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Watch out for a back door consolidation

by Stuart Posselt

The July 1 Board of Commissioners agenda included two items to be acted upon as emergency ordinances. Two were regarding bonds and their repayment from all eight water enterprise funds. There was no language in the 300-plus pages of supporting documents attached to the agenda items addressing the repayment by the individual benefiting enterprise funds.

The first appeared to re-issue the existing bonds to achieve lower interest rates in the current economic climate. Basically a good idea, but it pledged the revenues from all the enterprise funds to make the principle and interest (P&I) payments.

The second appears to issue an additional $5.67 million of bonds and also pledges the revenues from all the enterprise funds to make the P&I payments.

N.R.S. 350.578 requires an ordinance “… authorizing … securities to describe the purpose or purposes.” The second ordinance authorizing $5.67 million in bonds contains no such description in the supporting documents. What is the money for? Which enterprise systems will benefit? How will they pay for the bonds?

N.R.S. 350.579 addresses “Emergency ordinances.” Item 2 states “… an ordinance shall be conclusive in the absence of fraud or gross abuse of discretion.” In my several conversations with Comptroller Charlotte Springmeyer whose name is on the ordinances but who couldn’t answer any of my questions, Manager Michael Brown and Commission Chair Mike Olson, I have never been given the necessity the “emergency” adoption. I had to call the District Attorney’s office to get the NRS reference. Could this be gross abuse?

In a phone conversation with County Manager Michael Brown he told me the individual enterprise funds would be responsible for paying the P&I for the bonds benefiting the fund. However, should they default on such payments, all the enterprise funds would be liable followed by the County General fund i.e., consolidation.

Since the staff and commissioners sets the water rates for the enterprise funds, if they are not set high enough to make the payments, all the enterprise funds are liable which again equals consolidation.

There is no binding documentation other than a phone call requiring the individual fund’s rates to be set high enough to make the P&I payments nor accept the responsibility to pay any special assessments should the money be insufficient.

When I called Michael Olson he did not have any answers and said he would find out get back to me. I then received a call from Michael Brown who reported Mr. Olson requested he call me to answer my questions. Since Mr. Olson will be voting on these ordinances, should he not have the answers? Has he examined the 300 plus pages of supporting documents?

My opinion is that this is nothing more than a underhanded, back door consolidation of the water enterprise funds.

Stuart Posselt is a former candidate for Douglas County commission. He lives in northern Carson Valley.