The city of San Diego wants to use a common, but convoluted financing mechanism to repair its roads and build other infrastructure. But it recently hit a legal snag. Here’s how the plan is supposed to work and why there’s a hang-up.
This is a lot in Skyline owned by the city of San Diego.
The city would like it to be a fire station someday. Right now, people who live in the neighborhood have a high risk for a delayed emergency response. A fire station would fix that.
To build the station, the city needs money. And the fire station is just one project the city wants. Right now, the city wants to build or fix $120 million worth of stuff.
But it doesn’t have that kind of money — or any money really.
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How about this ... Raise the Hotel Tax to 18% and use the new revenue for infrastructure, beaches, playgrounds and parks. Maybe even build a fire station.
So let me see ...as responsible parents we are to teach our children to save money so they can afford to buy something but our governments can circumvent this and take out multiple large loans far into the future so our children are saddled with paying thames back....thanks a lot to our corrupt judges opinions.
Legal or not legal, these convoluted arrangements to avoid a vote of the electorate constitute policy that's just plain wrong. Bad form and all that.
A good example of unintended bad consequences was the revenue bonds issued to renovate Jack Murphy (now Qualcomm) Stadium. While revenue bonds are different than these convention center bonds, the goal is the same -- to avoid a vote of the people.
The "stadium authority" was a ruse. The three officers were the city attorney, the city manager and the city AUDITOR. In essence, the "agency" consisted of a folder in Jack McGrory's desk drawer. The city council would meet in the AM, decide what it wanted done, and later in the day the "agency" would meet in McGrory's office (or the office of the city attorney) and they'd rubber stamp whatever the city council had decided that morning. Yet the courts upheld this con job as an independent entity.
This revenue bond vote-dodging shell game incorporated the infamous 1997 San Diego Charger ticket guarantee. Chargers got their stadium renovated with taxpayer bonds - but in addition the city guaranteed the 60,000 per game general admission tickets -- paying the Chargers for the unsold tickets -- even for exhibition games. Through some odd quirks in the contact, the Chargers could actually make over 85% more NOT selling a ticket than selling one.
Remember the Charger ticket guarantee? In essence, the city paid the Chargers to field LOSING teams! During the 7 years of the deal, the city paid out tens of millions of dollars for the unsold tickets, while the BEST Charger season win-loss record was 8-8.
Incredibly, after a disastrous 1-15 season, the Chargers RAISED ticket prices 15%! Higher prices + lousy teams = fewer tickets sold = higher subsidy payments = greater profit.
The only good news is that the San Diego voters today is MUCH more suspicious of Charger subsidy deals, and hence the chance of them getting a new subsidized stadium is quite "iffy" -- ruse or otherwise.
Municipal lease financing has been common since at least the late 1940's, and is hardly novel. Its legality was upheld once again in the Convention Center case. Many very popular municipal public works projects statewide would not exist without it. Assuming the Charter with regard to financing has not been amended since the Convention Center case, the City, after a validating action, should have no legal problem issuing these bonds. Whether this is a good idea financially is another question, but one best addressed by those charged with forming public policy, the City Council.
@William Smith “…one best addressed by those charged with forming public policy, the City Council….”
Is “public” policy formed by the public or dictated by city council?
1. the principles, often unwritten, on which social laws are based.
the principle that injury to the public good is a basis for denying the legality of a contract or other transaction.
Great story. What happens if the Public Facilities Financing Authority of the City of San Diego defaults on the loan?
@Ari Isaak Oh ye of little faith.
@Richard Rider Thanks for being a good sport, Richard.
this is the most ridiculous of bond debt scams - it is the equivalent of telling the bank you plan to make your car payment with the additional revenue you'll earn by charging yourself rent ever time you use your kitchen.....
the only way to stop government corruption is to pull their books and count the money because they will not stop themselves ...read about government corruption found all over the state of cali - http://www.libionline.net/