Right now the death of retail in the Kansas City Northland and the ensuing financial disaster deserve a closer look.
To wit . . .
SPECIAL THANKS TO KICK-ASS TKC READERS WHO EXPLAIN THIS ZONA DEBACLE BETTER THAN ANYBODY!!!
There's a lot of highbrow financial chatter but this perspective makes it clear what's going on and better informs our blog community.
Checkit:
TKC INSIDER: ZONA ROSA DEBT CRISIS AND PLATTE COUNTY COURAGE
Moody's Investors Services recently downgraded Platte County Missouri's "Unlimited Tax General Obligation Bonds" (UTGO) to junk status because the County decided to EXPLORE their option of NOT appropriate for the payment for the Zona Rosa Shopping Project.
Now you might remember Moody's Investor Service. They, along with Standard & Poor's, are the ones that brought you the 2008 Market Crash and World Finance Armageddon when they rated mortgage back securities (MBS) triple-A, when any fool and his dog should have recognized they were junk.... (and a few became billionaires by correctly identifying incompetence at these rating agencies --See the movie The Big Short for a pretty fair outline of what took place.)
You see, the funny thing is, on the FRONT COVER of EVERY offering document required to be sent to investors, it says that the COUNTY HAS NO LEGAL OBLIGATION TO MAKE ANY PAYMENT.
Under the section "Bond Holder's Risk" (page 15) it clearly states there is a RISK that these bonds will NOT PAY if sales tax revenues are not enough to pay for the project.
And so Moody's comes along and explains that if the County doesn't steal from taxpayers to support a private entity the world as we know it in Missouri will soon come to an end.
Moody warns that ALL debt in Missouri risk a downgrade because Platte County has 3 County Commissioners with courage dared to say:
NO to paying investors not smart enough to realize there was a real chance they won't get paid,
NO to a rating agency that has already shown, in 2008 they made a terrible mistake with they originally rated these high grade investments.. now junk, and
NO to robbing hard working taxpayers to divert their dollars for projects they NEVER voted for in the first place.
I'm sure the S-Storm is just beginning for these three County LEADERS. Hang tough and thanks for looking out for the little guy.
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Developing . . .
we need some elected officials like these in KCMO!
ReplyDeleteWho holds these agencies accountable?
ReplyDeleteHow much in fines did they have to pay?
^^^You read the red star? Who’s the dummy now! Hahahahaha!
ReplyDeleteFrom Clay Co. resident: Platte Co rocks. Commissioners wise enough to foresee possible default. Unlike Sly who will do anything for more projects. Top notch prosecutor. Fuck up in Platte county and you pay the price.
ReplyDeleteBravo.
Sure, see a movie to understand the complex economics that led to the 2008 meltdown. Experts of all stripes are still arguing about that. Heck, they're still arguing about the causes of the Great Depressions in the 1930's.
ReplyDeleteIf the County guaranteed payment to bond investors, whether from development revenues or general taxes, then they should be on the hook for it. Running away from a valid debt simply signals to future investors that Platte County can't be relied on to pay its bills. It will then cost the County a LOT more to get future investors to buy its debt obligations.
Dumb story, dumb politicians.
Metro North was a nice mall. If someone actually knows, why did it get replaced by very nearby Zona Losa? Serious question.
ReplyDeleteSame thing all over town. Developers follow trends and, at the time, outdoor shopping malls were the hot trend. Traditional indoor malls have been “out” for so long that I’m surprised Oak Park and Indep Center have stayed open.
DeleteI miss watching those 4 hot air balloon go up and down and up and down at Metro North.
Delete2008 melt down was 100% Bill Clintons fault. You can't make banks loan money to people that can't pay!
ReplyDelete^^George Bush had been President for eight years.
ReplyDelete7:40, why would you assume I read the Star, dummy?
Metro north replaced by an outdoor strip mall maze, makes no sence.
ReplyDeleteNice try 8:06. Clinton was the one that started the sub prime collapse.
ReplyDeleteit might be worth bringing up here that the airport is different.
ReplyDeleteif it gets into trouble and its revenue bonds go into default, taxpayers are more likely to be called on.
This type of wheeling and dealing is successful enough to be repeated over and over and over. Pretty pictures are sold to elected officials who swallow the whole idea. To the person who asked if Metro North will reappear? Nope. In fact, the demolition has pretty much halted and Ford is back to parking it's unsold inventory on the property. I guess they are waiting for more of the TIF money because they already spent the bundle they received earlier.
ReplyDeleteIt wasn't sub-prime loans, it was derivatives.
ReplyDeleteZona Rosa is dead.
ReplyDeleteZona Rona should be linked to Sly Airport with toy train.
ReplyDeleteMore parking meters are needed.
Don't worry thanks to Mayor Sly James KCMO's finances are in perfect order and we even have a surplus!
ReplyDeleteAnonymous at 9/20/18, 7:49 PM wrote:
ReplyDelete"If the County guaranteed payment to bond investors, whether from development revenues or general taxes, then they should be on the hook for it."
RE-READ (or learn to read) the story...the entire point of the story was that Platte County GUARANTEED NOTHING. They are NOT on the hook and the county has the legal right, and some would say "duty", to investigate their OPTION to not pay for something the taxpayers NEVER voted for in the first place.
GREAT ARTICLE TONY....Sorry some are not smart enough to read... or, apparently, watch a movie that gives a fair outline of what took place....
Bravo to the County Commissioners of Platte County...Jackson County should pay attention...
ReplyDeleteThis is the courage lacking at KC and indep concerning shortfalls in the power& light and bass pro districts, respectively. The bond documents all say that there is a risk of non-payment. The city's obmigstion is to propose to the elected officials to make a payment but that final decision is up to the elected body and - like we see here - they have the authority to say no to a bailout if project revenues fall short of costs and debt payments. Otherwise, if the city or in this case county were really on the hook,it would be in the nature of a general obligation bond which according to the charters of KC, indep and in the case here Platte county would require voter approval at an election. It is a lie that KC has a legal obligation to continue to bail out Power and Light. It's a lie that independence has to continue to bail out bass pro. And it is a lie that Platte county has a legal obligation to bail out the private sector investors in zona rose. Sry for long post.
ReplyDelete-radish
I don't know if handing off the Bravo up in Zona to the county would actually do all that much
ReplyDelete10:27, do the actual bond indenture documents provide that repayment is contingent on voter approval? I doubt it, no investor would buy municipal bonds with that limitation. But maybe you know different?
ReplyDeleteYes they do. It is up to the elected body to decide. The city legal obligation is to submit it to the elected body. Otherwise it is a general obligation bond which absolutely require a vote. There maybe a *moral obligation* haha but no legal obligation. And as for the hit to the credit rating - I call BS on that. Platte county can still make debt payments for things that are important or that are approved by voters but not a private investment that has fallen short. I think the county would do just fine on the capital markets and a I-bank guy would jump out of his wingtips to write a bond secured by that prosperous county.
Delete-radish
Zona was given TIF, etc., to compete with Metro North.
ReplyDeleteVivion Road Lowes given tax breaks to compete with Home Depot few blocks away.
Luxury hotel TIF to compete with Burke subsidized hotel nearby.
Mutual Assured Destruction?
Taxpayers get burned.