Dunning Reminder: Ogden to Consider Reissuing Up to $32 Million in Bonds Tonite

The Std-Ex reports on another Boss Godfrey plan to put Ogden in hock up to its eyeballs

For those who may have neglected to put the matter on their calenders, we'll issue another dunning reminder of tonight's RDA and City Council sessions, wherein the Council will consider the re-issance of up to $32 million in Junction Project bonds. Although we posted an earlier article on this subject, we were at the time at a complete loss to explain the meaning of this cryptic item, which was included (in varying form) in both the RDA and Council agendas:

9. Reports from the Administration:
a. Tax Increment Revenue Refunding Bond. Proposed Resolution 2009-4 authorizing the issuance and sale of not more than $32,000,000 aggregate principal amount of its taxable revenue refunding bonds; and related matters. (Adopt/not adopt resolution – roll call vote)

Fortunately, Ace Reporter Schwebke is johnny-on-the spot this morning with a pretty decent full report:

• Ogden to consider reissuing up to $32 million in bonds

And yes indeed, our speculation in our earlier article was correct, assuming Mr. Schwebke got the facts straight. Indeed, tonight's agenda item is all about the Bank of New York's revocation of the Junction bonding letter of credit, AND Boss Godfrey's proposed tax increment bailout as well.

And here's the kicker. The substitution of Wells Fargo Bank (WFB) as the new Junction letter of credit bond guarantor will cost the taxpayers at least an additional cool $1 million:

Wells Fargo plans to provide a new letter of credit to the RDA on the reissued bonds that will not exceed $32 million.
That includes about $1 million in bond issuance costs resulting in an additional $80,000 in debt service annually for The Junction through 2030, said Mike Goodwin, the city’s treasurer.

And here's another interesting factor. WFB apparently wants to substitute as collateral utility franchise tax proceeds in place of BDO lease revenue income:

The bonds would be secured by lease revenue from the Salomon Center, tax increment funds and utility franchise tax proceeds. Lease revenue from Business Depot Ogden would no longer be used as collateral for the bonds.

Sounds like a situation made to order for our big spending mayor, as he courts that new hotel franchise which he's been pining for, over so many years. With that BDO revenue freed up, there'll be plenty of dough to generously "incentivize" a prospective new hotelier, or any Godfrey crony who might come up with another ambitious development scheme.

And one reliable source informs us that if this new bonding scheme is adopted by the RDA and Council, the principal balance of the Junction loans will jump to an amount in excess of the price of the original bonding. So if our source is correct, after four years of paying the existing bonds down, Emerald City will be in even deeper hock than we were in 2005.

Hopefully the RDA/Council will table this matter tonight, and seek outside legal and accounting advice. If there was ever a time when the council shouldn't take Godfrey's word for something... it's now.

And we're also scratching our heads wondering how the Bank of New York can lawfully pull the plug on the existing letter of credit. Letters of credit are usually irrevocable. Irrevocability is the whole point of having letters of credit, in fact. What good is a letter of credit if it can be voluntarily revoked at any given moment? In this connection, that's one more reason the council should not jump into this. Time to for the council to confer with independent legal council, we believe. The whole story smells mighty fishy to us.

The question also arises: What's the downside (if any) if our RDA/Council simply refuses to go along with this sudden "emergency" re-fi?

That's it for now. Hopefully one of our readers will show up for tonight's neetings and come back with a report.

Lots to talk about here in advance of tonight's meetings. So what say our gentle readers about all this?

Update 8/18/09 8:18 p.m. MT: For what its worth, here's a link to Scott Schewbke's Twitter tweets. Significantly, according to Mr. Schwebke, it appears that the council has decided to table the matter, and reset it for public hearing three weeks hence:

Council formally sets public hearing for Junction bond reissuance to Sept 8.

Great interim result, we think. This will give the council ample time to carefully examine the issue, and to determine independently who's telling the truth... and who's not.