Has Clackamas County been hustling MAX bonds illegally?
The Clackamas County commissioners met last night, and at last report were expected to meet again this morning. According to this agenda, one of the topics is "Resolution No. ____ Authorizing the Potential Issuance of Bonds to Meet the County’s Obligation to Fund Portland to Milwaukie Light Rail (Dan Chandler, County Administration, and Scot Sideras, County Counsel)."
The reference to a "potential issuance of bonds" is pretty amusing, given the fact that the county has already submitted the bond issue to the rating officers at Moody's, and Moody's issued a rating for the bonds on Tuesday:
Issue: Full Faith and Credit Obligations, Series 2012; Rating: Aa2; Sale Amount: $19,140,000; Expected Sale Date: 9/6/12; Rating Description: General Obligation Limited TaxOpinion
Moody's Investors Service has assigned a Aa2 rating to Clackamas County, Oregon's Full Faith and Credit Obligations, Series 2012. The obligations are secured by the county's full faith and credit pledge of all legally available resources, and are not subject to appropriation. Proceeds will finance the county's commitment to Tri-Met for its portion of the Portland Milwaukie Light Rail extension. Moody's maintains a Aa2 rating on the county's rated parity debt outstanding in the amount of $99.6 million, and a Aa1 issuer rating. The outlook on the county is stable.
Which county official submitted the bond offering to Moody's for a rating? And on whose authority? Did the county commissioners agree privately that the bond deal would go forward? Wouldn't that violate Oregon's public meetings law? And when did the request to Moody's go in? Normally, that company does not issue bond ratings overnight. Could it have been a week or two ago?
The highly irregular time sequence also raises questions under the county's own "debt issuance and management policy," which reads in part as follows:
Method of SaleClackamas County will offer the debt to be issued on terms consistent with market conditions, the project being financed, current County debt rating, issue size and complexity, and any other relevant considerations. The Board of County Commissioners will approve the method of sale based on the consensus recommendation of the Financial Advisor, the Finance Director and the County Treasurer. The debt issue may either be offered as a competitive sale or as a negotiated sale.
None of the recommendation and approval process could have been done by the time the rating request was sent in to Moody's. At least, it was not done in compliance with the public meetings law.
So how did the county bureaucrats who went to Moody's know what to put in the rating request? If proper procedures were followed, the terms of the bonds, including their size and maturity, could not have been known when the Moody's documents went to New York -- or even on Tuesday, when the rating was issued.
It's truly despicable that the commissioners are racing to get the bonds sold before the September 18 public vote on whether they should be issued at all. But if proper procedures haven't been followed, it might be more than just a disgrace. If old Harvey Rogers -- the bond lawyer who churns out the opinions about Oregon public debt on which the bankers rely -- can't give his o.k., there's no deal.
And regardless of what Rogers may or may not be willing to do, if a lawsuit gets filed that holds up the bond transaction past the opponents' likely victory in the September special election, those bonds may never get sold. Even Wall Street would never go for paper with that kind of cloud hanging over it.
| Posted at 7:48 AM | Permalink |
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Comments (13)
"Even Wall Street would never go for paper with that kind of cloud hanging over it."
You'd be surprised. With the Fed seeing the only way out as pumping even more money into the system (even though it hasn't made much of a diff in the past 3 years), it needs to find a home. I don't get it either, but municpals are still popular.
If you think the bond salesman / underwriting banks are going to slow this thing down, I'd look elsewhere - They need those commissions.
Posted by Steve | August 23, 2012 8:53 AM
And all this money, perhaps illegally spent by arrogant politicians, will bring us just two stations in the far northwest of Clackamas County. Of course they plan on extending the line farther south but that will require much more money in the future.
How much in total is the average homeowner paying for light rail? Property taxes to Metro, Clackamas county, the State, Milwaukie; payroll taxes to TriMet and where else? Oh, then there's the 50% coming from our Federal Income tax.
Posted by Don | August 23, 2012 9:06 AM
They really need to change the name from Light Rail to
Heavy-Handed Railroading...
Posted by tim | August 23, 2012 10:04 AM
The 3 Sisters of Red Soils screwed the voters last night under a dark cloud from the shadow government they operate.
In public hearing and on video, their staffer Dan Chandler told the audience "no bonding had previously been authorized, applied for or bond sale scheduled.
And that he cannot be responsible for what is in the newspaper. That the authorization would only come from the resolution before them."
That is clearly untrue.
I'm wondering if there was a violation of public meetings laws, and/or more, and there is now a panicked cover up underway.
Will the public get answers?
Can the bond sales be stopped?
Posted by Boot Lehan & Damon | August 23, 2012 10:17 AM
When it comes to local politics, it's only a violation if the wrong person is watching.
Posted by Mr. Grumpy | August 23, 2012 1:31 PM
This is very interesting. I have a related question:
Will the County get their money back if TriMet goes truly and utterly Tassels Up before construction even reaches them?
I don't see how they can continue operating the lines they have, not to mention expansion. Just follow the dispatch radio to see how bad things are.
They are barely keeping it together, and have somehow managed to cover up the work slowdown after the adverse ATU decision last month... so far.
If memory serves, the new route bids take effect in September, along with the other route and fare changes. It's going to be harder to hide the labor issues.
Posted by Downtown Denizen | August 23, 2012 4:49 PM
And The Beat Goes On
Posted by al m | August 23, 2012 6:43 PM
Tis a pity we have no state attorney general
Posted by tankfixer | August 23, 2012 7:07 PM
She's too busy covering for the tax refund mess. No compelling public interest to be served by naming who approved it, how it slipped through, and the "discipline" imposed according to the AG. She's fitting right in with the Salem crowd already. Nothing to worry about with Rosenblum in charge.
Posted by Andrew | August 24, 2012 8:21 AM
Probably 'they' are going to get away with it since, at the time, Lars was on contract-forced hiatus off-air and not around to stir up itching incendiaries, thank lucky stars. When it's some thought that counts, he's broke.
Posted by Tenskwatawa | August 24, 2012 5:30 PM
Even you are smarter than this,Bogdanski. Moody's issues credit ratings. That's all. Seems like a smart move to know what the rating is before the Board approves the financing, don't you think? You see conspiracies everywhere.
Posted by Rob | August 24, 2012 9:16 PM
Now the commissioners are hiring a PR firm to re-educate the voters.
The commissioners are going to spend the money regardless of what the voters want. Lehan and the others need to spend taxpayer money to survive.
Taking money from taxpayers and giving it to political supporters is the only trick they have.
Posted by Andy | August 25, 2012 12:40 PM
Rob,
Bogdanski is smarter than you.
It's not "...a smart move to know what the rating is before the Board approves the financing....". An elected body approves going out for bonds first, then the work is done to prepare for issuance, including the rating.
Moody's rates the bonds based on the specifics of the project the bonds are issued for, including risks like upcoming votes on related ballot measures. The Moody's rating makes no mention of that little detail by the way.
We "see conspiracies everywhere" because they are there. There is more dirt than most people will ever know.
Posted by L.O. Resident | August 25, 2012 1:28 PM