Nov 3, 2022
The Big Debt Payments Are Already Here
WOULD YOU PAY YOUR HOME MORTGAGE WITH YOUR CREDIT CARD?
THE BIG DEBT PAYMENTS ARE ALREADY HERE
IF APPROVED, BENNINGTON WILL SEE NEGATIVE CASH FLOW
At the June 2022 Board Meeting, the Underwriter presented to the board his bond levy and cash flow analysis.
(Agenda VII.F. Exhibit) https://meeting.sparqdata.com/Public/Agenda/165?meeting=535186
(1:40 mark) https://www.youtube.com/watch?v=pzJFPBvyGRQ&t=6913s
“The problem you always run into and consistently run into with the district’s issuance of debt or any sponsorship…since you're in such a growth mode and have been for some amount of time is layering out putting on the additional debt even in the instances where we might be doing interest only for a few years…
You run into a pinch point on any of these (debt) scenarios about December of 2028 to a position where you start getting into a negative cash flow based on the existing projections…
When you do a bond issue, you certainly have the ability to additionally borrow some dollars to pay for your interest expense over the next two or three years.”
What is interesting is this exhibit shows the bond levy at .38 and .48. Our Bond levy is .34. There is a small QCPUF Fund that is 0.04 but by law that is for a different purpose. The Underwriter even suggests that if we do not get the tax revenue, we may go to .50 or .51 levy.
The Underwriter clearly states that we are layering debt, we have interest only debt schedules, and we can issue debt (bonds) to pay existing debt.
This is similar to you paying your mortgage with your credit card and then
making only the minimum credit card payments.
I cannot help but wonder if we will soon be in this situation even without the new debt. We have big payments from our existing debt schedules that are due and climbing now as shown by the chart below.
Regardless, any time you have to issue debt to pay debt
means WE CANNOT AFFORD IT.
