Say…why don’t we mortgage our streetlamps to pay for that citywide wi-fi? And perhaps, once we seize a portion of the Arch grounds, we could mortgage that to pay for the riverfront renewal plan!

LOL… #1, that’s hilarious.

I have two words…, Eminent Domain! LoL

This sounds like a typical “Sale - Leaseback arrangement”. If so, this particular lease is a common way to raise cash. I do have a few questions:
1.) Is this a capital or operating lease?
2.) Did the city sell the buildings to the holding company? How much?
3.) How long is the lease?
4.) This has nothing to do with leases, but how did the city “underfund” their pensions?

I don’t have answers to all of your questions, but it is a lease-purchase arrangement, and the consideration for the city essentially is the $143 million (less expenses) which will be pumped into the pension plans. As to how the plans became underfunded, here’s a paragraph from my May 30 column on the city’s pension situation:

For anyone who doesn’t think there is a problem, a little history lesson may be in order. Booming stock market values allowed the city to skip making pension contributions for most of the 1990s, while increasing benefits at the same time. When the stock market fell, the city’s pension bills began escalating.

In participating in this financial gimmickry, did the City of St. Louis overcome the financial principle that “There’s no such thing as a free lunch?”

Nope. What essentially occurred here was that St. Louis latched onto a way of financing an operating cost (employee pensions) with a federally-subsidized program (federal tax exemption of municipal bonds) that is intended to subsidize capital improvements by municipalities and states.

These people benefit: (1)Retired St. Louis employees in receiving their promised pension benefits; (2) St. Louis residents and businesses in NOT having to pay more taxes to provide those full pension benefits; (3) People in the highest income brackets who receive a higher after-tax return on their investment in municipal bonds, as more municipal bonds are issued; (4) “Financial intermediaries” consisting of lawyers and investment banking firms that are paid big bucks to work out the details of these “transactions” that are really just highly-sophisticated ripoffs of the people who oay for all of these benefits.

Who loses (pays for all of these wonderful benefits)? Does anybody else know or care? Most people who are not included in the above categories should, because it’s usually them who pay.