Bankruptcy, debt reduction and reorganization is one of the many issues that will be a priority during my term of office.
There are many ways to settle these issues Here are a few.
The current problems facing the district are intertwined between the Administrative Civil Liability fines (6.5 million) issued by the Regional Water Quality Control Board, the appeal of that enforcement, (6.5 million) in the default of the State Revolving Fund for the defunct mid town Waste Water Project, contractor claims of (tens of millions of dollars) and various lawsuits and appeals concerning public waste and the issuing of Cease and Desist Orders by the RWQCB to a few individuals in the Prohibition Zone.
Most of these issues are being addressed through Chapter 9 Bankruptcy Protection filed by the District in August of 2006 in federal court. This will involve rulings by the state Office of Administrative Hearings as to the amount of each claim against the District which is usually handled through arbitration. One such ruling has already taken place lowering a claim of $7 million to $1.3 million. That's still a large chunk of change and the final ruling as to how much of that debt should be paid and the structuring of that payment has yet to be determined.
As the District goes through the process of debt determination and the restructuring its debt other issues may be resolved prior to any determination. One is the ACL fine issued by the RWQCB. 2701 is legislation enacted by the State which stripped the LOCSD of it's Waste Water Project authority and gave the County the choice to take the project or not. If the County chooses to take the project then it is possible that the RWQCB may choose to rescind some or all of the $6.6 million in fines. It can be argued, for lack of a better term, that the fines are meant to compel compliance therefore if the District no longer has Waste Water authority they cannot be compelled to comply because the County would have the project. A lesser fine for example, for the violation of the Time Schedule Order of $60,000, would be more appropriate since the RWQCB had been deferring enforcement actions against both the County and the District for many reasons out of the control of the County and the District for several years prior to the project being stopped by the new board. Remember this is only a suggested settlement and the reasons for and the amount of a settlement could very.
The SRF debt of $6,5 million is another issue that could be settled sooner then later. My first thought on this issue is that like so many lending institutions of the resent past the State in issuing this loan did not show good judgment knowing the intent of a future board that the project would be stopped and the loan would be in default. Where's $700 billion when you need it. But knowing that argument is only one aspect of the issue. Another point in this issue is that the our community has been declared by the State, under the definition of small communities, disadvantaged as far as the Waste Water Project is concern. I believe it would be contradictory of the state to give us that status and then demand $6.5 million and interest be paid back in full. That debt could be lowered or forgiven out right. Again just a suggested settlement.
More to come!
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