City Attorney Threatens Legal Action for “Frivolous” Appeal of Pension Bonds
Skippy Massey
Humboldt Sentinel
You’ll remember back in December the Eureka City Council, at the request of retiring City Manager David Tyson,
quickly approved a resolution allowing the city to issue pension
funding bonds.
The measure would thereby refund the California Public Employees’ Retirement System Public Safety funds that the City was paying into. According to a staff report, the action would save the City an estimated $1.4 million.
The City sought a court decision allow it to approve the issuance of $8.2 million in bonds without the standard two-thirds vote of the public.
City of Eureka Finance Director Paul Rodrigues stressed the bonds would pay off the City’s $7.8 million unfunded liability debt due to the state public employees’ retirement system, CalPERS.
“We think, as a city, that we have the potential to save $1 million to $1.4 million over the next 14 years,” Rodrigues told the Times-Standard. “We view that as a positive. We are not trying to pull the wool over anyone’s eyes.”
Rodrigues added that the unfunded liability is “very common” among member agencies. “There is some misperception that somehow the city has fallen behind on their pension obligations,” he said. “This is not the case at all. The city of Eureka has always met its pension obligations to CalPERS and never once fallen behind on its payments.”
Eureka resident Bill Holmes challenged the bond matter in April, believing the issue deserved a vote by its citizens. Mr. Holmes said at the time:
F
or my fellow Eurekans who treasure their right to vote:
The Constitution of the State of California has guaranteed since 1879 the voters the right to approve by 2/3 majority the sale of long term obligations (Bonds).
In the dark of election night last November, the Eureka City Council passed a resolution that in effect filed a lawsuit against “All Persons Interested.”
In effect every citizen of Eureka was sued, but more importantly the 14,000 voters of Eureka were sued to strip them of their right to vote on an $8.5 million bond issue – and ALL PENSION BOND ISSUES IN THE FUTURE.
We have (less than) one week to fix this.
Trial is next Monday, April 8th, and I have asked for a jury trial.
I am not a lawyer and the best defense I will be able to mount will be a few simple constitutional arguments– and hope that the jury rules in our favor.
If you want the details go to my blog: http://highboldtage.wordpress.com
This is a bizarre reverse class action lawsuit and I was the only one to answer it. Am I the only one in Eureka that cares about the right to vote? I don’t think so, but where are you?
I think the bonds are crappy junk bonds but the city has the right to issue crappy junk bonds – if the voters approve. That’s my issue.
Call the City Council and demand that they end this farce NOW! Demand that they WITHDRAW THE LAWSUIT AGAINST YOU AND PUT THE BOND ISSUE ON THE BALLOT.
Have a peaceful day,
Bill
Mr. Holmes went to court– and lost. He was ill-prepared, jurisprudentially speaking. He is appealing the decision.
Yesterday, the City of Eureka sent out an unusual press release to the Sentinel singling out Mr. Holmes for bringing the matter to court, adding that it is “considering its legal options against Mr. Holmes for the filing of the frivolous notice of appeal and opposition to the validation action.”
The City Attorney’s unsigned letter read:
“O
n November 21, 2012, the City of Eureka filed a validation action in the Superior Court of Humboldt County seeking a judgment validating that the City had properly authorized the use of pension refunding bonds for the purpose of refunding unfunded liabilities of the City to the California Public Employees Retirement System (CalPERS).
Issuance of the bonds, which was approved by the City Council on November 6, 2012, would be advantageous to the City due to current low interest rates, resulting in considerable interest savings to the taxpayers of the City of approximately 1.4 million.
On April 8, 2013, Judge Dale Reinholtsen of the Humboldt County Superior Court held a hearing on the City’s request for a judgment validating the issuance of the bonds. The only person opposing the validation was William Holmes, who failed to give any legal basis for his opposition and failed to file an opposition brief as required by law.
The Superior Court entered judgment in favor of the City that same day, first determining that the City had complied with all requirements for giving notice to the public of the action, and then validating that the City is authorized by law to issue the bonds. Judge Reinholtsen’s order stated that all proceedings by the City with respect to issuance of the bonds in question were “valid and binding.”
Mr. Holmes filed a notice of appeal of the judgment on May 7 in an attempt to prevent the City’s issuance of the bonds.
“We are disappointed to learn that Mr. Holmes has filed a frivolous notice of appeal which could delay bond issuance even though the appeal has no merit,” said Mayor Frank Jager. “The City has a rare opportunity to take advantage of very favorable market interest rates which the City may lose if issuance of the bonds is delayed.”
If the bond issuance is delayed the taxpayers stand to lose 1.4 million dollars.
The City will take prompt action to obtain dismissal of the appeal and is considering its legal options against Mr. Holmes for the filing of the frivolous notice of appeal and opposition to the validation action.”
Make of this what you will.
We have our own take of Eureka’s continual efforts towards gilding its finances and payroll to its own benefit.
You are already aware of the fact that the Eureka City Council has also been handing over money and staff time for a private railroad proposal, slipping a smooth $100 grand to the Eureka Chamber of Commerce every year, and paying oodles of dough defending and losing costly lawsuits. They still haven’t hired a new police chief after several years.
We were also none too pleased reading Grant Scott-Goforth’sTime-Standard article reporting that “Eureka paid $16 million in wages — the 10th highest total out of more than 100 cities with populations between 10,000 and 30,000,” too.
We hope the City can gets back to basics– like repairing the miserable condition of its streets– rather than looking after its own and leaning on the little guy standing up for his day in court.
