I’m not sure why either, but if you peruse the documents (Item #34), you will see that the city does not have to pay anything, BUT, it is a lot like your parents co-signing on a loan for your first car. If you FAIL to make payments on that loan, well guess what?

It’s still a bit confusing to me, but I still don’t understand why they don’t just go to a bank? Seems they are using our credit rating and bond borrowing status to get themselves a discount. Wouldn’t it be nice if we could get a mortgage with the city as a co-signor?



13 Thoughts on “Why is the city co-signing for bonds with a private non-profit?

  1. Rufusx on August 17, 2016 at 9:57 pm said:

    Ask the City of Lennox what happens when one of these entities they have co-signed for defaults.

  2. The D@ily Spin on August 18, 2016 at 10:27 am said:

    They do this because they can. The city and First Premier Bank is the same thing. There’s lots of ways to guarrantee 35% interest. The big surprise will be by 2020 when the city (like many CA cities) takes bankruptcy. It’s the Trump way to walk away from liabilities and debt. In this case, both public and private.

  3. The D@ily Spin on August 18, 2016 at 10:31 am said:

    They should CYA because the FBI will not consider this LOL.

  4. matt johnson on August 18, 2016 at 1:51 pm said:

    the city has zero liability for these bonds- the educated buyer of the bonds will know that the source of repayment is the revenues of Dow Rummel and its assets. They are able to borrow at a reduced rate to provide housing for the elderly- higher interest costs would only be passed on to their residents. Am not familiar with the Lennox situation but not the same here if city had liability.

  5. Feeling Blue In a Red State on August 18, 2016 at 3:38 pm said:

    Provisions such as these are common for non-profit organizations to get the best rate. Since the perception is that they provide a public service – caring for the elderly – SF supports them by using the SF bond rating. No if you want to talk about if one of the most expensive retirement communities / assisted living / nursing homes really is “non-profit” that’s a different conversation.

  6. Warren_Phear on August 19, 2016 at 6:18 am said:

    The cost to “buy in” at this retirement village is prohibitively high. 99% of the population cannot afford their prices. Non profit? Think again.

  7. matt johnson on August 19, 2016 at 11:20 am said:

    high prices do not equate to a profit- costs must be covered

  8. Rufusx on August 19, 2016 at 7:38 pm said:

    Matt – who’s on the hook if Dow Rummel fails to make payments? The co-signer. That’s what I call liability.

    City of Lennox co-signed for construction of low-income housing. The housing authority wasn’t getting enough rent to be able to make full payments on it’s obligations (built in early 2000’s) a couple years ago and its director notified the city it needed to pitch in for a few months until they could raise the rents – as it was either that or go into default leaving the city (cosigner) holding the ENTIRE bag. City attorney verified they would be obligated by virtue of having co-signed and recommended paying a few smaller amounts vs. ending up with the total obligation. A cosigner is essentially a guarantor.

  9. Rufusx on August 19, 2016 at 7:40 pm said:

    Yes matt, “costs” (including bond obligations) MUST be covered.

  10. matt johnson on August 20, 2016 at 7:25 am said:

    read the indenture- the city is not a guarantor; as to bond costs I am sure if they had not borrowed the money these buildings would have just magically appeared. They had to borrow money to build the buildings – on a low cost tax exempt basis or normal rates.

  11. anominous on August 20, 2016 at 11:04 am said:

    Seems only fair as DR serves as the captive audience for most of MMM’s horrible Q&A videos of late.

  12. The D@ily Spin on August 20, 2016 at 5:50 pm said:

    Our business man mayor is not business. Look at the debt and how much he’s pilfered on country club styled construction. Citizens didn’t need indoor private tennis, an expensive coliseum, and swim club reserved for nobility. He’s a lame duck to the end of his term unless he can come up with schemes such as funding unprofitable private business who pays him a 1% loan origination fee.

  13. After sitting through the Council meeting presentation the picture became more clear why the mayor spends so much time at DR doing his pandering shows.

    Do you suppose the shut-up and listen shows are just one of the things the props, sorry I mean residents, sign on for to live there?

    Get out the vote, petitioners and voter registration groups used to be able to go to retirement communities to help them vote but it is almost as if they residents are now not allowed to be part of the outside world.

    The residents should not be props for a politician and then make it hard for them to vote.

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