Standard and Poor’s Revised Outlook for Dearborn Heights is Positive…

Someone here on the blog wasn’t happy with the fact that I didn’t have anything up here about Standard and Poor’s report. I finally found something at Thailand Press Release News I did ask the person calling themselves “curious” here on the blog to put up a link to the story for all of us. They didn’t  So I did some more looking today.

Dearborn Heights, MI Outlook Revised To Positive On Likely Stronger Budgetary Flexibility
Stocks and Financial Services Press Releases Wednesday February 26, 2014 08:38
CHICAGO–26 Feb–Standard & Poor’s
CHICAGO (Standard & Poor’s) Feb. 25, 2014–Standard & Poor’s Ratings Services said that it revised its outlook on Dearborn Heights, Mich.’s previously rated general obligation (GO) bonds to positive from stable and affirmed its ‘BBB’ long-term rating and underlying rating (SPUR) on the bonds.

The city’s limited-tax GO pledge secures the bonds.
“The rating is based on our local GO criteria released Sept. 12, 2013,” said Standard & Poor’s credit analyst Katilyn Pulcher, “and reflects our view of the city’s very weak budgetary flexibility and weak management.” The city’s reserves for fiscal 2013 (June 30) were negative 8% of expenditures, or negative $2.7 million, marking the third consecutive year of a corporate (general) fund balance below negative 5% of expenditures. The city experienced operating deficits in fiscal years 2010 through 2012, due to decreased revenue, which it did not address with timely expenditure reductions. While management indicates total corporate fund reserves could possibly be in a positive position by fiscal year-end 2014, we understand the positive balance would be restricted, under the GASB54 accounting standards, which we view as unavailable. The positive balance would also likely be the result of interfund borrowing, as per current practice. Management expects to report a fund balance of approximately negative $900,000, or negative 2.3% of expenditures at fiscal year-end 2014, as well as a positive, available, operating fund balance position, without the help of interfund borrowing, by fiscal year-end 2015, which leads to our current positive outlook.

“The overall management score is weakened by turnover risk,” said Ms. Pulcher. Significant reductions in staff have led to difficulties managing the city’s finances and accounting for them, and management is concerned further reductions may be coming due to several staff members nearing retirement age.

The rating also reflects our assessment of the following factors we consider weakness, which include the city’s:
Very weak economy, reflecting high unemployment and population decline in Wayne County; and
Weak management, reflecting significant staff turnover in recent years and expected in the next few years.
Also reflected in the rating are the following factors we consider strengths, which include the city’s:
Very strong liquidity, providing very strong cash levels to cover both debt service and expenditures;
Very strong debt and contingent liabilities position, reflecting rapid amortization and a low debt burden, measured as a percent of market value; and
Strong budgetary performance, with surpluses in both the corporate fund and total governmental funds in fiscal 2013.
“The positive outlook reflects our view that Dearborn Heights’ budgetary flexibility may strengthen over a two-year horizon,” said Ms. Pulcher, “and we believe the city’s improved operational position is likely to translate into stronger available reserves.” Should available fund balances strengthen above 1% of expenditures, we could consider raising the rating. The rating is unlikely to improve if budgetary performance is worse than expected and reserves remain flat, in which case we are likely to revise the outlook to stable.

Here’s what curious posted on 3-13-2014

I find it interesting that this blog highlighted the fact that Standard and Poors rated Dearborn Heights as stable last year and made a big deal out of it which it was. However, DH has improved to positive. That is good news. Where is it posted here?

Curious then posted on 3-15-14

Still no posting of the Standard and Poors upgarde! Very intersting. But lets all bash snow plowing.

My respones on 3-15-14 @12:34am

If you have that report or link please post it I can’t find it sorry I’ll be more than happy to post it.

As of 3-15-14 @ 10:12am nothing from Curious instead of trying to make it look like I wouldn’t put up anything positive about Dearborn Heights…next time “curious” please post a link or something to the story. I’m more than happy to let the taxpayers know that the extra money they gave to the administration is doing good. This rating has an effect on all of us it’s not just about giving the Mayor a “pat on the back” telling him job well done or not as the situation warrants it’s about the City’s well-being as a whole.

You may feel that “streets” aren’t part of a City’s well-being, but look at it from a potential home buyers perspective. If I’m coming to the City looking at homes and see un-plowed streets, streets full of deep ice bumps, and pot holes that could cause a tire to come off. I’m asking my self do I want to live here? Do I really want to invest in a City that doesn’t take care of its streets/residents? People buying homes here gives the City money (tax revenue.) That money as I’m sure you’re aware pays for the up-keep of those very streets I’m taking about. So yes curious it makes a difference. Just like how the “rat” problem hasn’t been handled, or the “dog” problem hasn’t been handled, or the many other things that could make a good image for our City haven’t been handled. It all makes a difference. We are all investors in Dearborn Heights…we became investors when we bought our homes here.

 

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18 thoughts on “Standard and Poor’s Revised Outlook for Dearborn Heights is Positive…”

  1. Really, Mercury? The mayor is a CPA so he should understand the difference and state it correctly? Really? He’s also a politician and we “KNOW” we can always depend on them to tell us the truth and not skew the facts to make themselves look better. Besides, we’re talkin’ about Paletko here. Nuff said.

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  2. Planet Mercury,

    Mercury is the smallest and closest to the Sun of the eight planets in the Solar System, with an orbital period of about 88 Earth days. Wikipedia
    Density: 5.43 g/cm³
    Radius: 1,516 miles (2,440 km)
    Mass: 328.5E21 kg (0.055 Earth mass)
    Surface area: 28.88 million sq miles (74.8 million km²)
    Distance from Sun: 35,980,000 miles (57,910,000 km)
    Length of day: 58d 15h 30m

    You can’t get closer to the SUN then Mercury dos. That is why the heat is causing that planet to shrink. Searching for the truth and stating the facts create heated truthful environment here on earth that may cause some public officials to react erratically and out of order, that is an indication its time for them to exit public life.

    Every human on earth fall under one of 12 horoscopes and Mercury effects all of them theoretically, its fun and fascinating to learn about them. http://www.horoscopeswithin.com/planets.php

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  3. That was a post by the editor on this blog,

    “A Special Pat On The Back…

    The city carried over a deficit of $3.4 million from the 2011-12 budget. The 2012-13 budget has a $3.2 million surplus, leaving an overall fund balance deficit of about of $143,000.

    I guess giving a link to the full story wasn’t enough so to make sure I sing the praises of the Mayor I will put this from the same story in the press and guide. I would like to give credit where it’s do so in that sprit.

    Thank you all city employees who took the 10% pay decrease and thank you taxpayers for the money you gave to the Mayor.”

    We know for sure that the tax payers approved the “headily override”, But when the employees took the 10% salary cuts? and how much that cut resulted in dollars $$$$$$$$$$$

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  4. bitsyo8,

    The mayor is a CPA and current on his accreditation, he should understand what is the difference, he said it was surplus.

    To the best of my memory it was suppose to be for 3 years, but God knows what the language ended up to be? In anyway it can be recalled when the general fund deficit is paid off.

    BTW, if the city keep spending above the revenue, the extra taxes will continue to be necessary to stay in black ink! Last year general fund budget was about one million more then 2012-13. let see what the budget for 2014-15 will be? I hope the mayor cut more spending and pay the deficit this year, so the extra taxes will be recalled.

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  5. I believe the extra taxes connected to the HEADLEE override were only supposed to last for a few years and then stop. But you need to stop quoting the $3M surplus. That’s only in the mind of the mayor and his exaggeration of the facts. Once again – the $3M surplus is based on ACTUARIAL numbers which means it’s not really there UNLESS they cut the budget, etc. I would appreciate it if anyone knows how long the HEADLEE override is supposed to last – to what year?

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  6. “Curious
    Still no posting of the Standard and Poors upgarde! Very intersting. But lets all bash snow plowing.”

    The post is up. So what the big deal? Please tell us the good news! what the mayor and his administration did to control spending? and by how much they cut the budget? I heard the budget for 2013-14 was one million more then 20123-13! The 3 millions surplus are the extra taxes we pay since 2011 “Headily Override”. Get your facts straight and ask the council to recall the extra taxes and restore the Headily rate to were it was.

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  7. Sorry folks. After I posted S&P info I lost cable, the net and phone for two days. What did the pilgrims do!!!

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  8. Standard and Poor is a private rating agency. it effect the city ability to issue bonds at a good rate. The city at this time is not issuing bonds, and not rerunning any ether, the tax revenue with the additional taxes is way more then enough to pay the debits and the operational expenses given that the city services are at a very low level. The 3 mills should be recalled next year after paying the general fund deficit. The administration will try to avoid that by proposing projects to spend the extra 3 millions per year of additional taxes. History of spending over $ 11 millions dollars over the revenue of the general fund will never go away. Not able to control spending and balance the general fund is not a good indication for future ability to do. The taxes were approved to bail the administration and the council from the state takeover and loosing local control, not to spend more or build a massive general fund balance for political propaganda.

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  9. In looking again at the answer from the real estate agent, the question was put to her just that way. The question was – my taxes said the value of my house went down – and she replied prices are up compared to last year.

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  10. GS: Have you checked with an agent or is this based on your taxes? I would venture that even if your taxes went down, the value of your house from an agent could have gone up.

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  11. According to a real estate agent in DH and the comment made about house prices going down, this is what she said: “House prices are up compared to the previous year but the sale price did take a slight drop from October til recently. I believe the winter had more to do with that because it caused a lack in activity.”

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  12. In defense of Curious, not everyone is on this site all the time. Perhaps “she” is away or is busy with something else. Let’s see what “she” has to say.

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  13. I think ‘Curious” just wanted to be snarky and not informational; otherwise they would have posted the link as Kathy had asked.

    Interesting to note from the above is that “inter fund” borrowing is playing a major role in this upswing. The city has borrowed from the library fund before and with an increase in millage for the libraries voted last year this will give the city administration more money to borrow from the library.

    Real estate values are going down (another factor noted in the above). Why?

    1) Poor city services like snow plowing and street cleaning.

    2) Blight.

    3) Rat infestations.

    4) Increase in rental properties versus home ownership.

    5) Basement flooding with sewage.

    6) Council that doesn’t really care about the residents. Case in point is the Rusty Crow debacle. Council members verbally saying they are against it because of the potential problems faced by residents in the area, but in the end fold under bullying and vote yes.

    The above 6 factors could be resolved by a committed mayor and city council and that would see not only property values go up but would make the city of Dearborn Heights look very appealing to people who want to buy a home in a good city.

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  14. bitsy08

    No doubt every City has pot holes, but some City’s do a better job at taking care of them then others I’ve started a chat over at Chat TP just about this. Talking about Gully the difference between the Dearborn side and Dearborn Heights side of the street. http://chattp.wordpress.com/2014/03/16/a-street-divided/ I’m asking for a list of streets with pot holes I don’t think that the DPW department could possible know about all of them.
    As to the report I read it the same way.

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  15. I’m going to have to disagree with you on this one, Kathy. Pot holes are ALL OVER and the fact that DH has them is no different than every other city, county, etc. As to the rating, this is the way I read it: “While management indicates total corporate fund reserves could possibly be in a positive position by fiscal year-end 2014, we understand the positive balance would be restricted,” COULD POSSIBLY BE. I refer back to what Plante & Moran said that the proposed surplus is an ACTUARIAL number which means that IF the city does what they suggested, we COULD HAVE A SURPLUS. Then S&P says: “The rating is unlikely to improve if budgetary performance is worse than expected and reserves remain flat, in which case we are likely to revise the outlook to stable.” This is exactly what P&M said. It seems to me that S&P’s rating is based on a lick and a promise as is our administration. Sorry, Curious. I may not be from Missouri but I need this administration to SHOW ME what they’re going to do and then ACTUALLY DO IT. That would make P&M and S&P happy. You can decry everything I’ve said here but – too bad, so sad. I’m fed up with this administration and it’s typical of most politicians to do exactly what he’s doing; take something a professional says and make it sound exactly as you want it to to make you look better. And I’ll have to admit. He’s crapped on us for so long there’s probably nothing he can do to make him look better in my eyes.

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