Anaheim Convention Center: Expanding, perhaps, but not without a vote
OJB has obtained an e-mail from my fellow Government Accountability Attorney Cory Briggs to the Anaheim City Council, to which they probably should have paid more attention before last Tuesday’s vote. I’ve taken out the e-mail addresses not to ward off people, but bots that scan the web for them.
From: Cory Briggs
Sent: Tuesday, March 11, 2014 3:06 PM
To: [each city council member]
Cc: [amezzacappa; City Clerk]
Subject: Opposition to Item 9 on City Council’s Agenda for March 11, 2014
Importance: High
Dear Mayor and City Council:
On behalf of The Inland Oversight Committee, I am writing to urge you not to approve the items before you tonight. Your approval of these items would be illegal.
First, the Anaheim Public Financing Authority (“APFA”) does not have the legal authority to issue the bonds contemplated by this agenda. The City nay not incur this level or length of indebtedness without obtaining the voters’ consent, and the Anaheim Redevelopment Agency’s authority to transact business or exercise powers has been fully withdrawn by the Legislature. See HEALTH & SAFETY CODE § 34172(b). Significantly, even the ARA’s successor agency’s “rights, duties, and performance obligations under [any Joint Powers Agreement] shall be limited by the constraints imposed on successor agencies by [Assembly Bill X1 26 (2011)].” Id., § 34178(b)(3). The APFA does not have the authority to issue bonds under the Joint Powers Agreement or, even if the Agreement were to purport to give that authority, the APFA would no longer have the authority because neither of the parties to the Agreement has the authority at this point. In short, the APFA has no more legal authority to issue the bonds than the City or the ARA does.
Second, the proposed financing structure is an obvious attempt to get around the debt limitations in City Charter Sections 1209 and 1210, which require a vote of the electorate before the City incurs any general- or revenue-bond indebtedness. Indeed, Sections 3 and 4 of the Site and Facility Lease confirm that the transaction is being structured for the purpose of giving the APFA an interest in City property that APFA then uses as collateral for the bonds, the proceeds of which the City will direct. The Purchase Agreement for the bonds would have no effect without the City executing it. The other transaction documents confirm the scam being pulled on the public without a vote of the City’s electorate: namely, this is a debt being incurred by the City in substance, even if not (entirely) in form. Unless this transaction is put to the voters, it is illegal.
Third, the proposed financing structure also violates Section 18(a) of Article XVI of the California Constitution, which essentially prohibits the City from incurring any debt that cannot be serviced by the current year’s income and revenue. The $300 million the City seeks cannot be paid back in any fiscal year, much less the one in which the money is received. Without a vote of the electorate, the structure is illegal.
Lastly, it appears that you have not subjected the “2014 Project,” as described in the agenda materials and defined in the Indenture, to environmental review under the California Environmental Quality Act. The Indenture’s definition is specific enough to allow for meaningful review in connection with this attempt to generate the financing for the 2014 Project. Accordingly, to approve the project before subjecting it to environmental review would violate CEQA and render your actions invalid.
For these reasons, I urge you not to approve the items before you today.
Cory J. Briggs
Briggs Law Corporation
San Diego County and Inland Empire [contact info redacted]
Important Notice: This message contains confidential information intended only for the use of the addressee(s) named above and may contain information that is legally privileged. If you are not an addressee or the person responsible for delivering this message to the addressee(s), you are hereby notified that reading, disseminating, distributing, or copying this message is strictly prohibited. If you have received this message by mistake, please immediately notify me by replying to this message and then delete the original message and your reply immediately thereafter. Thank you very much.
Internal Revenue Service Circular 230 Disclosure: Nothing in this message is intended or written by Briggs Law Corporation (including its attorneys and staff) to be used and cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this message.
Despite the confidentiality warning, this is now a public document — though out of courtesy I’ve sought and received permission to publish it here.
Let me translate for the City Council: you’ve broken the law and you’re going to get sued over it. Briggs already beat you in a recent Brown Act case. This one is going to hurt even more than that — especially if you act on it. There’s still time to put it to a public vote in November.
I’ll also add some comments by Cynthia Ward, someone who (like me) is not automatically opposed to any version of an expansion of the Convention Center, but has learned not to trust Anaheim’s Council and the mercantilist portions of it staff.
They almost had me, and I am the biggest skeptic of the Council majority an their Chamber of Commerce enablers. I can see the value in expanding the Convention Center, if we can do an event while the next one is loading in it eliminates downtime. But i also knew based on who was selling this truckload of snake oil that it was too good to be true. Really, parking elsewhere? And how do we know how much it takes to move forward and bond for if we don’t have a plan for, or price for, the parking elsewhere? Perhaps this might have something to do with the Stadium development rights? All of these projects fit together, beginning with the lobbyist behind them, and they all stink to high heaven. Thanks Register, I knew I was missing something reading through the City’s docs, now I know where to look.
By the way, can anyone from Anaheim’s government explain to me what the ramifications are of the inclusion of conditions for capital appreciation bonds being listed in the indenture documents for the convention center expansion? What are the conditions? Beyond that — what is the size of the contemplated bonds? Voters will want to know — once Cory Briggs gets paid for forcing the city to put the question on the ballot.
As a taxpayer, I eagerly await the day when Anaheim (and Orange County, for that matter) will find a cheaper way to get their legal education, than in a Courtroom.
Brilliant comment!
As long as they can use taxpayer money to litigate and taxpayer money to settle/silence, they will just continue – like an out of control alcoholic. Federal prison sentences are their AA.
For instance Mike Carona is going thru his “AA” right now. What’s cute is he gets to continue receiving his 20K per month pension concurrently – using what? Yes you guessed … your taxpayer money.
Even the dumbest OC person should get this Madoff con but too many don’t. Especially the ones who financially benefit the most from fleecing others.
Here is a perfect example of people who behave like lawless trash because they know that taxpayer money and hiding behind the obstruction obscenity called the “police officer’s Bill of Rights” will save the day.
http://www.opposingviews.com/i/society/crime/tow-company-employees-arrested-after-towing-illegally-parked-unmarked-cop-cars
And how many people were stampeding over each other to be most in favor of this? Not just the usual kleptocrat circle but big Dems like Correa, Quirk-Silva, labor…. As I understand, only Tom Tait and Cynthia Ward were smart enough to express any misgivings.
That’s because in theory it’s a good idea. It could also easily be a good idea in practice — but this Council can usually be counted upon to do something like this the wrong way. And it looks like they have.
With all of that support you mention out there, they should be entirely willing to agree to Cory Briggs’s demand and bring this to a vote in November. How could they lose, right? It should be like shooting a fish in a barrel!
The only downside for them, of course, is that a ballot initiative gets more scrutiny. The questions that Tait and Cynthia have been asking might be explored. And if there is one thing the Council doesn’t want, it’s having people turn over rocks, let they see the teeming filth beneath.
It has to go to a vote — and it will, by court order, with a nice (and well-earned) payday for Briggs for making them do the right thing. Maybe the Council’s best line of defense is that, until they checked things out personally, voters just could not believe this is the way that Anaheim works.
Murray gives us TWO hysterical cameos in this Tragedy-The first, after listening to supportive letters from our chorus of grandstanding but absent legislators, she later acknowledges that County and State receive MORE tax benefits than Anaheim, with sarcastic ‘thanks’ to both, while oblivious (or hoping we are!) that their inactivity to SEEK a return of any of those benefits for the project, truly makes their written support WORTHLESS!
The second is effusive thanks to Staff for the “dozen or so meetings” they granted her ” to really drill through the numbers” of the deal, in sharp contrast to HER later Council Meeting DENIAL of even a second, to Tait’s motion for even a SLIGHT delay on the vote, for the Public, as well as himself, to pause and analyse the documentation, behind the auctioneer-speed script-reading from the presentation slides. How sharp, if at all, that drill was, will be detailed in MANY posts to follow-
There was lots of sneaky stuff going on here, including and extra hundred mil for re-financing and unrelated capital projects.
The whole thing got the stamp of approval from the Finance Director who also failed to explain how come the old ’92 COPs were never refinanced. How much extra has that cost?
The issue of CEQA is interesting; I’m not sure if this is a “project” yet, although clearly the bonds suggest broadly the contemplated scope of the proposal.
Zenger, even if you don’t want to write your own piece on this (as you’d be welcome to do), can you flesh out the various problems with it for the benefit of a non-expert audience? Like me, many readers don’t know what the “old ’92 COPs” are, for example.
I second this request.
Certificate of Participation. The interest rates in ’92 must have been near double digits.They could have been financed at much lower rates later in the decade but never were.
More is coming and it’s pretty bad, and certainly nothing anybody just reading the staff report (like I did) or attending that bang up “workshop” (like I did) could have known, because nobody said anything about it and I didn’t feel like reading the disclosure documents.
OK, so they weren’t refinanced when they should have been: but cui bono? Seems like stupidity — low interest rates having come into being primarily around the Pringle years — rather than avarice. Or is there an avarice angle that I’ve missed?
You know, I have a great idea — Anaheim should pay professionals to stay aware of these issues and recommend ways to maximize savings to its residents. We can call these people — STAFF!
Well, you are HALF right — They ARE paid!
It’s not an issue of kleptocracy, just lack of accountability, I guess. But I really wonder about that Director of Finance. Didn’t inspire confidence.
That’s (the DD’s) where (beyond ALL the BLANKS!) the story is – I’m getting a concussion from all the forehead slaps!
It gets worse. Stay tuned for a BIG follow up, thanks to Big Box of Red Whine for the catch here (my friend, when do you sleep?) this story of Greg’s has only just begun. And folks, if you thought these people were fiscally irresponsible, you ain’t seen nothin’ yet! Oh and no, CATER was not behind the Briggs letter, although we would likely support the efforts of the other group if needed.
I always thought it would be the Stadium deal that killed the political aspirations of the Kleptocracy….turns out it will be the one Agenda item that got the least attention of them all.
I have some friends with better finance minds than mine looking this stuff over, and the waste product is going to hit the circulating cooling appliance. Tait was absolutely right to fight against this thing, and had any of the other four bothered with their due diligence rather than being the first in line to say “Pick Me!” they would have been wise to side with him on this one.
The Convention Center IS a good idea, and as I said at the meeting if the General Fund was buffered from the liability of this I would have agreed. But not only is the General Fund on the hook, against the clear intent of the City Charter that never wanted those in charge to have the authority to mortgage our futures without our consent, what they just approved is a ticking time bomb.
Reporting in when the various pieces are lined up, but this is FAR from over. Thanks for sharing Cory Briggs’ letter, Greg, it gives me hope maybe someone can put the brakes on before the Bonds are sold April 1st. Anaheim is forever screwed if they are released.
Sold on APRIL 1? Is Briggs filing for a writ to stop this? (Am I?)
They certainly are trying to pump all the oil out of Anaheim’s well while they can!
Whoa there. April 1st? I don’t see how bond counsel and the underwriter can get the prospectus ‘n everything done by then.
http://www.anaheim.net/docs_agend/questys_pub/MG45523/AS45550/AS45554/AI45851/DO45863/DO_45863.pdf
INDENTURE OF TRUST
By and Between
ANAHEIM PUBLIC FINANCING AUTHORITY
and
U.S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE
Dated as of April 1, 2014
Relating to
Anaheim Public Financing Authority
Lease Revenue Bonds
(Anaheim Convention Center Expansion Project)