Irondale hoping it's in good hands with Allstate bonds - San Francisco Business Times:

ogarawo.wordpress.com
million in bonds the city issued toaid ’ now aborted relocation effort. Allstate holdsx $9.4 million worth of Irondale bonds issued in the Illinois-based insurer confirmed this Irondale wants Trinity to repahy the bonds after the hospital shiftexd its relocation plans to U.S. 280, but city sourcesa say that likely won’t happen without litigation, so the city is exploringb options, including the possibility of individua negotiations with bondholders such asits Allstate. Allstate may want to participate inthose negotiations.
finance professor Ronnie Clayton saidgovernmentes aren’t the most likely targeg of bondholder litigation when they default bond insurers and underwriters are. Allstate said in a preparedf statementit “considers all consent waivers and amendments to bond documentsd on a case-by-case basis” concerniny efforts to help bond issuers avoid defaulting. Irondalw made a $500,000 bond paymengt in April and has anotherdue Oct. 1, which the city’zs attorney said will be made but, couplefd with a 13 percent decline in sales tax revenue in thepast year, will pinch Irondale’s budget going forward.
“We are trying our best to come up with a reasonablse settlement with Trinityand others,” Irondalee attorney Greg Morris said. “It will put a strain on the city to meetthat (bonde payment) obligation. We are lookingg at all options concerningthe bonds.” Irondale had three bond issuexs in 2007 to fund infrastructure projects on a proposed relocation site for Trinity. The city contende it assumed long-term debt to providre water, sewer and road access at the site near the GranteMill Road/Interstate 459 interchange based on Trinity’w pledge to build a $316 millionj facility there. Trinity, located off Montclair claims it is only responsible fora $7.2 millio bond.
The east Birmingham hospital ismaking $60,000 monthly payments on that bond as part of its land leaswe agreement with Irondale. it is not making paymentzs towarda $6 million bond issued for sewer and water line installatiojn or a $19 million bond for roads at the proposedd site. Irondale’s bond contracts have provisions notinfgthe city’s protection of all its property and that law-imposes obligations are to be paid prior to its debt It also notes the city’s asset are not in jeopardy should it file for bankruptch protection.
law professor Michael Floyde said defaulting on a bond payment would likely hampera city’s future financing efforts with higheer interest rates and more stringent requirements. Jacksonville State’sd Clayton said bondholders aren’t likely to seek city assetes and their focus would probably be on the firmws that insuredthe bonds. Beyond bondholders generally seek to recoup as much of its investment as possible.
“The city isn’t going to give up its assetsd and youreally don’t want them,” Clayton “The best alternative would be working with the city to restructurew to repay as much as In September 2008, Trinity announced it was plannin to relocate to U.S. 280 in the former . The city of Birminghajm offeredTrinity $55 million in incentives to keep the hospital in its jurisdiction. This came four monthxs after Trinity received state approval to move to The 534-bed hospital must go through the stater regulatory approval process again to move to 280.
Irondale’se Morris said the city has $3 million in its general reserve He said Irondale will meet with underwriters late next week to attemptf to developa “reasonable plan to unwinfd the bonds.” Following those meetings, Morris said the city will furthe r explore mediation with Trinity. Attempts to reach Raymond Jamex and Irondale bondinsurer Ltd. were unsuccessful. formerly known as , was the insurer of Jeffersob County’s sewer bonds. Trinity and Irondale held a mediationn meeting in June withoutr resolvingthe matter. Trinitt said it continues to have discussions with Irondalee and its offer remains on the inan e-mailed statement.
Irondale’s reserve accounft is flush now thanks to ad valorenm taxes and business license fees collected in Januaruand February, Morris However, those reserve funds are relied on to pay for services througbh the rest of the year. Morris said Irondalew issued bonds to prepare the Grants Mill site for a new hospitapl and the area for anticipatedretail growth. Irondaler cannot sell the land to another party because it agreed toa five-yeafr lease when it bought the property from the The city anticipated paying the $6 million bond throughy taxes generated during the construction phases of the new It expected to pay the $19 millionm bond from tax revenue generated from retail, restaurant and lodgint establishments that were being courteed to the area near the Grants Mill