Let’s Look at the Anaheim Convention Center Contract! (Boring, but Big Punchline)


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This piece on the Anaheim Convention Center Expansion Contract will be incredibly boring.  Seriously — toxic substances warning applies.  But it will end up with a real eye-opener, so if you want you can just skip down to the end.

Tom Hagen - steal with briefcase

Understanding the meaning of a contract of this sort can be like one of those hunts where each clue takes you to another clue. If we want to understand the authority by which this is done, we look at Section 1.04, on page 18:

“This Indenture is executed by the Authority pursuant to the provisions of the Act and the Refunding Act. The Authority is executing this Indenture, undertaking its obligations in respect of, and issuing, the Bonds for the purposes set forth in the recitals hereof for the benefit of the City.”

So we look to Section 1.01, Definitions:

“‘Act’ means Chapter 5 of Title 7 of Division 1 of the Government Code of the State of California.”

( For your ease of reference, here’s the California Government Code: )

This is a problem, because “Titles” come before “Divisions” within the Government Code. They may mean “Title 7, Division 1″ (which would be “Division 1 of Title 7.”)  Yes, that seems to be it: §§ 66000 et seq.

There’s a lesson here: you look at a contract in this sort of impressive form and you think that they know what they are doing. Not necessarily. They just did the equivalent of switching the area code and the prefix of a phone number. This does not give one a sense of great security. (By the way: can I bill for this correction?)

Section 66000

As used in this chapter, the following terms have the following meanings:
(a)
“Development project” means any project undertaken for the purpose of development. “Development project” includes a project involving the issuance of a permit for construction or reconstruction, but not a permit to operate.
(b)
“Fee” means a monetary exaction other than a tax or special assessment, whether established for a broad class of projects by legislation of general applicability or imposed on a specific project on an ad hoc basis, that is charged by a local agency to the applicant in connection with approval of a development project for the purpose of defraying all or a portion of the cost of public facilities related to the development project, but does not include fees specified in Section 66477, fees for processing applications for governmental regulatory actions or approvals, fees collected under development agreements adopted pursuant to Article 2.5 (commencing with Section 65864) of Chapter 4, or fees collected pursuant to agreements with redevelopment agencies that provide for the redevelopment of property in furtherance or for the benefit of a redevelopment project for which a redevelopment plan has been adopted pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code).
(c)
“Local agency” means a county, city, whether general law or chartered, city and county, school district, special district, authority, agency, any other municipal public corporation or district, or other political subdivision of the state.
(d)
“Public facilities” includes public improvements, public services, and community amenities.

The real question here is: “who’s on the hook?”

“‘Refunding Act’ means Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California.”

“’Indenture’ means this Indenture, as originally executed or as it may from time to time be supplemented, modified, or amended by any Supplemental Indenture.”

“’Supplemental Indenture’ means any instrument hereafter entered into between the Authority and the Trustee, supplementing, modifying or amending this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.”

“’Trustee’ means U.S. Bank National Association, a banking association organized and existing under the laws of the United States of America, or its successor as Trustee hereunder as provided in Section 9.01.

“‘Authority’ means the Anaheim Public Financing Authority.”

What’s that? We need to look at a different APFA resolution, which states:

[T]he Anaheim Public Financing Authority (“the Authority”) has been established pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (“the Act”), by the Joint Exercise of Powers Agreement (“the Agreement”), dated as of January 28, 1993, between the City of Anaheim, California, (“the City”) and the Anaheim Redevelopment Agency to, among other things, assist in providing financing for the City, for the purposes of which are authorized under the Act….

Hmmm.  Something seems off there, but — all right, back to the joy of definitions!

“Bond” or “Bonds” means any or all, as appropriate, of the 2014 Bonds and any Additional Bonds authorized and issued by the Authority, authenticated by the Trustee and delivered hereunder.

“’2014 Bonds’ means the 2014A Bonds and the 2014B Bonds.”

“’2014A Bond’ or ’2014A Bonds’ means any or all, as appropriate, of the Bonds authorized by Section 4.01(A) of this Indenture and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such 2014A Bonds.

“’2014B Bond’ or ’2014B Bonds’ means any or all, as appropriate, of the Bonds authorized by Section 4.03(A) of this Indenture and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such 2014B Bonds.

Let’s include this one too:

“2014 Project” means (1) acquisition, construction, installation, furnishing and improvement of an expansion to the Anaheim Convention Center and the construction of a public parking garage and related infrastructure improvements and (2) other capital projects of the City, the funding of which with proceeds of the 2014 Bonds is permitted by California law and will not adversely affect the Tax-Exempt status of the 2014A Bonds.

So the “2014 Project” is essentially … unlimited.  These bonds can apply to any city project that the Council — or maybe at this point just City Staff on its own — wants.  In other words, this contract makes the name “Anaheim Convention Center contract” wrong — it’s the “anything they want” contract.

Was that what you understood about the agenda item from two weeks ago?  More on this to come.  Why, I haven’t even told you yet about the balloon payments and the collateral!


About Greg Diamond

Worker's rights attorney now moving into "good governance" litigation. North Vice Chair of Democratic Party of Orange County and occasional candidate. Proud to be prolix. Unless otherwise specifically stated, his writings never speak for the Democratic Party at the local, county, state, national, or galactic level. He tries to either suppress or openly acknowledge his partisan, issue, ideological, and "good government" biases in most of his writing here. If you have a question about any particular writing, just ask him about it and (unless you are an pseudonymous troll) he will probably answer you at painful length. He lives in Brea but generally doesn't blog about it. A family member works as a campaign treasurer for Wendy Gabriella in AD-73; he doesn't directly profit from that relatively small compensation and it doesn't affect his coverage. He does advise some campaigns informally and without compensation, although in 2014 he may receive some compensation for campaign consulting and fundraising for the campaign of Jorge Lopez for Orange County Assessor.