More on "Risk Free" debt.

Earlier I posted about our City Manager's claim that the bonds issued to finance the City's share of a planned coal fired generator would be without risk to the taxpayers. Last night the City Commission voted to hire an underwriting firm to begin the process.

As to the risk attached to this $125,000,000.00 debt, our City Manager stated: "local taxpayers will not face any risk from the sale of the bonds. He said taxpayers would need to vote on any public-backed bond issue, and he said in this transaction the holders of the bonds would face the risk. He said the risks could be spread out somewhat if the city agreed at some point to mortgage its share of the plant or pledge city water sales to the plant if project underwriters felt that were necessary. In any case, he said, local taxpayers will not be on the hook."

Either this is poor reporting, or more doublespeak from our Manager. Please explain why, pray tell, the City would agree to "mortgage its share of the plant or pledge city water sales to the plant" if the City (and its taxpayers) are not otherwise liable for the obligations? Is it reasonable to expect that people will buy $125,000,000.00 worth of bonds payable by a shell company that owns 20% of its assets?

And one more thing. If, as I suspect, the City is ultimately going to be asked to guarantee these bonds, and if such guarantee requires a public vote, let's have the vote now, not 2 years down the road after the City has spent another umpteen thousands of dollars moving through the process. Because if we need the City to back the bonds, Mr. Lawton, and the taxpayers won't vote with you, every penny you spend from here on out will be wasted.

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