SEC Complaint filed Against City of Glendale for incomplete disclosure on Bond Measures
To SEC Enforcement Division
To whom it may concern
This letter is submitted for the purpose of bringing to your, and the investing public’s, attention the disclosure filed by the city of Glendale, California, on 1/21/2015 pursuant to S.E.C. Rule 15c2-12(b)(5). A copy of the filed disclosure can be obtained from this URL http://emma.msrb.org/EA685025-EA536710-EA932870.pdf
In particular we wish to bring attention to issues raised with regards to the “$60,000,000 CITY OF GLENDALE, CALIFORNIA ELECTRIC REVENUE BONDS, 2013 SERIES.” The document above specifically states affirmative facts that provide support to the financials presented by the city that make the bonds attractive to investors. Yet intentionally omits material Litigation events that would otherwise question the validity of assumptions made by the city. We believe it is imperative that the investing public be fully informed of the financials supporting the issuance of Bonds to the city of Glendale CA.
In specific, the city states
- On page 11, Transfers to the General Fund of the City
“The Charter provides that the unneeded balance, if any, in the Electric Works Revenue Fund at the end of each Fiscal Year shall be transferred to the City’s Public Service Surplus Fund. Once transferred, the balance will no longer be subject to the pledge of the Indenture of Trust. The Charter also provides that at the end of each Fiscal Year, 25% of the operating revenues of the Department for such Fiscal Year, excluding receipts from water or power supplied to other cities or utilities at wholesale rates, shall be transferred from the Public Service Surplus Fund to the City’s general reserve fund of the general fund; provided, however, that the City Council, on an annual basis, may reduce or eliminate the amount to be transferred if the City Council determines that such reduction or elimination is necessary to assure the sound financial position of the Department.”
- On page 11, ELECTRIC SYSTEM DEBT SERVICE REQUIREMENTS
“Other than the 2006 Bonds, 2008 Bonds, 2013 Refunding Bonds and the 2013 Bonds, there are no bonds or notes currently outstanding that are payable from Net Income of the Electric System”
The above 2 statements in support of the bonds do not disclose two lawsuits filed against the city of Glendale that challenge the interpretation of the charter’s authorization for transfer as stated in item #1 above. And challenge the increase in the electric rate effectuated on 2013 the Net income of which is the basis that the city is relying upon to pay for these bonds as stated in item#2 above.
I direct you to the 2 lawsuits that challenge the transfer of funds from Electric Works Revenue Fund to General fund, and the legality of the electric rate increase of 2013. These lawsuits can be obtained below:
- Glendale Coalition for Better Government vs. City of Glendale. Case #BS147376 filed Feb 25, 2014 Los Angeles Superior Court a copy of which can be obtained here http://www.glendalecacoalition.org/wp-content/uploads/2014/02/GCBG-vs-City-of-Glendale-2014-02-25.pdf
- Juan Saavedra and International Brotherhood of Electrical Workers Local 18, AFL-CIO vs. City of Glendale (Case # BC539160 Los Angeles Superior Court)
We hope the information presented here will be sufficient to compel the city of Glendale to properly states all facts relevant to the public.