Many of you are aware that the El Paso Times and KVIA reported on the higher than expected costs the City has paid for the ballpark. According to Maria Garcia’s report on KVIA on November 17, 2015, the city lost $22 million it expected to add to the City’s general fund. This information is more difficult to glean from Elida Perez’ article, “City sought to fire financial advisors” that was also published on November 17, 2015 because the ballpark figures are buried in that story. As a matter of fact, the El Paso Times article ignores the dollar figure and just mentions that the cost for the bonds was “about $17 million” more than had been initially projected. In this post I am going to focus on two troubling issues that the two news media reports have started to expose and ignore at the same time.
The first issue I am going to focus is on Larry Romero’s apparent and continued attempt to bypass city council on policy decisions. As you likely know, Larry Romero has been involved in several controversies lately. After instigating a large salary increase for Tommy Gonzalez, the city manager, the taxpayers have come to learn that Larry Romero was involved in street repairs and street speed control devices that bypassed city processes and policies. Additionally, we learned that Larry Romero’s brother was paid by Tommy Gonzalez for business services.
In the newspaper article we now know that Larry Romero initiated an attempt to have First Southwest, the City’s financial services provider, removed. Larry Romero is one of eight city representatives that are the body that is supposed to be making public policy for the city in the open. It requires a majority to agree to proceed with the public policy agenda.
At this point is unclear whether the city’s financial services advisors would be a public policy issue or whether it is a vendor-related issue. Regardless, the city is managed by a city manager that applies the will of the political body. As only one member of the political body, Larry Romero has no authority to unilaterally make policy decisions for the city council nor to bypass the city manager.
Perez’ newspaper article makes it clear that the attempt to remove First Southwest, without input from the governing body, was initiated by Larry Romero. Coupled with the other events that have recently come to light about Larry Romero, a pattern has begun to emerge.
It is a pattern where Larry Romero unilaterally is making policy decisions that bypass the governing body. The biggest argument made by proponents of the city manager form of government is that it keeps politicians in check by keeping them away from day-to-day operations. The actions by Larry Romero seem to indicate that he is looking for a way around the governing body. Why?
The other issue that I want to point out is the higher cost to the city because of the delay to sell the ballpark bonds. According to the El Paso Times, the delay cost the city “about $17 million more” than what was projected. The newspaper points out that several factors caused the delay. They include the pending lawsuit and last minute changes to the public-private partnership requirements.
The fact is that the sale of the bonds was delayed because of market conditions in August of 2013. As reported by David Mildenberg in Bloomberg, Morgan Stanley “couldn’t find buyers when the interest rates were lower in June and July” of 2013. Goldman Sachs took over the selling of the bonds and sold them at a higher cost to the city. This was the result of investors jumping out the of municipal bond market because of speculation about the economy and Detroit filing for bankruptcy.
On the other hand, KVIA’s Maria Garcia quoted Oscar Leeser in her “Political consideration may have cost the City $22 million in ballpark financing” report on November 17, 2015 as stating that “prior City Manager Joyce Wilson, Candelaria and some council members delayed the issuance the second time it was scheduled due to a pending election.”
Obviously the political rhetoric is thick in both reports. The newspaper focuses on the attempt to oust First Southwest while KVIA focuses on the background political rumormongering.
The fact is that the additional cost to the city is old news. Bloomberg reported it on August 29, 2013. I blogged about the higher costs and the delay in the sales of the bonds in “The El Paso Baseball Fiasco: The Rest of the Story” on September 6, 2013.
Anyone that followed the ballpark debacle likely already knows that the bonds cost the city more money than they had projected. As if anyone really believes government projections.
Now let’s delve into some of the minutia.
In my blog post, over two years ago, I pointed out that First Southwest had been implicated in the public corruption scandals that resulted in several officials jailed. According to the information we know, from the corruption cases of Roberto Ruiz and Christopher Pak, is that First Southwest was fired because they would not pay bribes.
Think about that for a moment. Two corrupt Bear Stearns bankers; Pak and Ruiz, have indicated that First Southwestern did not want to participate in the bribery.
We now know that the sudden revelation about a higher cost to the taxpayers because of the delay in the selling of the bonds is old news. At least two years old. KVIA focuses on the delay as a result of political favors to protect Steve Ortega. While the El Paso Times focuses on Larry Romero’s attempt to fire First Southwest.
Larry Romero has been involved in various questionable actions recently. Now, it appears that he wants to get rid of one business entity that apparently did not want to take bribes from two corrupt bankers.
Ask yourselves, why is that?
The next thing to notice is why did the cost become an issue now? Look to the politics and the reason will become immediately evident.
However, the most important pattern to notice is the one that the El Paso Children’s Hospital is the poster child for. In 2007, the taxpayers were guaranteed that the children’s hospital would not cost the taxpayers any more money. In 2015, the taxpayers were again promised that the children’s hospital would be successful even after the business model has been proven to be a failure. Of course it meant that the taxpayers had to fund millions more to the children’s hospital.
Likewise, the taxpayers were promised that visitors to the city would be paying for the ballpark with the HOT taxes. Like the children’s hospital, it isn’t going to cost you any money.
Look at the politics behind the “sudden” need to discuss the higher bond rates, that was public information in 2013 and I believe you can see the pattern slowly emerging letting you know that the figures used to sell you the ballpark scam aren’t really what is happening in the real world. Looks like you are slowly being prepared for the reality that you’ll have to bail out the ballpark, like you are being forced to bailout the children’s hospital.
As for Larry Romero, if it walks like a duck it must be a duck and Romero’s actions surely warrant some serious investigation. In many ways, Larry Romero reminds me of another Larry, Larry Medina who kept telling everyone that he wasn’t corrupt.