Squeezing the Voter: the BAN loan

posted Oct 21, 2013, 2:03 PM by Stephen Barnes   [ updated Oct 21, 2013, 2:19 PM ]
If you want bigger and better toys or you want to push people into a corner, you just go out and get it.  If the other folks don't like it, there is always an election.  PRECISELY!  This November you can say NO loud and clear!

When the current council wanted to live in style* in the interim while getting you to pay twice as much as the prevailing rate for construction of a new civic center**, they did what is called in sales lingo an assumptive close: they assumed you would want so badly to get a shiny new city hall/civic center you would willingly overpay to get it done now.  That is why they called it a Bond Anticipation Note (BAN).  They anticipated you would pass a thirty seven million dollar bond like sheep.  But you weren't quite as willing as they had hoped.

Even though their lease deal included seven months of free rent (so they really didn't pay anything for the first half year plus), the 2.2 million dollars they borrowed on an expensive line of credit*** was still fully drawn down except for 600,000 dollars.  That means, despite reporting that they drew on some ongoing one-time funds to pay part of the rent, the current council has STILL left you on the hook for most of the rent for the fancy facility they have borrowed at your expense.

That 1.6 million they say will be spent by the end of this year is of course more than that after we pay for it over the planned next seven years.  Interest will add almost enough to equal one year's rent at the current facility over the full term!  So we pay (actually DON'T PAY) for five years and add another year in cost because we chose one of the most expensive rental buildings in Mountlake Terrace.  How is that good stewardship?

*See my notes on "Why the current council likes the term 'Interim'"
**See my notes on the "Home" page near the bottom on what is possible versus what they wanted you to pay in Fall of 2012 and Spring of 2013.
***My brother, a City Councilor in Maple Valley, reported that South King County cities were getting loans near 1% at a time when we took a short-term 4% loan.