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A change in the way the city borrows, or are residents getting the short end of the stick?

Tuesday, May 06, 2008
Time: 11:57 AM

First, let me apologize for not going over the budget in detail. I'm in the middle of a rather large project and I didn't have time to post every video of the budget ad-hoc committee meetings and point out numerous problems with the budget that's going to hit us all in the pocketbook BIGTIME.

But I have just enough time to go into one subject that's really driving me nuts...the NEW way Mayor Boughton is proposing bonds to the city.

Now, this is going to be a bit of a learning experience for some as it will involve knowing a bit about the city charter (which is considered to be the constitution of the city) as well as the history of the bonding council and corporation council.

Okay, here we go.

This is section 7-10a of the city charter (which was modified in 1991). Pay particular attention to the portion in BOLD.
Section 7-10 BORROWING.

a. The Common Council shall have power to authorize indebtedness by issuing bonds or notes as provided by the General Statutes subject to the limitations thereof and the provisions of this Section. The issuance of bonds and notes shall be authorized by ordinance adopted by the Common Council with the affirmative vote of at least two-thirds ( 2/3) of the entire membership of the Council. No bond shall be issued for a term longer than the estimated life of the improvement for which they are issued and in no event for a term longer than twenty years. Whenever the Common Council votes to issue bonds or notes in a principal amount in excess of $500,000.00, the ordinance authorizing such issues shall be submitted for approval or disapproval of the electors at the next municipal election or at a special City meeting called by the Mayor and warned for the specific purpose of voting on the question of such issue on the voting machines in the several voting districts.

In other words, whenever the Common Council votes to issue BONDS or NOTES in a PRINCIPAL AMOUNT in excess of 500,000 dollars, the matter goes to the people for an up or down vote.

According to Mayor Gene Eriquez's when he was mayor (1989-2001), in the 90s, Corporation Council and Robinson and Cole (bond council) offered an legal opinion that mirrors what the charter states. Basically, when you hit the 500,000 PRINCIPAL AMOUNT mark in bonds, you HAVE to go to the voters for approval (this is commonly known as a referendum). This means that Once your bonds goes over the 500,000 PRINCIPAL AMOUNT limit (regardless if it's one or several bonds), you go to the voters for approval.

Put it like this, if Eriquez issued 11 50,000 bonds at once in a fiscal year, the principal amount would be 11 x 50,000 dollars or 555,000 dollars and would trigger a referendum.

Now, the city charter hasn't changed since 1991, the bond council hasn't changed since 1991 (Robinson and Cole) and Corporation Council hasn't changed YET in March of '08 SOMEHOW the legal opinion of Robinson and Cole (bond council that makes a LOT of money from the city) changed and somehow Boughton is able to do something that NO OTHER MAYOR PRIOR TO HIS ADMINISTRATION has ever done before.

NOW, as long as you keep your bond project under the 500,000 limit, you NEVER need to get the people's opinion...NEVER. Basically, the whole idea of a referendum is now thrown out the window as long as you can keep your capital improvement bond projects under 500,000. Under this scenario, unlike previous mayors, and using the model I used for Eriquez, Boughton CAN issued 11 50,000 bonds in a fiscal year, where the principal amount would be 11 x 50,000 dollars or 555,000 dollars and there would be no need for a referendum.

Well, scratch that 555,000 example out of your mind, because Boughton is now presenting 5 bonds at once that are totaling 2.5 MILLION dollars without the people of Danbury having their say.
The mayor's proposed 2008-09 spending plan features a major shift in the city's borrowing policy.

Traditionally, when city officials wanted to borrow more than $500,000 in a year, the issue was put out to voters for approval.

However, the mayor's budget calls for borrowing about $2.5 million for five projects, each one costing roughly $500,000.

Those projects are separate and do not require voter approval, a fact that has rankled some residents.
Rankled is an understatement. As I stated before, I would have talked about this earlier but I'm so busy in a project that I don't have the time to give this topic proper justice but other residents are picking up the slack and sounding the alarm bells.
"That is not how our local government has been run for the last 35 years," said Lynn Waller, a Danbury resident and host of a cable access show focusing on city issues.
Boughton's answer to Waller's concerns...
"It is a major policy shift. There is no doubt about it," Mayor Mark Boughton said.

In other words, Boughton knows what he's doing is going against something that has NEVER been done before in the history of the city.

Now let me state AGAIN:
• The current Corporation Council is the SAME council under Eriquez's watch.

• The bond council (Robinson and Cole) is the SAME council as during Eriquez's watch that stated to him (in a written legal opinion in the 90s) that he (Eriquez) can not do what Boughton is currently proposing to do in terms of issuing individual where the principal amount exceeds 500,000 without going to the people for approval.

• The city charter section 7-10a that pertains to bonding (and CLEARLY states the legal opinion that Robinson and Cole offered in 93 to Eriquez) has NOT changed.

My question is simple. How can a bond council state one thing in '93 (which was BASED on a long standing interpretation of the charter that dated back to prior mayors of decades past) and issue something completely different in near the end of March 2008 days before the presentation of the current budget?

Think I'm kidding? Well, listen to former Mayor Gene Eriquez explain to himself. Last week, the former mayor made an appearance on the local access show Ideas at Work and Beyond and answered questions on this VERY subject.
(NOTE: Eriquez misspoke when he stated the section of the charter, he meant to say 7-10 and not 17-10).



In short, something is wrong here and with drastic increase in property taxes, it seems like the people of Danbury are once again getting the short end of the stick.

Again, I'm so sorry that I don't have the time right now to go into further detail right now but this subject is something to consider and keep in the back of your mind when this budget comes up for debate tonight.


UPDATE:


Well thats interesting. It appears that those questionable bonds are not coming up for a vote tonight. This although there was a public hearing completed on the matter.


I've received several emails from readers wanting to know where they can see the full interview where former mayor Gene Eriquez gave his opinions on the budget. You can watch the show in it's entirety over at the Ideas at Work and Beyond website.


UPDATE: Post has been updated to correct references to dates.

posted by ctblogger at 11:57 AM | Permalink|

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