Saturday, January 24, 2009

The Next Bubble to Burst: Biggest Antitrust Conspiracy Ever?

An anonymous reader made the following comment on my column from last Sunday:

I believe people will find this reader's comments interesting.

Here's a link to the column for a reference point.

Humboldt County Library building in Eureka is funded by a suspicious kind of bond. Same type also built the newer Humboldt County Court House Jail remodel.
The bonds are secured by the Jail or the Library, and the interest rates are quite high, going back to the time they were written, but particularly if contrasted with contemporary rates. Bonds ordinarily require voter prior approval, but these were backdoored, so as to require no vote.
Premium rates are way above the market from the get go. They haven't met the market since, so far as one can tell.
Construction costs at the time were quite high for any region, but certainly for around here-- envelope computations suggest the buildings cost more than $400 per square foot, adjusted for inflation the costs would be more like $600/sq.ft.
The twist was, a quasi-public entity was set up to receive land from the County, then issued a bond to finance construction, and owns the facilities, which are then leased back to the County until the structure is fully depreciated.
Someone gets the depreciation tax credit,and someone gets the huge interest paid on the bonds. If bonds rates were readjusted to reflect markets during their existence, taxpayers would have saved millions. It is hard to say how much.
These details weren't discussed much, in public meetings; they received little news media examination. If you find out more maybe you could write another stimulating editorial about bond corruption, but with a more local perspective.
I really don't like to use "anonymous" here as my name, but ...
Posted by Anonymous to As It Stands at January 24, 2009 7:36 AM

1 comment:

Anonymous said...

Humboldt County Library building in Eureka is funded by a suspicious kind of bond. Same type also built the newer Humboldt County Court House Jail remodel.

The bonds are secured by the Jail or the Library, and the interest rates are quite high, going back to the time they were written, but particularly if contrasted with contemporary rates. Bonds ordinarily require voter prior approval, but these were backdoored, so as to require no vote.

Premium rates are way above the market from the getgo. They haven't met the market since, so far as one can tell.

Construction costs at the time were quite high for any region, but certainly for around here-- envelope computations suggest the buildings cost more than $400 per square foot, adjusted for inflation the costs would be more like $600/sq.ft.

The twist was, a quasi-public entity was set up to receive land from the County, then issued a bond to finance construction, and owns the facilities, which are then leased back to the County until the structure is fully depreciated.

Someone gets the depreciation tax credit,and someone gets the huge interest paid on the bonds. If bonds rates were readjusted to reflect markets during their existence, taxpayers would have saved millions. It is hard to say how much.

These details weren't discussed much, in public meetings; they received little news media examination. If you find out more maybe you could write another stimulating editorial about bond corruption, but with a more local perspective.

I really don't like to use "anonymous" here as my name, but ...