The Morning Report
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SANDAG bet against big, experienced banks like Goldman Sachs and are, so far, losing the bet leaving taxpayers are on the hook for millions.
Voice of San Diego’s Andrew Keatts and Ashly McGlone explain how the regional transportation agency bought into an investment called interest-rate swaps. The agency essentially bet that interest rates would rise.
Interest rates did not rise. Now the agency has spent millions to get out of part of the bad bets while a large liability hangs over it.
“All of that taxpayer money was supposed to go to regional transportation and infrastructure projects,” write Keatts and McGlone.
Before the 2008 economic downturn, investment managers sold many government agencies on the derivatives — San Diego officials saw it as a surefire, risk-free side bet when SANDAG borrowed money to fulfill its promises from the 2004 extension of a half-cent sales tax.
SANDAG leaders still say everything is fine.
“SANDAG’s continued certainty that it isn’t a concern is also, in essence, the same bet the agency made at the beginning: that rates will surely increase soon, at which point the swap value will rise,” report Keatts and McGlone.
Financial experts Keatts and McGlone spoke with are bewildered by SANDAG’s confidence.
“What happened is they got burned by an extreme event no one envisioned: interest rates near zero,” said Steve Malanga, senior fellow at the Manhattan Institute for Policy Research, after reviewing some of SANDAG’s financial disclosures. “That’s why you don’t make speculative bets with taxpayer money.”
Pro Soccer Coming to San Diego
Move out of the way SoccerCity, another pro soccer league is headed to San Diego.
The North American Soccer League, which is designated as a second-division league by U.S. Soccer, is expected to soon announce a San Diego expansion franchise.
The website Goal.com reports that the formal announcement is expected to be made Monday, with the team set to begin play in the spring of 2018 first at USD’s Torero Stadium and later at a new venue it plans to build in the North County.
Soccer star Demba Ba is the lead investor in the ownership group that will bring NASL to San Diego. The Union-Tribune asked Ba about the move in an in-depth Q-and-A.
The U-T also talked to Bob Watkins, a local businessman who’s serving as theNASL club’s president, who had some strong words for the SoccerCity plan that paired a development deal with a Major League Soccer team.
“We want to develop soccer through this professional opportunity,” Watkins told the U-T. “We are not in the real estate development business and want to use soccer as a ploy to get a real estate project going.”
• Supporters of SoccerCity and the mayor’s proposed tax hike to fund a Convention Center expansion, homeless services and road repairs aren’t giving up on getting the City Council to approve a special election this year. The drop-dead deadline for announcing a 2017 special election isn’t until the end of August, so expect to hear more about both proposals in coming weeks. (U-T)
Faulconer’s Politics Praised
POLITICO Magazine included San Diego Mayor Kevin Faulconer in its list of America’s 11 Most Interesting Mayors.
Faulconer is praised for his campaigning in English and Spanish, his work on pension reform, his embrace of San Diego and Tijuana as one big “megaregion” and his pragmatism that leads him to buck his own Republican Party on several major issues.
Yet “interesting” is not a word most local reporters would use to describe the mayor, whose peacemaking approach to politics often left him following instead of leading and absent from some of the city’s biggest debates.
Faulconer’s hard push to pass his hotel tax hike and aggressive housing push have lately revealed a mayor anxious to make an impact.
• Also on the national radar this weekend was Lorena Gonzalez-Fletcher. The assemblywoman had a cameo on Last Week Tonight with John Oliver on the topic of vaccines.
Weekend News Roundup
• Hepatitis A has infected 181 people and killed four in the region since November. It’s the state’s largest outbreak in nearly two decades, and the viral disease is hitting the region’s homeless population the hardest. (Union-Tribune)
• In perhaps his most optimistic column ever written on the topic of homelessness, the U-T’s Dan McSwain celebrates a pitch by a group of local business owners to house the region’s homeless in inexpensive tents and the county’s new initiative to spend $25 million on affordable housing.
• The Los Angeles Times names Chicano Park as a must-see place to visit in its ongoing “California Bucket List” feature.
• East County Magazine interviewed Morgan Cook, the Union-Tribune reporter named the 2017 “Journalist of the Year” by the Society of Professional Journalists in San Diego.
• Local activists organized a cool event this weekend meant to connect Mexican and Muslim cultures.
• The Daily Democrat talks to business folks who are following the scheduled building of border wall prototypes in our region.
• The San Diego Zoo is gearing up to open its new Africa Rocks exhibit after undertaking its biggest construction project ever. (U-T)
Kinsee Morlan is engagement editor at Voice of San Diego and author of the Culture Report. Contact her directly at email@example.com.