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An aide to City Attorney Mike Aguirre said today that the Mayor Jerry Sanders’ new timeline for returning to Wall Street after years of exile is unrealistic.
Chief Deputy City Attorney Mark Blake, who supervises the city’s financing matters for Aguirre, said Sanders’ forecast to regaining access to Wall Street by late April doesn’t take into account an extra hurdle that he claims would protect the city from higher interest rates.
He said the city should not try to reenter the markets until it completes the 2007 audit.
Sanders said yesterday the city would only need the 2006 audit, which he predicted the city would receive by late January, before financial ratings agencies would usher the city back to the public markets. The city has been forced since 2004 to borrow on the more expensive private markets after its credit rating was downgraded and suspended in the wake of an accounting scandal.
Without the extra assurance of the 2007 audits, investors will demand they receive higher interest rates for the loans they would give the city for upcoming water, sewer, pension and construction bonds, Blake said.
“There will be a premium to pay for returning to the public financial markets without it,” he said. Under normal circumstances, the city would be wrapping up certification of the 2007 financial statements about this time of the year.
In addition to recommending a new benchmark for the city to reach, Blake also recommended the city revisit old ones. He urged the firm, Macias Gini & O’Connell, to withdraw its October blessing of the 2005 audit in order to examine a fund that takes on the debt associated with pension benefits that exceed the IRS’s limits for public retirement funds like the San Diego City Employees’ Retirement System. Aguirre claims the additional fund could jeopardize the tax-exempt status of SDCERS.
Mayoral spokesman Fred Sainz said Sanders is sticking by the timeline he announced yesterday despite Blake’s criticisms. He accused the City Attorney’s Office of putting unreasonable demands on the city and its auditor in order to politically embarrass the mayor.
“If the city attorney or his stooges frustrate the timeline in any way for re-accessing the bond market, we’ll make sure to call it out so people know who is responsible,” Sainz said.