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Bond rating for Los Osos is suspended

August 21, 2016

Money toiletBy KAREN VELIE

The financial bad news for the Los Osos Community Services District continues; earlier this summer the Standard & Poor’s suspended its rating for district bonds.

The credit rating service said it could not continue to rate the district’s fiscal integrity because a promised outside audit of the 2014-2015 books was not submitted on time. While the rating is suspended, the district is unable to get approvals for grants and low income loans for future infrastructure project associated with the community’s seawater intrusion issues.

While the suspension occurred on June 21, the district board was not informed until activist Julie Tacker brought it to their attention several weeks ago. Nevertheless, before it was suspended the district had already been saddled with a poor rating.

Back in Dec. 2014, Standard & Poor’s lowered its rating for the district to BBB- due to the district’s financial reporting failures. Because of the district’s lower ratings, it is required to pay higher interest rates on bonds.

“This action follows repeated attempts by Standard & Poor’s to obtain timely information of satisfactory quality to maintain our rating on the securities in accordance with our applicable criteria and policies,” said Standard & Poor’s credit analyst Misty Newland in 2014.

The recent suspension is another indication of widespread accounting failures that have plagued the district for the past few years.

Earlier this year, the Internal Revenue Service, Employment Development Department and the Social Security Administration sent the district delinquency notices for misreporting staff salaries and wages. The district owes fines and interest for under-reporting almost $100,000 in wages during the past two years.

Last year, CalCoastNews analyzed former General Manager Kathy Kivley’s personal payroll and found that she had overcompensated herself by approximately $6,000 during her two-year term. Following a district funded two-month investigation into the financial irregularities, Kivley retired in January.

In February, the district hired Peter Kampa to serve as its interim general manager. In April, Kampa said he refused to provide financial statements until the reports were “grounded in fact.”


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This guy has been reporting on this issue since july: http://sewerwatch.blogspot.com


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Not to worry, the ‘Standard’ of our disfunctioal CSD has always been ‘Poor’ since the train left the station & we all got onboard.


Next station is called ‘Junk Bond’.


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Peter, I believe that the reason that you were hired was to get the financial statements grounded in facts. Are you admiring the problem. It appears between April and now a competent individual should have the district’s finances “grounded in fact” and moved on to address other issues.


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WRONG! In October of 2005, the LOCSD of which you were a member DEFAULTED on a low interest State Revolving Fund loan and the state subsequently refused to disburse additional funds and demanded immediate repayment….of which YOUR LOCSD refused to do.

Lets stop with the revisionist nonsense.


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Pel,


The State stopped paying installments; triggering the “default”. Creditors had already been paid, repayment wasn’t an option. The little bit of money that had not been paid out went into trust and paid for bankruptcy protection and into the debt adjustment plan.


You must know, the State was told to get in line with all other creditors since their loan was (foolishly on their part) unsecured.


If the recalled board had not broken ground, there would have been no bankruptcy. For the record, the amount of work that was completed on the sewer amounted to 3,000 feet of pipe in the ground, miles of street torn up for no reason and the Tri-W site being graded (again for no reason, as you can tell from the county’s construction of the collection system first, Tri-W could have for over a year).


Yes, I was on the board that Moved the Sewer, unfortunately it was more expensive than it needed to be.


If you’ve toured the County’s plant behind the cemetery I’m sure you’re as grateful as I am that that monstrosity wasn’t built in the middle of town.


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Most government agencies. cities, counties, and states would be in financial crisis and risk suspension if they actually reported their true liabilities, i.e. pensions, but they don’t.


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Lets not forget how Los Osos began this journey to Bankruptcy-Thanks Julie.

This is like the arsonist who lights fires and then saves the people to look like a hero.


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Bankruptcy protection is the status given to an individual or business that are unable to pay back their debts in full. The bankruptcy protection process can be initiated by either the debtor themselves or even a court in some circumstances. In the case of Los Osos CSD, I was on the board that took the initiative to protect the community from creditors who were hired by the recalled board and front-loaded their contracts to make the debt as big as it could be up front for a project that would take years (just as the county’s project has) to construct. These same recalled board members and creditors successfully lobbied to have the loan installments stopped, making the district unable to pay current invoices. The district needed to protect its assets, our action to file for bankruptcy was necessary.


Unreal, the “journey to Bankruptcy” began when the contracts were let before the recall election.


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@ Unreal .. you would rather just sweep sh*t under the carpet and let corrupt practices continue, rather than address them in an effort to get back on the right track? If you are not part of the solution you are part of the problem and such thinking is exactly why our govt is so dysfunctional .


such thinking reminds me of Elmer Fudd … ssssshhh, be vewy, vewy quite. I’m hunting wabbits.


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EXACTLY!


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Oh really? What about the time the LOCSD defaulted for the only time in history on the SRF low interest loan? Then proceeded to declare bankruptcy….without all that, there would be NO bond rating suspension.

This town has been run by a ship of fools for decades.


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The super tanker ship of fools is being run by Morro Bay. In the end, the Los Osos sewer will seem inexpensive by comparison. Those who don’t learn from history are destined to repeat it!


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Pelican1, the district didn’t default. The SRF stopped payments on installments that were committed to the work that had been done prior to the recall i.e., 3,000 feet of pipe in the ground, miles of street torn up for no reason and the Tri-W site being graded (again for no reason, as you can tell from the county’s construction of the collection system first, Tri-W construction could have waited for over a year).


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“While the suspension occurred on June 21, the district board was not informed until activist Julie Tacker brought it to their attention several weeks ago.”


WTF?????????????????????????????????????


And some people in this forum criticize Julie Tacker for her “activism”? Maybe what this country needs is a whole frickin’ nation of Julie Tackers!


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God help us!


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If I remember correctly Ms Tacker is the reason that there was a loan default to begin with, when her and her bunch put a stop to the sewer.


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BINGO!


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It is a sad day when an activist has to inform a city of their bond rating, or lack there of.


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Can anyone say “Ostriches with their heads in the sand”?


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