WHAT WE SEE BELOW IS THE PLAN THAT DR. ALONZO PUT FORWARD AS A SCHOOL CONSTRUCTION MODEL FOR BALTIMORE. YOU SEE IT IS JUST A COPY OF WHAT WAS DONE IN SOUTH CAROLINA SOME YEARS AGO. WHAT THIS DOES IS COMMIT TAXPAYER MONEY TO A PRIVATE PROJECT FOR 30 YEARS, THIS AS WE SEE A PUSH TO PRIVATIZE PUBLIC EDUCATION. SO, WE WOULD SEE YET ANOTHER EXAMPLE OF PUBLIC MONEY PAYING FOR PRIVATE INFRASTRUCTURE. THIS WILL BRING HUNDREDS OF MILLIONS TO THE BANKS AND LEAVE BILLIONS IN PROFIT FOR THESE EDUCATION BUSINESS OWNERS AND SHAREHOLDERS WHEN THIS ALL GOES PRIVATE-------THINK ABOUT NASA AND ITS PRIVATIZATION HAPPENING NOW!.
REMEMBER.......WE COULD SIMPLY HAVE CORPORATIONS PAY THEIR FAIR SHARE OF TAXES AND:
I HAVE A BETTER IDEA.......WHAT IF ATTORNEY GENERAL GANSLER SIMPLY WORKED TO GET THE $600 BILLION IN MORTGAGE FRAUD SETTLEMENT MONEY FROM THESE SAME BANKS AND PAY CASH FOR THE PROJECT?
Greenville’s Model Could Mean $1 Billion for School Construction in Baltimore Now!
This Campaign calls upon elected officials and decision makers at the local, state, and federal levels to adopt and act upon a funding plan to renovate and modernize all public school buildings in Baltimore City within 8 years.
NOTE THAT TRANSFORM BALTIMORE IS THE SAME COALITION OF ORGANIZATIONS AS BALTIMORE EDUCATION COALITION. A PARTNERSHIP OF THE PRIVATE NON-PROFITS, CHARTER SCHOOLS, AND JOHNS HOPKINS. WHO WOULD WANT TO ENTER INTO SUCH A LARGE COMMITMENT WITH WALL STREET GIVEN THE TOTALLY COMPROMISED INTEGRITY AND CRIMINALITY? THESE 1% SAY 'YES WE WILL'!
Transform Baltimore - Build Schools. Build Neighborhoods
✦ A Partnership Organization is needed to borrow a large sum
of money up front so that a large scale construction program
can be implemented.
✦ A “63--‐20”corporation, like Greenville’, could be formed to sells
bonds or borrow large amounts of money from a financial institution.
Alternatively, other institutions like the Maryland Health and Higher
Educational Facilities Authority (MHHEFA), could also be used to
borrow money up--‐front.
✦ The size of Baltimore City Public Schools’ annual funding for
improving school facilities will determine how much could be
borrowed for school construction.
✦ The amount that the Partnership Organization can borrow is
also determined by the length of time the loan must be paid back.
✦ The current payback period on government debt is15 years.
Extending the payback period to 30 years will allow for increased
borrowing, just like a home mortgage.
Dedicating Existing Revenue
✦ Baltimore City Public Schools needs a consistent revenue stream
annually to pay back debt, so that bondholders and banks are
confident that the loan will be repaid.
✦ Existing Revenue that is already alloted for school construction
in Balimore City can be used to borrow large sums of money.
✦ Current annual funding for improving city school buildings varies
slightly each year averaging approximately $60 million in total in recent years; $45 million per year from the state and $15 million
from the city.
✦ State and city legislation is needed to ensure that this funding
remains consistent over 30 years.
✦ Like Greenville, Baltimore City Public School’s Partnership
Organization could borrow about $1 billion up front for school
✦The city school system would then use its $60 million in existing
revenue as annual installments, each year to pay back the debt
over a period of 30 years.
THIS IS THE PROJECT ALONZO WANTS TO COPY......
finance & labor PROGRESSIVE PROJECT DELIVERY Innovative Financial Plan Pushes Greenville Schools Ahead Construction program languished until district found nonprofit catalyst 11/13/2006 By E. Michael Powers
The Greenville, S.C., school board struggled for 10 years to find a means to pay for a much-needed construction program that would build or expand 70 different school buildings. Realizing its effort was going nowhere, the board advertised for a construction manager that could offer a creative solution. It found one, locally, when a group of business executives formed their own firm to attack the financial problem and partnered with New York City-based construction manager Faithful + Gould for construction expertise.
Institutional Resources, Greenville, found a way to finance a $1-billion deal, avoid the state’s debt restrictions and provide comprehensive construction management services. The program is on schedule for a 2008 completion, after only 5 years of operation.
Financing was the biggest hurdle for the program because tax rates had tripled recently and South Carolina has a constitutional debt limit for public entities of 8% of holdings, says school board member William Herlong. Institutional Resources won the bid with its financing plan that utilized a third-party holding corporation to circumvent the debt rules.
Financial plan is similar to that of a mortgage agreement with a bank. The nonprofit company, dubbed Building Equity Sooner for Tomorrow (BEST), is classified by the Internal Revenue Service as a 60-23 corporation, which means that it exists and must function solely to support the school district, says Bob Hughes, chairman of Institutional Resources. BEST is run by a board composed of five members, all appointed by the school board. BEST contracted New York City-based UBS to underwrite $999 million in bonds that it issued for construction of new schools, using projected usage figures as collateral.
“We proved that the school district will always need the schools, that the schools would all be completed, and that it would be very unlikely that the [board] would be able to get equal quality schools for a lower payment,” says Hughes. Those factors allowed BEST to receive an excellent bond rating that made its interest rates comparable to what a school district would expect to pay.
WHAT WE ARE SEEING IN BALTIMORE'S SCHOOL SUPERINTENDENT ALONZO IS A COMPLETE REBUILDING OF BALTIMORE'S SCHOOLS ALL AT ONCE, MAKING THE CITY BASICALLY RENT THE NEW INFRASTRUCTURE OVER 30 YEARS WHILE WHAT ARE ESSENTIALLY PRIVATE CHARTER SCHOOLS OPERATE IN THESE BUILDINGS.....THESE SCHOOLS WILL BE PRIVATE BY THE END OF 30 YEARS, JUST AS THEY ARE DOING WITH NASA. THEY WILL NO LONGER RESEMBLE PUBLIC SCHOOLS AS THEY WILL BE BUSINESS-EFFICIENT, COMPUTERIZED, VOCATIONAL SCHOOLS ATTACHED TO CORPORATE ENTITIES LIKE JOHNS HOPKINS and McDonnell Douglas.
CITIZENS IN MARYLAND SHOUTED LOUDLY AS O'MALLEY PUSHED A SIMILAR 'STATE CENTER' PROJECT ON THE BALTIMORE COMMUNITY.......THE SAME PUBLIC/PRIVATE PARTNERSHIP WITH TAXPAYER MONEY HELPING TO BUILD AND MAINTAIN THE BUILDING WHILE THE STATE PAYS RENT TO THE DEVELOPER.
THIS IS HOW A THIRD WAY CANDIDATE GAINS NATIONAL INTEREST BY THE 1%.....GIVE TAXPAYER MONEY TIL IT HURTS!
MARYLAND'S ATTORNEY GENERAL GANSLER IS GATHERING A WAR CHEST OF CAMPAIGN FUNDING, MUCH LIKE O'MALLEY, BECAUSE HE NOT ONLY LET THE BANKS OFF THE HOOK FOR MASSIVE FRAUD, HE ALLOWED BANKS TO PAY INCREDIBLY SMALL PENALTIES FOR OTHER FRAUDS, LIKE MUNICIPAL FRAUD AS CHARITABLE CONTRIBUTIONS TO THESE NON-GOVERNMENTAL ORGANIZATIONS (NGOs).
NOW, WHO WOULD TRUST A PARTNERSHIP WITH THESE BANKSTERS? CO-CONSPIRATORS!
NAKED CAPITALISM Tuesday, June 12, 2012 Tom Ferguson:
How Wall Street Hustles America’s Cities and States Out of Billions
While the municipal swaps fiasco may seem like old news, this piece discusses a post-crisis type of swap which is even more appalling. The old scam was to talk local and state authorities who would have been far better served with old-fashioned fixed rate financing into doing floating rate financing and entering into a series of swaps to get a fixed rate deal, with a supposed improvement in funding costs. The problem is that many of those floating rate deals were auction rate securities, and when that market failed in early 2008, the borrowers were doubly hosed. The ARS went to penalty rates. In addition, payments on the swaps often kicked up shortly thereafter (due to the slow-motion failure of monoline guarantors, which was the hidden trigger behind both events. The downgrade of the monolines de facto downgraded the municipality, which led to increased payments on the swaps). The latest scam is more appalling. Municipal authorities would borrow fixed rate, then enter into a variable rate swap on the side. Earth to base, no responsible manager wants uncertain funding costs on a long-term capital investment. This is tantamount to the owner of a candy store borrowing money at a fixed rate from his bank to finance an expansion of his business, then betting at the racetrack to try to lower his costs. Not surprisingly, many of these swaps have proven to be costly time bombs. By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston. Cross posted from Alternet Many powerful interests have jumped at the opportunity to use the crisis to eviscerate what’s left of the welfare state. We all know that America’s cities and towns are in the throes of a deep financial crisis. And are told, over and over, what’s supposedly behind it: unreasonable demands by grasping state and municipal workers for pay and pensions. The diagnosis is a grotesque cartoon. Many of the biggest budget busters are on Wall Street , not Main Street. In a country as big and locally diverse as the U.S., any number of wacky pay and pension schemes are likely to flourish, though some of the most outrageous turn out to cover not workers, but legislators. But overall state and local pay has not been growing faster than in the private sector for equivalent work for many years now. What has driven cities and towns to the brink is not demands from their workforce but the collapse of national income and the ensuing fall in tax collections. Or, in other words, the Great Recession itself, for which Wall Street and the financial sector are principally to blame. But many powerful interests have jumped at the opportunity to use the crisis to eviscerate what’s left of the welfare state, roll back unionization to pre-New Deal levels, and keep cutting taxes on the wealthy. The litany of horror stories that now fills the media is ideal for their purposes. The selective character of this press campaign became obvious last week. As the latest wave of stories started rolling in the wake of elections in California and Wisconsin, a striking piece of evidence surfaced that flies in the face of the conventional narrative. The Refund Transit Coalition, a coalition of unions and public interest groups, put out a study that documented in stunning detail how Wall Street banks have for years been hustling American cities, states, and regional authorities out of billions of dollars. But save for Gretchen Morgenson’s “Fair Game” column for the New York Times, the study drew almost no attention. At a time when cities and states are taking hatchets to services and manically raising fees and fares, the group’s analysis merits a closer look and a much, much wider audience. Its starting point will be familiar to anyone who recalls the debate over financial “reform” of the last few years. In the bad old days of pre-2008 deregulated finance, bankers started pedaling hot new “structured finance” products that they claimed were perfect for the needs of clients who had thrived for decades using cheaper, plain vanilla bonds and loans. The new marvels – swaps and other forms of so-called “derivatives” whose values changed as other securities they referenced fluctuated in value – were often complex and frequently not priced in any actual market. Their buyers thus had difficulty understanding how they really worked or how they might be hurt by purchasing them. In many documented cases, buyers also had only faint ideas about how profitable these products were to the houses selling them. One befuddled Pennsylvania school board, for example, diffidently quizzed J.P. Morgan Chase: “The school-board official knew they were getting $750,000 for entering into a ‘swaption’ with J.P. Morgan Chase & Co . They wanted to know what was in it for the bank. They wanted to know the price. They seem like reasonable requests. ‘I can’t quantify that to you,’ the banker told them. ‘It is not a typical underwriting and I can’t quantify that for you and there’s no way that I can be specific on that.’” One popular product involved an “interest rate” swap built into a bond deal. In these, as the Transit study explains, some hapless municipal authority brings out a bond and commits to making fixed payments to buyers. That sounds like any other old fashioned bond offer. But here’s the twist. In the swap version, the bank offers, for a handsome charge, to pay a variable fee to the issuer of the bonds. The idea was that the money could be used to make payments owed to the bond buyers. Payments were supposed to vary with the course of interest rates. The contrivances were heralded as protecting issuers against a rise in rates and saving them money on their payments. But there was a catch: If rates fell, then banks could make out big, while issuers faced disaster, because the latter still had to make the fixed payments on their bonds, while the banks’ payments would shrink as rates fell. In effect, issuers were gambling on interest rates and betting they somehow knew better than the banks what was going to happen. And, ah, yes, the final touch: With old style bonds, you could refinance if rates fell; with the new fangled derivatives, the banks made sure to impose huge termination fees. The result, for years now, has been literally billions of dollars of losses for cities, states, and other local authorities, including school boards and state college loan agencies. Locked in by the termination fees, they can stay in the swaps and pay and pay as the banks’ payments to them dwindle. Or they can buy their way out of the swaps at preposterous prices – Morgenson indicated that New York State recently paid $243 million dollars to get out of some swaps, of which $191 million had to be borrowed. The Refund Transit study concentrated on local transit systems. Some of its numbers are stunning. The study pegged annual swap losses at the Massachusetts Bay Transportation Authority (Boston area) at $25.8 million and suggested that the MBTA will “lose another $254 million on these swaps” before they lapse. The study added that the MBTA was losing money on swaps even before the crisis, with total losses running in the “hundreds of millions” of dollars. In Charlotte, site of the Democratic Convention, the study suggests that swaps with Bank of America and Wells Fargo cost the area transit system almost $20 million a year – something to think about as the President gives his scheduled acceptance speech at Bank of America Stadium. Other localities that the study suggests are wracking up big annual losses include Chicago ($88 million), Detroit ($54 million), frugal Chris Christie’s State of New Jersey ($83 million), New York City ($113.9 million), Philadelphia ($39 million), and San Francisco ($48 million). The study includes a useful table of the main banks benefiting from these arrangements. They include all the usual suspects: Besides Bank of America and Wells Fargo: Citigroup, Morgan Stanley, Goldman Sachs, J. P. Morgan Chase, UBS, and AIG, among others. Most were recipients of TARP funds, while all have profited from super cheap Federal Reserve financing, Fed, Freddie, and Fannie purchases of mortgage backed securities, and extended deposit guarantees as well as tax concessions granted by the Treasury in the wake of the 2008 disaster. Given all the other advantages conferred on our Too Big To Fail Banks by the government and both major political parties, it would be a stretch to argue that the toleration of these swaps by federal, state, and local authorities – and the press, which in virtually all areas has defaulted on reporting the basic facts – constitutes the greatest outrage of all. But it is high time that they came in for full public scrutiny. These products were obviously very risky; few agencies that bought them appear to have understood this. Despite some reforms aimed at eliminating crude “pay for play” deals, state and local finance remains a area rife with conflicts of interest. The whole series of deals needs to be investigated, the advisers who recommended them to the authorities need to be identified, the full losses added up, and responsibility fixed for the continuing series of bad decisions. Many State Attorneys General and general counsels also need to explain why they have not more aggressively publicized these arrangements and challenged them in court. (A New York court ruled that such deals were private contracts, not securities; that should have brought forth howls of protests and immediate legal fixes.) It is high time citizens, instead of banks, start occupying the transit authorities, school boards, and other state and local entities that are so vital to communities and real people