Wednesday, February 06, 2019
TKC TOLD YOU SO!!! QUESTIONS OVER $90-MILLION SWINDLE FOR KANSAS CITY NEW AIRPORT GROW LOUDER!!!
A broken promise over airport funds earns added concern from a government watchdog group.
The Citizens For Responsible Government recently published this note:
"There is serious concern whether this is a legal move or borderline bond fraud. It it turns out to be bond fraud, any councilperson supporting these ordinances should be held accountable."
While this move may or may not be legal, it's definitely a departure from what voters were sold when the new airport "that wouldn't cost taxpayers a dime" was initially pitched.
Here's the word for today . . .
$90M: Unlawful Use of City Bond Authority
Kansas City, Missouri is funding massive construction projects by issuing special obligation bonds (SOBs). This has become a disturbing way of circumventing voter approval.
As you are undoubtedly aware, issuance of municipal bonds generally requires voter approval. SOBs are typically an emergency exception to the need for voter approval. Circumstances may arise in which the city needs to raise cash quickly to remedy a significant threat to public health and safety, making impractical the time required for voter consent. For example, unexpected failure of vital city infrastructure might require expedited bond issuance in the form of SOBs. It’s clear, however, that bonds of this type are properly intended for exigent circumstances, not to create a pattern of circumventing voter approval. Yet just such a pattern has developed in KCMO in recent years.
One example is the city’s recent streetcar project, costing over 70 million dollars. This project was funded with special obligation bonds. This project was/is politically contentious, raising significant questions about the extent of voter support across the city. By issuing SOBs the city effectively rendered moot voter debate. With construction funds in hand, the project proceeded to construction, regardless of debate about the project’s merits.
Now we have the city calling for issuance of up to two billion dollars in SOBs to build a new airport. This may be the single largest bond indebtedness in city history; a massive increase in public debt by any measure. The proposed ordinance to authorize sale of these bonds can be seen on the city clerk's website.
(ACTUALLY, THERE IS A SECOND ORDINANCE FOR ANOTHER $2BILLION. CHECK OUT 190027 for $2Billion in a Senior Appropriation Obligation. This is a total ask of $4Billion)
Question: Where are the exigent circumstances in either the streetcar or airport projects? There certainly is no emergency at KCI, yet the airport is proposing to incur massive public debt without a public vote. How can this be justified?
Then there is the financial risk that voters are being forced to accept without a vote. The airport claims that taxpayers are at no risk of paying for the estimated $115 million dollar per year bond payments over the next 30 to 35 years. This assertion is based on the airport’s claim that airport revenue and airline lease and user agreements will cover the bond debt service. There definitely are, however, possible circumstances that could render this claim inaccurate, ultimately exposing taxpayers. The point isn’t whether the airport’s optimistic scenario is valid. Rather, the point is whether voters will have a chance to evaluate whether they want to accept the financial risks of proceeding with a project involving immense public debt.
Unfortunately, we’re seeing a pattern in KCMO where city officials are increasingly side-stepping public accountability by moving to directly fund projects they favor with SOBs. This is a practice that should be stopped.
The city is proposing to sell SOBs as soon as possible. In fact, news media report that the airport may already have committed 90 million dollars of SOB’s to airport construction contractors through the Industrial Development Authority, itself a shadowy entity.
Is this lawful? As of this date, nothing on the city’s legislative docket shows that the ordinance authorizing the SOBs has been passed. How can the airport spend money connected to this ordinance before it has even been voted on by the City Council? To folks looking on, all of this gives the distinct impression of an airport and city playing fast and loose with enormous piles of public money."