Whipped Cream Difficulties

And we have a couple of stories from the municipal beat.

Story #1: The last ballots cast in June’s election in the notoriously corrupt California town of Vernon have been counted…and Reno Bellamy has been declared the winner. Bellamy’s opponent, Luz Martinez, was endorsed by the Vernon Chamber of Commerce. Of course, the Chamber “has vowed to pursue further legal action”.

Story #2: A while back, the town of Moberly, Missouri, agreed to guarantee $39 million in bonds through 2025. The bonds were intended to help a Chinese company, Mamtek International, build a plant to manufacture sucralose in Moberly.

Guess what happened next? If you said, “I bet the project fell apart”, take two gold stars and advance to the next blue square.

The hook here is that Moberly is refusing to make payments on the bonds, basically claiming that they were “misled” by Mamtek. (Mamtek claimed they already had an operating sucralose plant in China; it turns out that plant never opened, and that Missouri state development officials were aware of this before the bonds were sold, but nobody told Moberly officials.)

In a related NYT story:

Surprised local taxpayers from Stockton, Calif., to Scranton, Pa., are finding themselves obligated for parking garages, hockey arenas and other enterprises that can no longer pay their debts.

This is particularly interesting:

Residents of Pennsylvania’s capital, Harrisburg, recently learned from a forensic audit that their city’s fiscal woes could be traced to a guarantee issued in 1998, for the bonds of a trash incinerator project. Every few years after that, the authority running the project issued more bonds, and the city guaranteed those as well.
The audit showed that the authority had been selling new bonds for the cash to pay its older bonds — saving unwitting residents from having to honor their guarantees for a time, but blowing up their debt from the incinerator to an impossible $310 million. That’s more than three times what residents owe on the city’s own bonds.

If you or I did this, they’d call it a Ponzi scheme, and we’d be going to Federal pound you in the ass prison.

This entry was posted on Tuesday, June 26th, 2012 at 7:51 am and is filed under California Über Alles, Clippings, Law, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.