fund during Fiscal
Year 2018-19 can and will be pledged for the payment of the interest on and the principal of the Note
In other words, the City of Oakland City Council approved the issuance of a type of bond called a “revenue anticipation note”, and for $105 million. The purpose of the use of that money was not specifically defined beyond “the requirements of the City to satisfy obligations payable from the General Fund of the City”. Folks, that could be anything.
Now, in the video of the Oakland City Council where the agenda item about the $105 million was introduced for discussion, the city staffer on the dais, did say the money would be used for the CALPERS (California Public Employees’ Retirement System) unfunded pension liability – where the city pays money to its eligible retired employees. But, guess what? That claim’s not in any written documents available online and on this subject of the $105 million bond.
The words “the requirements of the City to satisfy obligations payable from the General Fund of the City” could include anything – including buying the Oakland-Alameda County Coliseum Complex.
As this post is written, it’s well-known the City of Oakland is in negotiations with the County of Alameda to buy the County’s share of the Oakland-Alameda County Coliseum Complex. While this author has been told by sources that City staff was working to determine the assessed value of the Coliseum Complex for purpose of negotiations, no number was quoted.
Before you the reader react and say “well, the Coliseum’s worth more than $105 million”, the news also has been that the City of Oakland just may buy the County’s portion of the Coliseum debt. To this point, no number has been publicly or privately released. Meanwhile, the City of Oakland has two exclusive negotiating agreements with the Oakland Athletics: one for a new stadium at Howard Terminal, and the other for a new stadium at the same Coliseum Complex.
What’s the $105 millon for? No one on the Oakland City Council asked the question. Councilmember Desley Brooks, to her credit, did try but she asked a question that was more akin to leading the witness, when she stated that the bond issue, if done now, would cut the cost of borrowing. And while staff affirmed her summation, the fact is the resolution has nothing to do with just reducing the cost of borrowing money and has everything to do with borrowing $105 million in money, albeit at a cheaper rate. (Still, an open shout-out to Desley Brooks, who serves her District Six, very well, and deserves to be re-elected.)
The Oakland City Council avoided asking about the CALPERS “unfunded pension liability” claim, if only to inform the public in a crystal clear way what the $105 million was for. In fact, other than Brook’s conversation, Oakland District Three Councilmember Abel Guillen did ask if the City was selecting bond underwriters and bond counsel without competitive bid. City staff responded that there was a “case-by-case” selection of companies for work, and that the informing of the firms was public. In that, none of the Councilmembers even bothered to ask how the sending out of a notice for bids for bond underwriters and bond counsel was done.
What’s up with the $105 million? The people of Oakland should know, in writing.
Stay tuned.