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Municipal Bond Market Chaotic as City Council Looks at 2005 Financial Report

The city council will look at the long-delayed 2005 financial report today (March 3). Mayor Jerry Sanders still insists the City can return to the municipal bond market. But that market is roiling. Friday, hedge funds were forced to dump bonds. Muni yields spiked above Treasury yields -- quite unusual, since Treasury bonds are taxable and muni bonds are tax-free, state and federal. Municipal bond insurers may lose their AAA ratings; bond issuers such as California are no longer using insurance. Could San Diego afford to sell non-insured bonds at high rates? The lack of certified audits for past years blocks the City's entrance into the market. Mark Blake, deputy city attorney, says that in the draft of the 2006 statement, the pension fund is only 78 percent funded, "the low end of municipalities." Says Councilmember Donna Frye, "I have not seen anything that convinced me that this city will be back in the public market any time soon." Mike Aguirre, city attorney, says the City has blown its opportunity to get its finances in order.

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The city council will look at the long-delayed 2005 financial report today (March 3). Mayor Jerry Sanders still insists the City can return to the municipal bond market. But that market is roiling. Friday, hedge funds were forced to dump bonds. Muni yields spiked above Treasury yields -- quite unusual, since Treasury bonds are taxable and muni bonds are tax-free, state and federal. Municipal bond insurers may lose their AAA ratings; bond issuers such as California are no longer using insurance. Could San Diego afford to sell non-insured bonds at high rates? The lack of certified audits for past years blocks the City's entrance into the market. Mark Blake, deputy city attorney, says that in the draft of the 2006 statement, the pension fund is only 78 percent funded, "the low end of municipalities." Says Councilmember Donna Frye, "I have not seen anything that convinced me that this city will be back in the public market any time soon." Mike Aguirre, city attorney, says the City has blown its opportunity to get its finances in order.

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4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
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