SATURDAY. DECEMBER 14, 2013

VOLUME 7 NO. 50

CITY CLERK 
ISSUES 

ELECTION 
ANNOUNCEMENT

SIERRA MADRE BOND RATING PLUMMETS

MOODY’S INVESTORS 

SERVICE RATING SYMBOLS 
AND DEFINITIONS

Long-Term Obligation Ratings

AAA

Aa1, Aa2, Aa3

A1*, A2, A3**

Baa1, Baa2, Baa3

Ba1***, Ba2, Ba3

B1, B2, B3 

Ca1,Ca2, Ca3 - C1, C2, C3 - and C1,2,3

Moody’s long-term ratings are opinions of 
the relative credit risk of financial obligations 
with an original maturity of one year 
or more. They address the possibility that a 
financial obligation will not be honored

as promised. Such ratings use Moody’s 
Global Scale and reflect both the likelihood 
of default and any financial loss suffered in 
the event of default.

AAA Obligations rated AAA are judged 
to be of the highest quality, with minimal 
credit risk.

Aa Obligations rated Aa are judged to be 
of high quality and are subject to very low 
credit risk.

A Obligations rated A are considered 
upper-medium grade and are subject to low 
credit risk.

Baa Obligations rated Baa are subject to 
moderate credit risk. They are considered 
medium grade and as such may possess 
certain speculative characteristics.

Ba Obligations rated Ba are judged to have 
speculative elements and are subject to 
substantial credit risk.

B Obligations rated B are considered speculative 
and are subject to high credit risk.

Caa Obligations rated Caa are judged to 
be of poor standing and are subject to very 
high credit risk.

Ca Obligations rated Ca are highly speculative 
and are likely in, or very near, default, 
with some prospect of recovery of principal 
and interest.

C Obligations rated C are the lowest rated 
class and are typically in default, with 
little prospect for recovery of principal or 
interest.

Note: Moody’s appends numerical modifiers 
1, 2, and 3 to each generic rating classification 
from Aa through Caa. 

 The modifier 1 indicates that the obligation 
ranks in the higher end of its generic rating 
category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates 
a ranking in the lower end of that generic 
rating category.

* Sierra Madre’s 2010 Rating

** Sierra Madre’s 2011 Rating

*** Sierra Madre’s 2013 (Current) Rating

By Susan Henderson

 In a scathing report issued late 
Thursday by Moody’s Investor Service, 
the City of Sierra Madre’s Water 
Enterprise’s 1998 Revenue Bonds were 
downgraded from A3 to Ba1, a rating 
that, according to Moody’s analyst 
David Jacobson, ”is considered non-
investment grade.”

 The report states that “the downgrade 
primarily reflects significantly 
weakened operating results leading 
to continued rate covenant violation 
and rapidly declining reserves. The 
rating also incorporates a weak track 
record of implementing rate increases, 
the enterprise’s moderately sized 
customer base with an above average 
socioeconomic profile, as well as aging 
infrastructure that requires significant 
improvements.”

This news comes just as residents began 
receiving their Prop 218 ballots which 
gives them the opportunity to protest 
any proposed water rate increase. In 
2010 when the previous Prop 218 
process was started, opponents of 
the rate hike and ultimately the city 
council, failed to recognize the negative 
impact of what not implementing the 
recommended increase would have on 
the city. 

Significantly weakened operating 
results leading to rate covenant 
violations

 One of the conditions of the 1998 
bonds, is that we keep “net revenues to 
equal at least 120% of our annual debt 
service”. We have not met this requirement 
because of “weak financial performance” 
and that has led to “three 
consecutive years of violating the rate 
covenant”.

 Declining revenues are partially at 
fault, however repairs on the city’s aging 
infrastructure and the cost of purchasing 
outside water have taken the 
largest toll on the water company’s 
reserves. When the city’s pumps its 
own water supply the cost is, according 
to Moody’s $95 per acre foot compared 
to the cost of purchasing water 
at $260 per acre foot which we are currently 
paying. Our own well levels are 
too low to pump our own water, and 
given the drought and likelihood of its 
continuance, purchasing outside water 
may continue for some time. 

 The other contributing factor that 
Moody’s cites is our “historically lackluster 
political will to implement rate 
increases sufficient to maintain healthy 
operations.”

 In 2010 when the 218 Process was put 
before the citizenry, an organized effort 
to protest the rate increase failed to 
get enough support. However, instead 
of moving forward with the increase 
as the law allowed, the council, led by 
Mayor Joe Mosca, chose to delay and 
ultimately adjust, under Mayor Josh 
Moran, the amount of the increase to a 
level that was not sufficient to keep the 
water company solvent. According to 
the letter issued to the city by Moody’s 
in 2010, “The rate increase would have 
rectified the rate covenant issue within 
90 days. However, City Council delayed 
implementing the rate increase 
for one year to get residents more aware 
of the coming rate increase”. Those actions 
lead to the first downgrade from 
A1 to A3 in 2011.

Downgrade Part II.

 On Thursday, when the city was 
downgraded even further to Ba1, the 
language from Moody’s was even more 
disconcerting than it was in 2011. 
“….the current rating at a below investment 
grade level reflects the increased 
risk that arises from the demonstrated 
willingness to violate the bond’s legal 
covenants, the enterprises limited financial 
resources, and the possibility that a 
successful rate payer 218 protest would 
exacerbate the enterprise’s financial 
challenges.” 

 Mayor Nancy Walsh expressed 
her ongoing disappointment with 
downgrade and the water company’s 
finances. She said, “The Moody’s letter 
paints the picture clearly. We are a 
city of residents that can well afford to 
pay for the services. However, we are 
governed by a series of Councils that 
pandered to the irresponsible demands 
of those who don’t want to pay for 
services.

 It is harsh and it is true. I’ve argued 
for responsible fiscal governance since 
I joined council in 2010, and I’ve been 
ignored. Some Council members just 
vote No, and others weaken formulas 
that then fail to address properly our 
issues. 

 We have witnessed this approach 
recently in addressing the current water 
rate study. The projected outcome for 
the 2014 water rate is addressed in the 
Moody’s letter as well. We must do the 
right thing for the sake of our City.”

Councilman John Capoccia was also 
not blind-sided by the report. He said, 
“The downgrade is not surprising. 
Moody’s analysis is consistent with 
the information that the City has 
published in various venues, including 
the ballot package mailed this week 
to all the water utility customers. 
Basically we’re rapidly depleting our 
reserves, we have aging infrastructure 
that’s been neglected over many 
years, our revenue is off because of 
the recession and conservation, and 
we’ve had unanticipated expenses 
such as rebuilding two of our wells. 
Thus, our financial position has 
deteriorated leading to the downgrade.
The problem has been exacerbated 
in recent years. Since the last rate 
study, revenue is off $2.5M and 
the unanticipated expenses are up 
approximately $2.5M, for a net 
negative hit of $5M, thus the rapid 
depletion of reserves. The rate 
proposal that is before our citizens is 
frankly unpleasant for all of us, but it 
is necessary, and will address the issues 
highlighted in Moody’s report. The 
rate proposal will build up our reserves, 
allow us to upgrade infrastructure on 
a pay-as-you-go basis to start to catch 
up on years of neglect, and it will 
allow us to meet the bond covenant. 
I’m hoping that our water customers 
read the ballot package very carefully. 
It’s very thorough and explains in great 
detail the (cont. on page 3)

Sierra Madre City Clerk, Nancy 
Shollenberger issued a press release 
this week announcing the Council’s 
approval of an election to be held on 
April 8, 2014.

On the ballot will be 3 city council 
seats, and the User Utility Tax. 
There is also reference to extending 
the current water and sewer tax until 
July 1, 2014.

The full text of the Press Release as 
submitted can be found on page B11.

Nomination papers will be available 
on December 16, 2013. The deadline 
is January 10, 2014 or January 15 if 
an incumbent does not run.

JOIN THE VILLAGE CHURCH 
FOR A COMMUNITY 
POTLUCK BEFORE THE 
CANDLELIGHT WALK - 

Planning to participate in Sierra 
Madre’s traditional Candlelight Walk 
on December 22? Walk up the hill a 
little early (5:30), stop at the Church 
of the Ascension, and share in food 
and fellowship at the Village Church’s 
Community Potluck Dinner (bring 
enough of your favorite salad, main 
dish, or dessert to serve 8). Filled 
with food and community spirit, 
you’ll be ready to join the singing 
and celebrating as we share in the 
Candlelight Celebration at 7:00 pm. 
Community Potluck starts at 5:30 pm 
in the newly renovated Hawk’s Hall all 
are welcome. 

 Church of the Ascension is located at 
the corner of Baldwin and Laurel. For 
more information about the potluck, 
call the parish office at 626-355-1133 
or visit: www.ascension-sierramadre.
com. 

Inside this week: 

SIERRA MADRE

Calendar Page 2

Sierra Madre News Page 3

VISION WITHOUT SIGHT - Sierra Madre C.L.I.M.B. resident sheds light on being blind 

PASADENA/ALTADENA

Pg. 4

By Helen Simmons 

How is it possible that a woman 
who came into this world weighing 
less than 3 pounds could have such 
a powerful impact on 130 Camino 
Grove 4th graders? It is possible 
because that woman is Jo Anne 
Seaman. Still full of the energy and 
spunk of a teenager, Jo Anne, now 
65, managed to completely move 
and inspire this Arcadia crowd of 9 
and 10 year olds, at an assembly held 
December 3.

Jo Anne and I met 14 years ago. I was 
in the process of writing an article 
about C.L.I.M.B., a facility for the 
multi-handicapped blind, located in 
Sierra Madre. (C.L.I.M.B. stands for 
the Center for Living Independence 
for the Multi-Handicapped Blind.) 
As resident of C.L.I.M.B. since it 
opened in 1977, Jo Anne volunteered 
to show me firsthand how people who 
are multi-handicapped blind can and 
do lead very fulfilling and successful 
lives. We became friends through 
the experience. Seven years later, 
when I became a 4th grade teacher 
at Camino Grove in Arcadia Unified 
School District, Jo Anne agreed to 
meet with my school’s 4th graders 
as I wanted them to gain insight and 
appreciation of those with multiple 
handicaps through her experience. 
Since then, Jo Anne has returned 
almost every year to speak with our 
4th graders. Each time she visits 
she makes a strong impact, with her 
open heart, multiple interests, love of 
children, and amazing gusto for life. 

At this year’s assembly, Jo Anne 
readily addressed questions asked by our 4th graders. She explained how she lost her vision due to receiving too much oxygen as a premature baby, and demonstrated 
how she gets around with her cane. When asked if she could drive, Jo Anne chuckled heartily, as her silky, white cheeks turned slightly red. In good spirit she replied, 
“If I was driving without a license that would be illegal and I would have quite a few accidents. I’m afraid that I’d be the terror of the town and don’t think the Sierra 
Madre police would like it if I drove. They would be after me!”

Sharing one of her biggest passions, being a licensed ham radio operator, Jo Anne whipped out her sleek, red ham radio, with its one foot long black antenna. She 
talked about how she enjoys communicating with people from all over the world using the device. “I spoke with a woman from China, yesterday!” she exclaimed, 
aware that a high percentage of Arcadia students have Asian connections. Jo Anne highlighted ham radio uses in disaster situations, referencing how the radio came 
in handy during the windstorm that ravaged our area a couple of years back, downing electric power lines and trees like matchsticks. Jo Anne also commented that 
she had communicated with children as young as 8 on her ham radio and knew of children as young as 5 who passed the ham radio (continued on page 3)


Human Remains 
Found In Altadena

AROUND SGV Pg. 5

ARCADIA NEWS Pg. 6

MONROVIA/DUARTE 

 Pg. 7

EDUCATION & YOUTH

 Pg. 8

FOOD & DRINK

Peter Dills Pg. 9

BEST FRIENDS Pg. 10

HEALTHY LIFESTYLES

 Pg. 10

THE GOOD LIFE 

 

 Pg. 11

Savvy Senior

Senior Happenings

This and That

SMTV Channel 98 

Program Guide Pg. 12

SECTION B 

The Holidays Are Here 
Page B1

ARTS & ENTERTAINMENT 

WORLD AROUND US B2 

Jo Anne Seaman shares her sleek, red, ham radio with Camino Grove Elementary School 4th graders. From left to right: 
Standing: Nathan Chien, Audrey Cho, Bradford Hunt, Jonas Yee, Elise Fong. Seated – Jo Anne Seaman.

LEFT TURN/RIGHT 
TURN/OPINION 

 Pg. B3

BUSINESS &

Rich Johnson Pg. B4

 LEGAL NOTICES Pg. B5




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