Wacky Clacky theory: MAX bonds are really a property deal
We've been trying to wrap our mind around how the Clackamas County commission can hold a meeting on August 22 and authorize selling $20 million of bonds for the Tri-Met light rail line on September 6 -- 15 days later. Oregon law (ORS 287A.150) requires that 60 days' advance authorization be given for "revenue bonds," which is what to our eye the county bonds are. (They are "bonds" -- "a contractual undertaking or instrument of a public body to repay borrowed moneys" -- and not "general obligation bonds," because they are not "secured by a commitment to levy ad valorem taxes outside the limits of sections 11 and 11b, Article XI of the Oregon Constitution." Thus, they are "revenue bonds.")
But looking at the sales pitch for the Clackamas IOUs, which was just released the other day, we see now that the county contends that it is not selling "bonds" at all, but rather entering into a sale, lease, or financing of property under a different provision of Oregon law, ORS 271.390. That section, which is cited both in the county commission resolution and the proposed legal opinion by bond counsel Harvey Rogers (right), reads in relevant part:
A public body or a council of governments may enter into contracts for the leasing, rental or financing of any real or personal property that the governing body of the public body or council of governments determines is needed, including contracts for rental, long term leases under an optional contract for purchase, financing agreements with vendors, financial institutions or others, or for purchase of any property.
How in heaven's name are the Clackamas MAX bonds described in that sentence? The county is not leasing, renting, or financing any real or personal property. The county is borrowing money from investors and paying it over to Tri-Met so that Tri-Met can build its, not the county's, light rail line to nowhere. The money is to be paid back just like any other bonds that the county has issued over the years. Portland's doing the same thing, and it -- with Rogers again in his monopoly role as bond counsel -- is forthrightly calling its obligations (which were authorized back in April) "revenue bonds."
The proposed deal with banks and other investors is not about Clackamas County buying, selling, or using any property at all. To say otherwise seems to us to be taking the language of the statute into Humpty Dumpty territory. Bonds are still bonds, even if you cross out the word "bond" and write "lease" or "sale" or "ham sandwich" in its place. What the county is trying to do seems awfully cute -- at best.
We put in an e-mail request to State Treasurer Ted Wheeler's office yesterday afternoon to see whether he had any comment on the county's highly aggressive reading of the bond law. So far, we have received no response. We also called Moody's, which has rated the Clackamas bonds, to see whether they had considered the question -- or the recently filed referendum petition -- but they apparently stop answering the phone at 2 p.m. our time. Now everyone is going to get lost in the holiday weekend.
Will the Clackistani rebels get this question before a court in time to stop the rush-rush bond sale? The bonds are supposed to be sold on Thursday, and close on the 13th. If the rebels can keep the county from paying Tri-Met until after the September 18 special election, they may succeed in stopping the payment entirely. If the scoundrels on the county commission get Tri-Met paid before the election, the rebels may never get the money back for the taxpayers. Either way, there are two incumbent heads on the commission that are likely to roll in November on account of their lawless, rogue actions. And deservedly so.