Rogue Clackamas commission takes shaky bond deal into back room
It's pretty amazing, but the Clackistani rebels' various legal maneuvers to try to stop their county from borrowing $20 million and handing it over to Tri-Met for pointless light rail have actually thrown a monkey wrench into the county's plans to do just that. Yesterday the county abruptly cancelled the public bond sale that was supposed to happen today. No reason was given, but it's pretty obvious that somebody -- bond counsel Harvey Rogers, or the underwriters, or the credit raters at Moody's, or county counsel, or the commissioners themselves -- has gotten nervous that the rebels' legal arguments against the bond issue may have merit. The legal action taken by the opponents appears to have, as the corporate folks say, "queered the deal" on the public bond sale.
It's amazing to us that the county could cancel the sale and not give a reason. Here are the politicians and bureaucrats, slinging $20 million around, and when they suddenly pull the plug on a major deal that was two days away from going down, they can just give the media and the public the brushoff? Ladies and gentlemen of county government, what the heck is going on?
But of course, the county isn't really giving up. Reports are that it is going to try to borrow the $20 million from a bank in a "private placement." Like the aborted bond sale, it will have to be negotiated and closed in an awful hurry, because county voters are already casting votes on a ballot measure that will either kill or mortally wound any loan deal. The votes will be counted a week from Tuesday, and there is every indication that the measure will pass. After that, the cloud over the bonds becomes a destructive tornado.
What do the rogue county commissioners, who are blatantly defying the public vote, gain by taking the deal private? First and foremost, secrecy. Unlike the public bond sale, which required detailed public disclosure of the details of the deal, the private placement won't be televised, as it were, on the internet. And if the rebels can't see what's going on, it's going to be harder for them to continue to challenge the proceedings in court. At last report, they're planning to take the matter all the way to the state supreme court, but with the negotiations gone private, it will be difficult for them to know exactly what they're complaining about until it's too late.
That being said, the fact remains that shifting the deal to a bank doesn't alleviate the county's serious legal issues. Whether sold publicly or privately, the county's IOU is invalid unless the county's highly aggressive reading of state law is correct. We won't repeat what we wrote here yesterday about that, but it's not at all clear that in the end, the county's reading of the law will be upheld. It got a favorable ruling from a trial judge yesterday, but the appeal of that decision has not even begun, much less be decided. In a climate of uncertainty, somebody is going to have to take some risk in order for the $20 million to appear. Yesterday's cancellation indicates that the risk is too great for the public market. Maybe a bank will be willing to step up, but one has to wonder.
Meanwhile, the legal issues multiply, the more the county flails around. Is it putting the loan deal out for bid? Does it have to? And with all these crucial decisions being made behind closed doors, are the county commissioners complying fully with the state public meetings law? They'd better hope they are, because they could be personally liable for a lot of money if they aren't.
The right thing to do, of course, is for the county to tell Tri-Met, "Hey, we tried, but we just can't get it done." This set of commissioners, however, won't do that. And that is why there are going to be two new members of the board come January. The incumbents up for re-election are, figuratively, dead men walking. And with a new regime may come new county bureaucrats. The staff people working on this -- particularly the county finance director and county administrator -- have got to be thinking a little about their own futures. Would you put your career on the line over light rail? What a way to go.