Folks don’t know the connections and implications of crony capitalism, partly because no one points them out, until a municipality is overexposed by such unnecessary risk, a la Harrisburg.
So I’ll try to keep an eye on The Political Class’ continued fleecing of We The Taxpayer.
The article says “average interest rate of 3.87 percent over 30 years,” might indicate a bond swap of fixed for variable interest rates. This document, from Boro staff, says it is fixed:
Hopefully that is for the life of the loan. Because if it ever can switch to variable, it exposes the taxpayer to unnecessary risk, if rates go up, in exchange for no benefit of reduced taxes, etc. I cover little of that here, in a similar move in nearby Londonderry Twp:
Here, former Harrisburg Receiver recommended that Pennsylvania “prohibit local governments from entering into any new interest rate swap agreements,”, and why:
Interest rates, kept low for a long time only by the Federal Reserve’s actions, have to rise at some point. A bond swap – of fixed interest for variable – is taking on a risk burden. If swaps are to be done in the public sector, those assuming the risk must equally share the rewards from it. Swaps should not be done to make new money appear out of thin air, and spent on campaign donors, even before it hits the coffers.
Watch also when O’Keefe “recommends an engineering firm.” That could end up as another no-bid, no peer oversight handout to HRG-PAC. It would be curious, for example, to know who recommended Bond counsel Lou Verdelli, who he beat, and by what competitive selection process he beat them. Verdelli and HRG-PAC sweep most of the plumb assignments right next door in Derry, by wild coincidence. Verdelli and HRG-PAC have both given generously to Derry Supervisors’ political campaigns. And the coincidences pile on.
Also coincidentally: Dauphin County Infrastructure Bank announced on March 12, 2014 funding $3.9 million to five local projects. HRG-PAC is the municipal engineer in three: West Hanover, Derry and Londonderry. If HRG-PAC was also involved in the other two, in Harrisburg and/or Middletown, who did they beat for those lucrative projects, and by what selection criteria? If there was no competitive process, then We The Taxpayer may not have gotten the best price we could have for those services. That would be a shame, but doubly so if we added the risk of variable loans on to our tax burden and didn’t share in the wealth. Again.
I’ve long tried to tell my elected officials about the waste associated with no-bid assignments. To no avail, yet:
Someday, someone may start to cover the real story of bond swaps profiting campaign donors by increasing public risk exposure. I’ll keep blogging about it and trying to elect folks with the honesty and courage to stand up to it, while staying open to any other suggestions.
April 4 UPDATE:
By sheer coincidence, the link below came out two days after this blog. I swear I didn’t know about PPC’s, although I can understand if you don’t believe me, given that I am very closely associated with the PA People’s Campaign (“PPC”: I am the Dauphin county Coordinator of Hanger Activists for Government Reform).
PPC’s interpretation focuses much more on Corbett than I prefer, as it implies that the problem will improve after Corbett leaves. I do not think it will, as no one running against Corbett has made reform a central plank. But still, solid accounting of the #1 underlying threat to our democratic republic, at all levels of government.