Political consideration may have cost City $22 million in ballpark financing

Political considerations may have cost the City of El Paso $22 million when it issued debt for the ballpark.

When City officials first presented the financing plan for the ballpark, they said the debt model would infuse between $24 million and $27 million into the City’s general fund.

“People are saying this is going to be an increased burden on the local taxpayer. Actually, it’s gong to decrease the burden on the taxpayer because we’re going to have additional revenues above and beyond,” then City Chief Financial Officer Carmen Arrieta Candelaria told ABC in June of 2013. That’s when Council authorized taking on $60.8 million in debt for ballpark construction.

Because interest rates were so low, the city’s model estimated any sales tax made at the ballpark would go into the city’s general fund. But things turned out very differently.

In February, the City’s new Chief Financial Officer, Dr. Mark Sutter told Council the financing had not gone as planned, mostly due to the timing of the issuance of the debt. “I told council ‘I don’t think you ever saw the actual results of the financing compared to the models. It’s not a pretty sight,” he said in an interview Tuesday.

Though Council authorized issuing the debt in the Summer of 2013, it appears the Council chose to issue the debt until it was more politically favorable. “Somebody made a decision to wait until after an election and that’s what cost us a lot of money and that’s really disheartening,” said Mayor Oscar Leeser at the City Council meeting Tuesday.

Though Leeser and most of the council disagreed with City Rep. Cortney Niland, she blamed the loss of $22 million on the financial advice the City received from financial advisors First Southwest. ” If you think for one second that I’m not going to stand up here and tell the truth from the very beginning because I’m getting blamed for a $22 million error that was not mine, you bet your ass I am,” she told the rest of council, very clearly aggravated.

Niland said First Southwest did not inform the City the parameters of the issuance of the debt had changed.

Leeser quickly corrected Niland, saying First Southwest had informed council of unfavorable conditions the first time the Council was slated to issue the debt but prior City Manager Joyce Wilson, Candelaria and some council members delayed the issuance the second time it was scheduled due to a pending election.

Though City Rep. Larry Romero did not comment during Tuesday’s meeting, other city representatives said he had before tried to get the city to end the contract with First Southwest. Sutter said in a budget meeting on July 22, 2014, Romero suggested to Sutter to put out a request for proposals for another financial consulting firm.

Even though Council did not take a vote to end the contract with First Southwest, Sutter said he began the process because Romero is the head of the Financial Oversight Committee. However, Sutter ended the process when he said he further looked into the concerns from Romero and found First Southwest had not given council bad advice.

“Was the financial advisor ever recommending delay and that never happened. As a matter of fact at one meeting they (city representatives) were asking about delaying and the impact and I didn’t remember verbatum what the response was but it was (from First Southwest) “you’re at market risk when you do that.” So they were providing, I believe as I went back and looked at the record carefull, I think they were providing the right advice.”

Robinson and City Rep. Lily Limon commended Sutter and Robinson implied Niland was trying to throw First Southwest under the bus for a decision made by the prior city management.