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.
| Posted at 8:45 AM | Permalink |
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Comments (19)
As usual and regardless of which position is correct, this entire topic will be ignored entirely or at best glossed over with no detail by the mainstream media. This town is in desperate need of more transparency. Thanks Bojack!
Posted by m | August 31, 2012 10:18 AM
With a name like TriMet, it has to be good.
...or so says the mainstream media, the watchdogs, the auditors, the SOS office, the AG, and anyone else.
Posted by Erik H. | August 31, 2012 10:25 AM
Oregonian article this morning said the commisioners lied about the cost savings.
None of this is a surprise to me. Lehan and others on the board will stop at nothing to do what they want. I'm not sure why they want to spend the money so bad, most likely there is some kickback in it for them. They are working like a dog in heat to get this deal done.
Posted by Andy | August 31, 2012 10:43 AM
They are working like a dog in heat to get this deal done.
As I mentioned in another post, even ignoring the politics the behavior alone suggests a greater fear of something undisclosed than any fear of displeasing the constituents who mistakenly elected them to office.
Posted by Mr. Grumpy | August 31, 2012 11:09 AM
The Rule of Law is a cornerstone of a constitutional representative republic.
Ad hoc political objectives are constrained by the Rule of Law.
But here we are seeing political objectives trump the Rule of Law.
This is a telling development.
More and more, it seems elected officials at all levels of government ignore even black letter law.
"We really know better."
Arrogance...
Even people who support light rail should be concerned about this flouting of the Rule of Law.
Because it's a slippery slope...
Individual rights might not be too far down the tracks.
Posted by Jim Evans | August 31, 2012 11:29 AM
Repeat after me - As Clack County commissioners anything we do or pass works because we said so.
Makes it a lot simpler. Why try to gin up all of these excuses.
"How in heaven's name are the Clackamas MAX bonds described in that sentence?"
I agree, everything the guy talks about is the action of buying or renting stuff NOT the activity of paying (i.e. bonding) for it. If they want to enter an agreement and can't pay for it, too damn bad. Like that's never happened before.
Posted by Steve | August 31, 2012 12:01 PM
You voted for these people.
Posted by Sam L. | August 31, 2012 1:30 PM
Sam L.
Yeah, thanks for the obvious.
But unlike Multnomah county and Portland, Clackamas county voters are doing something about it.
Are you suggesting the citizens shut up and behave because their officials were elected? :)
That's rich.
Posted by 3-401 Rail Vote | August 31, 2012 1:44 PM
Sam L. Nope-not guilty I didn't vote for these clowns.
With all the hustle and bustle and smoke and mirrors I am wondering where a paper trail would lead us.
Does not pass my sniff test. I smell a buncha stinky rats.
Posted by K.W. | August 31, 2012 1:54 PM
"You voted for these people."
And now that we see what corrupt a**wipes they are, we're doing something to stop their self-serving agenda and to vote them out of office. Sam L., you might want to take a Logic 101 class at the nearest community college.
And speaking of their "self-serving agenda":
"I'm not sure why they want to spend the money so bad, most likely there is some kickback in it for them."
Answer: There is some "kickback" - they have further political ambitions and aligning themselves with the corrupt rail mafia is where the money is to help them move up the political ladder.
Posted by realitybasedliberal | August 31, 2012 2:13 PM
These CCBC's are tap dancing like BoJack students splainin how the dog ate their homework.
Wish we had a real AG in Salem. Now you know why the FBI has been snooping around.
Posted by BoBo | August 31, 2012 2:32 PM
When I step back and take it all in... the tight-lipped, lock-step obedience to an agenda regardless of cost, the secrecy, the lies, the arrogant and wilful defiance of the public will, the abuse of the public trust, it sometimes seems a little too widespread to be a random event or just a couple of rotten apples, and that's when I start to wonder if something carefully planned and with sufficient financial backing wasn't quietly maneuvered into position during the 2008 elections.
Or maybe a tin-foil hat just fell off the top shelf onto my head and I simply didn't notice.
Posted by Mr. Grumpy | August 31, 2012 5:09 PM
Now this is funny. I'm sure TriMet and Metro don't see the humor though.
http://stopportlandcreep.eventbrite.com/
Stop Portland Creep Golf Outing
Wednesday, October 3, 2012 at 12:00 PM (PDT)
Aurora, OR
With the potential favorable political environment resulting from the bond battle and Sept 18th rail vote the Clackistanis will have one heck of a Hootenanny Golf Tournament.
It's looking like November may be a landslide for Ludlow.
Knock on a 3 wood.
Posted by 3-401 Rail Vote | August 31, 2012 5:24 PM
...and I suppose the courts say only the bond holders have standing to sue, which they have a big incentive not to do unless and until Clackistan defaults. Tammany Hall West!
Posted by dyspeptic | August 31, 2012 5:30 PM
Jack:
As I read the statute you posted, it looks as if the commissioners will have to secure the transaction with a mortgage if they try to use the ORS 271 argument.
ORS 271.390 (2)(a) says that the government agency must...
a. Provide that the obligations of the public body or council of governments under the contract is secured by a mortgage on or other security interest in the property to be leased, rented, purchased or financed under the contract.
I dont see any of those mortgage agreements in the counties documents. What's up with that?
Posted by Thoughtful Goober | August 31, 2012 9:49 PM
But wait, there's more...
According to the POS submitted by the county...
"The Beneficial Owners of the Obligations do not have a lien or security interest on the property financed with the proceeds of the Financing Agreement."
I'm not a lawyer, but I don't see how they can make both arguments for the same transaction...
Posted by Thoughtful Goober | August 31, 2012 9:53 PM
Well this should make raising property taxes so much easier.
Posted by Lc Scott | August 31, 2012 10:15 PM
The plaintiffs attorney who filed the writ of today got a hearing before a judge set for Tuesday 1:30.
Both the county and bond counsel will have to appear and explain how they are not violating the law.
Since they have already thrown all the creative legalese they have this will be a very interesting courtroom event.
Posted by 3-401 | August 31, 2012 10:57 PM
TriMet to most part is Bankrupt. TriMet lives on revenue that goes into a black hole where its short and long term obligation exceed its ability to fund those obligations. (retirement and healthcare)
To protect the Citizens of Clackamas County we must not get ourselves entangled into their WEB! Their operational model cannot be sustained. This is worse then Greece, that has put, all of Europe in jeopardy.
Posted by Paul Edgar | September 1, 2012 9:19 AM