Sunday, July 23, 2017

THE $74 MILLION BOND "N.S.F."*** BOND ISSUE

(*** "Not So Fast")

Guest Letter by Sidney Bach

It's a hard but true fact in the financial world of municipal bond financing (such as the City's proposed issuance of $74 Million in bond debt) that, as a practical matter, no such bonds can be issued (because no financial institution or underwriting syndicate of investors will buy them) UNLESS the City, its City Attorney and its bond counsel can sign off on what is known as a "CERTIFICATE OF NON-LITIGATION."

Such a Certificate must state, without any reservation whatsoever, that there is no litigation pending or threatened that challenges the legal validity of the bonds or the proceedings by which they have been authorized. Since there is a lawsuit about the bond referendum ballot wording that is currently pending in the Buncombe County Superior Court (which recently denied the City's request to dismiss the case), until such time as that lawsuit has been finally resolved by North Carolina's courts, in the real world of finance, no bonds can be or will be issued.

However, in spite of this reality, the City Administration is continuing to pretend and represent to the public that it is proceeding with the bond issue so as to justify the imposition and collection beginning this year of additional City ad valorem property taxes on all privately-owned property in Asheville. Talk about "putting the horse before the cart !"

Now here's the "$74 Million Dollar Question":

Since the City cannot market and sell its proposed bond issues while the current lawsuit is winding its way through the courts (and no "Certificate of Non-Litigation" can be issued in order to sell the bonds) what does the City Administration intend to do with the millions of dollars in additional property taxes it plans to begin collecting now that the Council has approved the 2017-18 annual City Budget? Will we see our tax increases placed aside and earmarked to pay for the interest and principal on the $74 million general obligation bonds IF AND WHENEVER they can be issued... or will some hands at City Hall try to divert this new revenue bonanza stream to other purposes and other projects favored by the bureaucrats in the City Manager's offices (e.g. the Riverside development project that already is "deep in the red" and strapped for cash with a shortfall well in excess of $30 million (and probably even a lot more when new contracts are bid).

If this is allowed to happen, it will be one of the most outrageous and duplicitous schemes ever foisted upon the backs of Asheville's property owners and taxpayers.

Perhaps a new motto for the current City Manager and the City Administration should be printed in large red letters on a huge banner to be strung across the entrance way at City Hall:

"TAX AND TAX, SPEND AND SPEND...THE PEOPLE ARE TOO STUPID TO UNDERSTAND !"

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