St. Lawrence and Entire Board Backdoors $25m Bond for the Ballpark—Jamieson OKs Process Hidden from the Public—Moody’s downgrades Bond Rating and Assigns Negative outlook to LDC Bonds

April 12, 2011 The last time the Ramapo Supervisor and his Board wanted to bond $16.5m for the ballpark, they posted a public notice in the Rockland County Times. They said in the notice that this loan was subject to "permissive referendum" (the public could be allowed to vote on it), and the matter was handled in public Town Board meetings—this was all done as a matter of required procedure, probably not out of any sense of fair play or open government. They got killed in that vote. More than 70% of the taxpayers told them absolutely no taxpayer dollars should be spent on the ballpark. Immediately afterwards, St. Lawrence publicly vowed, "I got the message. There will be no taxpayer dollars." But then the investors who were supposed fund this project never showed up. And you can’t blame them given the unbelievably shaky history of the Can-Am Baseball League (73% failure overall, 100% failure in New York State). Even banks refused to make the loans. So the race to get ready for the June opening ramps up to three shifts around the clock and at $30m and counting you’re running out of money. What can you do? SHUT THE LIGHTS OUT! You don’t publish any public notice this time. No Legal Notice in the paper, no visibility for the public. Then call a special meeting of the Town Board at four o’clock in the afternoon (that was Feb. 17). No one there to see and hear the vote—a 5 to 0 complete agreement on a new $25m bond for the ballpark: that’s St. Lawrence, Daniel Friedman, Fran Hunter, Pat Withers, and Itzy Ullman all colluding to keep these tens of millions borrowed for the ballpark hidden away from public sight. And yesterday, the IPREO Municipal Deal Calendar lists a $25m Revenue Bond (fully backed by the Town of Ramapo—the taxpayers, that is) offered by the Ramapo Local Development Corp. What began as monumental lie by the Supervisor promising that the will of the taxpayers would be honored and "The stadium will be built with private money. There will be no taxpayer dollars. I got the message." has developed into a wider, absolute betrayal of the residents of Ramapo by the town board and the lead town attorney Michael Klein.

Back in Court
Yesterday, once again before Supreme Court Justice Linda Jamieson, Jody Cross, the attorney for Preserve Ramapo and neighbors near the ballpark site, argued the following points concerning the $25million bond:

Michael Klein, lead attorney for the town’s legal department, said that there is no requirement to provide notice to the public about this kind of bond, and, consequently, no chance for a permissive referendum vote because he, and or his department, had found a legal workaround for their "visibility problem." Long term (ten-year bonds) require public notice, short term (five-year) bonds, like this one, do not require telling the public anything.

To do a second round of big-number, high-risk loans, backed by the public Klein et. al decided it was not a good idea to do what they did the first time. So this time it was, Tell them nothing.

It’s a clever legal strategy that takes advantage of a quirk in the law, but at the same time it enables a complete betrayal of the public trust by Klein. For those inclined to buy that old saw about a lawyer is just a hired gun, I would suggest that a lawyer who serves the public in his capacity as municipal attorney is bound by the same code of ethics binding all who work at the town. And further, what more fundamental political crime can there be in a democracy than to take from the citizens their right to vote? In what other profession does "he’s just a hired gun" excuse offenses against the public at large? Teaching, medicine, law enforcement? And one final question. Who’s hired gun is he? Who pays Klein’s salary? (That would be a little over $135K.) That’s right, the taxpayers pay his salary—he’s the hired gun for the very same group that he just screwed by finding a way to eliminate their right to vote.

As reported in the early coverage in The Journal News, Klein also objected to what Jody Cross said about the Moody’s analysis of this $25m bond. She said Moody’s painted a bleaker picture of town finances. In more detail, this is some of what the ratings agency actually wrote:

"Moody’s assigns Aa2 Rating and Negative outlook to Ramapo Local Development Corporations’s $25m Go-backed Bonds."

(Moody’s rates AAAs the highest rated, then Aa (Aa1, Aa2, Aa3): Moody judges obligations rated Aa to be high quality, with "very low credit risk",but "their susceptibility to long-term risks appears somewhat greater." Aa2 is the next to the bottom rating in this category.)

"Concurrently, Moody’s affirms the Aa2 rating and assigns a negative outlook to the town’s $102 million outstanding general obligation debt, which is secured by the town’s unlimited property tax pledge."

"The Aa2 rating reflects the underlying credit characteristics of the town conferred by the town’s absolute, irrevocable, and unconditional guarantee on the [baseball] bonds."

"The negative outlook reflects deterioration of the town’s financial flexibility resulting from recent draws on reserves and volatility in economically sensitive revenue streams which are expected to continue over the near term."

"Bond proceeds [$25m] will be used to finance a portion of the construction of a new minor league baseball stadium." [NOTE: It doesn’t say this money is for projects other than the "construction of the baseball stadium." This $25m added to the $30m already committed creates a documented $55 million-dollar-taxpayer-backed debt.] Those who expect that the RLDC will be paying back $5m plus interest on this bonding each year for the next five years needs to go the RLDC and FOIL all the books of account for the group. They have no financial standing to float this kind of loan and are entirely dependent on the town (taxpayers) backing.

You can read the complete Moody’s assessment here,

And you can read the Journal News coverage of the court appearance here.