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The city council is being asked Tuesday to approve the refunding of $185 million of lease revenue bonds, including the 1996 Qualcomm Stadium bonds. (The facility was then named Jack Murphy Stadium.) The outstanding principal on those bonds is $54.7 million. They mature in 2027. Should the Chargers depart, they would have to pay some of that sum -- at least, as things stand now. This refunding proposal is extremely dubious. First, it bundles three bond offerings together: the 1996 certificates of participation for Balboa and Mission Bay Parks improvements, and the 2009 lease revenue bonds for various improvements are lumped with the stadium bonds. "Why the bundling?" asks Councilmember Donna Frye. Also, the original stadium bonds were taxable. Now the city claims that "tax counsel" has ruled that they can be refinanced as tax-exempt at a lower interest rate. "Who is that tax counsel?" asks Frye. The document doesn't say.

The thin document that the council is asked to approve has this line: "The leased properties are different from the assets that were financed with the original bonds." Those assets substituted for the stadium include the police headquarters and the Scripps Ranch Library. The document states that the stadium "would be released free and clear from the existing financing encumbrances" upon issuance of the 2010 bond. Former City Attorney Mike Aguirre issued a legal opinion saying a transaction like this is clearly a violation of the debt limit law because the assets that are securing the borrowing were not improved by the borrowed funds, and he says that outside counsel cannot be relied upon to rule on this matter because it makes money if the deal goes through. Essentially, with this maneuver, the city is borrowing against the general fund, says Aguirre, but the city claims that no vote is necessary in this case, although its documents states that the general fund is ultimately responsible for these bonds. "The idea of clearing the debt for Qualcomm is an obvious step in the direction of building a new stadium for the Chargers, and is another reason why there should be a vote of the public," says Aguirre.

Says Frye, "One issue is whether or not this refunding, which would release the stadium as collateral and in its place substitute other city properties -- what effect does that have, if any on the repayment schedule with the Chargers."

Former Councilmember Bruce Henderson observes, "There is no transparency. This document is almost as opaque as it gets. There could be a spectacular problem that is being papered over." Henderson suggests that through this maneuver, the National Football League could get off the hook on a public relations problem. Should the Chargers leave, the city would have to pay off part of the stadium bonds, and that could be a black eye for the league. "So the NFL would like those bonds to go away."

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Comments

SurfPuppy619 March 7, 2010 @ 5:15 p.m.

I was going to ask who the heck came up with this fraudulent quagmire of a scam, and once I saw the goal was to remove the mortgages/lease revenue bonds off of Jack Murphy it became obvious-the Spanos Crime Family and KFC Sanders.

Negotiated behind closed doors to keep out the sunlight disinfectant that would kill this fraud if it were discussed in public.

Sanders is a fraud and I for one cannot WAIT until he is out of office. He is a professional scam artists, working HIS scams on behalf of Spanos and the others like him.

I would NOT be surprised at all if Spanos is giving kickbacks to Sanders-either under the table or though his campaign.

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Don Bauder March 7, 2010 @ 6:38 p.m.

Response to post #1: This refinancing package is redolent of a scam that will benefit the Chargers. Donna Frye will ask tough questions Tuesday. But will anybody else on the council? Possibly DeMaio, but while he rides herd on scams benefitting organized labor, he tends to let the establishment off the hook. So, Carl, show that you're interested in thwarting scams, no matter who benefits. This deal absolutely smells to high heaven and is probably blatantly illegal. Best, Don Bauder

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PistolPete March 7, 2010 @ 7:41 p.m.

I've said it before and I'll repeat it like a mantra... Sandy Eggans deserve EVERYTHING they get!

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Don Bauder March 8, 2010 @ 7:22 a.m.

Response to post #3: You are so correct. If San Diegans keep electing politicians who know they can get away with stealing money in broad daylight, the city will continue to plunge toward the bankruptcy court. This bond offering is an outrage. It is a move to bail out the pension system and the Chargers at the same time, and hope the public will never be the wiser. Best, Don Bauder

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Don Bauder March 8, 2010 @ 11:15 a.m.

Response to post #5: That should prove helpful, Katheryn. Best, Don Bauder

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JustWondering March 8, 2010 @ 6:22 p.m.

The obvious question: Does this planned refunding of "Stadium Bonds" alter the Chargers' obligation to pay off the debt if they choose to relocate the team to another city?

If the answer is yes, then any Councilmember who votes for this plan has been corrupted by process.

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laplayaheritage March 8, 2010 @ 8:09 p.m.

The inclusion of the “1996A Stadium Bonds” for the “Qualcomm Stadium structure, site, and certain surrounding property” was to release the underlying land “from existing financing encumbrances.”

Getting rid of the debt that is tied to the Qualcomm Stadium, may be so the 84-acres of developable land of the 166-acre publically owned site can be sold or leased to San Diego State University (SDSU).

If our public land is sold, according to the City Charter the taxpayers get to vote on the sale.

If our public land is leased, the money could be used as a yearly source of income.

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Don Bauder March 8, 2010 @ 9:18 p.m.

Response to post #7: The devil may be in the details. There are also plans afoot that the public doesn't know about, in all probability. This just may be one step in a nefarious scheme. Best, Don Bauder

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Don Bauder March 8, 2010 @ 9:24 p.m.

Response to post #8: If the encumbrances are being erased to sell or lease the land to SDSU, then the obvious question is this: what about the Chargers? Does the city government feel that the preposterous downtown stadium subsidy deal is a sure bet? Or does the government think the team's departure to L.A. is a certainty? It could be neither of these. But the council -- and that probably means only Donna Frye -- has to get to the bottom of this. There is so much muck on the surface to shovel away first. Best, Don Bauder

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a2zresource March 9, 2010 @ 8:53 a.m.

According to page nine from the above link to this morning's (3/9/10) agenda item, there has been no community participation and public outreach relating to the voter-blind bond item.

Question: Why was not any community participation or public outreach attempted? Any council members care to comment?

The first-named firm for "Business entities involved in this transaction" on page ten is J.P. Morgan Securities. J. P. Morgan is the firm that is buying up the dismantled leftovers from the RBS Sempra Commodities LLC wind-down from the Royal Bank of Scotland side of the LLC's balance sheet.

Question: Is this the only connection in the bond deal that has something to do with any part or partnership of Sempra Energy?

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Don Bauder March 9, 2010 @ 1:39 p.m.

Response to post #11: Why wasn't the community told about this? Come now. You know. This is San Diego. Does the public ever find out when there is mischief afoot? Best, Don Bauder

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a2zresource March 9, 2010 @ 3:48 p.m.

RE #11

I was merely making the bemused point that it was actually put in print about nobody telling the community about this...

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Don Bauder March 9, 2010 @ 4:06 p.m.

NOTE: I am told that the bonds were given the nod by the council today (Tues. March 9). Donna Frye asked many questions. So did Carl DeMaio. In the end, Donna was the only one to vote against it. Some muni bond expert said it was legal for taxable bonds to be refinanced at a tax exempt rate. Also, if you can believe what the administration says, the lifting of the encumbrances from the stadium won't affect the Chargers situation, the council was told. Best, Don Bauder

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SurfPuppy619 March 9, 2010 @ 9:54 p.m.

NOTE: I am told that the bonds were given the nod by the council today (Tues. March 9). Donna Frye asked many questions. So did Carl DeMaio. In the end, Donna was the only one to vote against it. Some muni bond expert said it was legal for taxable bonds to be refinanced at a tax exempt rate.

The bottom line is this was done for a reason. It was done behind closed doors without public input for a reason. Why?? There is only one logical answer-scams and fraud.

Based on the closed door dealing it is obvious (to me anyway) KFC Sanders is doing this to try to work a Chargers stadium deal on the Jack Murphy site- most likely to try to GIVE away the land (as in free) to the Chargers so they can build on it. Corporate welfare plain and simple.

We need Sanders out of office NOW. The citizens of San Diego simply cannot afford anymore crooked Golding/McGrory/Sanders backroom giveaways.

We are broke, $3-$5 billion in the red, technically bankrupt-and you have these clowns STILL trying to give away the farm. Boogles the mind.

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Don Bauder March 9, 2010 @ 10:55 p.m.

Response to post #13: I know. I wasn't criticizing you. Just being sarcastic. Best, Don Bauder

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Don Bauder March 9, 2010 @ 10:57 p.m.

Response to post #15: Agreed. There is a scam behind this. I am not exactly sure what it is. I would bet it is Chargers-related. The bond by its very nature is a piece of deceit. Best, Don Bauder

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MURPHYJUNK March 11, 2010 @ 8:51 a.m.

response to #9

right on Don, with the city scum bags running things the term

" nefarious scheme" would cover most of what they are up to. ( and not just this instance)

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Don Bauder March 11, 2010 @ 10:33 a.m.

Response to post #18: One way or another, I would like to get to the bottom of this. To paraphrase another axiom, where there is a foul odor, something is rotten. Best, Don Bauder

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Psycholizard March 13, 2010 @ 10:54 a.m.

We know the Chargers have designs on the stadium property, they published one. Fortunately after examining this plan, the public laughed them all the way to Oceanside. While pitching plans all across the county their mouthpiece kept saying that the city should pay them for the chance to demolish the stadium we built for them, because of the big money the city could get for developing the site.

The Chargers can't make real money on the stadium downtown, the facility can't be superior in this inferior location, but they could make money developing the site of the present stadium. Perhaps we can't follow the cards in this game of three card monte, but we know what the result will be if we don't leave the game. The stadium land will be sold, and our children will learn where to find crack and prostitutes on the way to Jerry Sanders Stadium.

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Don Bauder March 13, 2010 @ 1:08 p.m.

Response to post #20: That could well be what is going on. I will have more on this. Best, Don Bauder

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Psycholizard March 16, 2010 @ 11:22 a.m.

The Balboa Park nine hole golf course is flat, valuable, and easily developable. The plan might be to send the buses there. To organize opposition, we must keep careful track of this three card monte three way land swap. The buses will annoy some, the five thousand units at the present Stadium will concern others, and tailgaters might not want to share their food with the homeless at the proposed new stadium site. Many will oppose these moves.

The developed value of this land is well into ten figures. But many regard these parcels as priceless heirlooms for our children, that should be protected from thieves who wish to sell them.

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Don Bauder March 19, 2010 @ 1:21 p.m.

Response to post #22: There should be a lot of people opposed to this outrageous Chargers deal. (The proponents say it is just being studied, but don't be fooled; the establishment plans to go ahead with it.) The trouble is, after the smearing of Aguirre, and the smearing of Frye and the stealing of the mayoral election from her, people are afraid to come out and oppose establishment theft. Anybody who does will likely be blackballed from San Diego jobs, as well as smeared in the mainstream media. Best, Don Bauder

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Psycholizard March 21, 2010 @ 11:08 p.m.

Smeared? How do I get smeared? If the mainstream media would simply report that my rock band ruins the morals of teenagers, my music might go somewhere. Unfortunately, the morals of teenagers were already ruined, so it would have to be a smear.

As for the Stadium proposal, perhaps the pirates are fighting over the spoils now, and thats why there seems to be a pause. With so much greed, it must be difficult to satisfy everyone. This is only a few billion after all.

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Don Bauder March 23, 2010 @ 4:03 p.m.

Response to post #24: Go to blogofsandiego.com. Pat Flannery has excellent analyses of these bonds. Pat is right on the money. Best, Don Bauder

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Psycholizard March 25, 2010 @ 1:40 a.m.

Thanks for the link. His numbers are slightly different than those on the city document. The city only estimates a 5.71% new interest rate, elsewhere in the document, they admit the rate could be over 7%, and that the supposed savings might not exist for the Mission Bay properties.

Normally I would say 7% or 5.7% was too high for tax free municipal bonds. but knowing our city, I'm surprised speculators would make such a risky play. Perhaps they intend to go short later.

Pat Flannery entertains as well as informs, I liked "bondoggle" especially.

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Don Bauder March 25, 2010 @ 1:48 p.m.

Response to post #26: Pat Flannery has a great blog that San Diegans should follow. His latest one accuses two city financial officials of flat-out lying on these bonds. Best, Don Bauder

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Psycholizard March 27, 2010 @ 1:26 a.m.

from Bloomberg 11 9 9

"JPMorgan won the county’s business by making millions in undisclosed payments to close friends of county commissioners, the county said. LeCroy, the banker who pitched the refinancing to Jefferson County, and MacFaddin, the former head of the New York-based bank’s municipal derivatives desk, didn’t settle with the SEC. Their lawyers said they acted properly.

JPMorgan paid Blount, the former chairman of the Alabama Democratic Party, almost $3 million.".

JPMorgan, the underwriter on the city's proposed bonds, is under investigation for bid rigging and bribery in municipal bonds, across the country and the world.

That might explain the high interest rates, and the high fives. This gives a new meaning to "fixed" interest rates.

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Don Bauder March 28, 2010 @ 6:29 p.m.

Response to post #28: In the first settlement, JP Morgan paid $25 million to the SEC and $75 million to Jefferson County and forfeited $647 million it had racked up in the deal. Chicken feed. There should have been a criminal case. This was bribery. I suppose there could still be criminal charges. Best, Don Bauder

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Psycholizard March 29, 2010 @ 12:16 a.m.

The feds appear to be tailoring orange jumpsuits for some JP Morgan executives. Check out http://www.bloomberg.com/apps/news?pid=20601087&sid=anW3hAG0Zw5k .

I hope Uncle Sam will wire tap our local "experts" who recommended JP Morgan for this bond offering. I'm no expert, but this bond process, which chose multiple banks without agreeing on price, seems strange and suspect, and the proposed gain, even if as stated and not illegal, seems marginal.

The more I look at this deal, the worse it seems.

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