As I was reading yesterday's WSJ article about coastal cities decrying the impending sea level rise on one hand and essentially ignoring the risk in their municipal bond disclosures, I flashed on the B'game bayfront and the bonds we are about to issue for the Rec Center rebuild. The Journal article notes
The Government Accountability Institute undertook a yearlong study of 40 major cities to find out if mayors’ apocalyptic projections about climate risks are factored into the interest rates on the municipal bonds their cities issue. The results revealed a gulf between the words municipal leaders speak and the disclosures cities make. There was no statistically significant difference in the interest rates for bonds issued by cities in high-risk locations for climate-change devastation versus those issued by low-risk cities.
The study also found scant mention of climate change in bond disclosure documents. The disclosure statements of the 20 at-risk cities totaled 4,361 pages. Phrases like “climate change” and “sea-level rise” appeared fewer than 100 times across all 20 at-risk cities in the context of the issues addressed in this study. Further, 12 out of the 20 disclosures for at-risk cities did not mention climate language in the same context.
When they got to discussing Oakland, it felt very close to home indeed since our sea level is their sea level
Worse, “by 2050, a ‘100-year flood’ in the Oakland vicinity is expected to occur on average once every 2.3 years and by 2100 to occur 44 times per year or almost once per week.” The lawsuit added that “Oakland is projected to have up to 66 inches of sea level rise by 2100.” The city alleged this would “imminently threaten Oakland’s sewer system” and harm property with a “total replacement cost of between $22 and $38 billion.”
Contrast that detailed, dramatic language with Oakland’s bland, measured 2017 bond risk disclosure to investors: “The City is unable to predict when seismic events, fires or other natural events, such as sea rise or other impacts of climate change or flooding from a major storm, could occur, when they may occur, and, if any such events occur, whether they will have a material adverse effect on the business operations or financial condition of the City or the local economy.”
That looks like an "oopsy" to me. Which is it? Is Oakland 30 years from disaster on a semi-annual basis which for a major port city would be a financial Titanic or are they unable to predict any of this? We will have to have our local bond expert(s) weigh in on the B'game disclosures of same.
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