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Original post made
on Dec 18, 2013
I wish my banker was as big a financial idiot as the MP City Council. I would love a remodeling loan at 2.5% and my regular mortgage reduced to 3%.
If the council members wish to make these ridiculous financial decisions they should do it with their personal funds, not our tax money.
What exactly is the 'public benefit' that accrues from this gift of public funds?
Shame on you, City Council!
Peter, a loan is not a gift, it is a loan. The 'public benefit' is expressed in several ways. First, the city manager is engaged and has a long term commitment to the city, literally. Also, the city gets interst from the loan, which is no joke. When the economy tanked a few years ago, the loan to then city manager Rojas was the highest returning of any of their investments.
If this was not a better rate than the City Manager could have gotten in the market then why did he seek a city loan.
If it is a better rate then the rate difference is a gift of public funds.
"If it is a better rate then the rate difference is a gift of public funds"
No, the city makes many investments. The return on these investments helps the city maintain a high quality of service while maintaining lower taxes. Instead of paying Rajas more in salary, which would increase the city's long term pension liability, the city chose to instead provide him a loan, which turned out to be a great investment, and helped the city pay down existing long term pension liabilities.
Elected public officials are always too ready to make generous wage and perk offers to their employees - usually much better than they could earn in the private sector. Other people's money is cheap. - And then we should not wonder that cities and counties are in financial difficulties, especially with pensions. What private employee retires at 50-90% of the final year's pay (including overtime).
"Elected public officials are always too ready to make generous wage and perk offers to their employees "
Fortunately that is not true for all local government entities.
Entire City Council should be fired for this vote alone!!!
Who's ready to start an online petition to fire them for this vote and/or overturn this vote?????
Per Retrospect: No, the city makes many investments. The return on these investments helps the city maintain a high quality of service while maintaining lower taxes.
To extend your argument, any MP resident with good credit should be able to go the city council and get a loan for less than the going rate (which I believe is over 4% for home improvements), all in the name of helping the city diversify its investments.
Besides, why is MP's investment strategy so poor that interest payments on a personal loan helps boost the city's return on its overall investment portfolio?
What makes our council members believe that compensation to city employees is a zero-sum game, and that a sweet loan is necessary to offset the request for a higher salary? When was the last time council members said, "no" to a request from employees? Making decisions about public funds based on a philosophy of "we don't want to lose so and so, so we need to find a way to pay them more" is ridiculous.
"... First, the city manager is engaged and has a long term commitment to the city, literally. ......"
Why not open this up to all MP employees so they will also be part of this "long term commitment"? In fact open it up to all city residents and maybe they will have a long term commitment to the city. Residents for life!
Vote out the council.
The city council has made a point of paying the current city manager a lot less than other local city managers, which cuts down on long term pension liabilities. The city manager has the most important job, and is expected to make difficult decisions by hiring only high-quality employees, which is difficult when the best people leave, on their own, for better paying jobs in nearby cities.
Making it possible for the city manager to live within the city has great value. If Menlo Park had a policy of providing a home for the police chief, maybe there would be fewer cops on the payroll that have been busted ... while on duty. We'll never know, but I would not want someone like that knocking on the door of my family home.
More support to overturn this and the Council.
This is ridiculous!!
So instead of giving the City manager a raise - money the City not only would never have seen again, but also that would contributed to the City's long long term pension obligations - the City Council instead, as COMPENSATION, gave the City Manager a loan he must repay in full, plus interest. And the interest the City Manager will pay on that loan, as part of his COMPENSATION deal, is far greater than that same money would have received in the City's reserve account. And people are mad about that?
I asked - What exactly is the 'public benefit' that accrues from this gift of public funds?
This SJ Mercury article answers my question:
"Then-mayor Peter Ohtaki and City Attorney Bill McClure negotiated the loan agreements under the council's direction in lieu of a salary increase that would have compounded the pension amount due McIntyre upon retirement."
It now makes sense.
Shame on me for not reading the Staff Report before making my comments on this issue:
"There is a loss of interest to the City of $4,950 per year due to the reduction in interest rate from 3.5% to 3.0%. The City will make more income on the new loan to Mr. McIntyre than it is receiving today since the interest rate payable of 2.5% exceeds the Cityâ€™s current rate of return on its funds from LAIF and other permitted investments. Because the contract amendment does not include any increase in base annual salary and there is no bonus as part of this Amendment, there is no increase in PERS contributions by the City."
"Fortunately that is not true for all local government entities."
Peter, the four council members that voted on this deal all supported 2010's Measure L have never, ever voted to increase unfunded pension liabilities.
You, on the other hand, voted for an insane 3%@50 deal for the firefighters. You have a lot of nerve.
"You, on the other hand, voted for an insane 3%@50 deal for the firefighters."
In 2002 !! That was the beginning of my education on this issue and NOBODY has held the line harder than I have in the last ten years - please do your homework.
What appears odd to me is the term of the loan & provision for repayment, or interest rate re-set, when employment ends. Some homes have been occupied by these beneficiaries of MP loans or partial ownership long after termination of employment. One man not too long ago kept his expensive City-financed house long after he'd found employment elsewhere. There's at least 1 other instance I know of where a woman who'd left City service got to keep her townhouse financing benefit for years.
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