Despite Referendum Threat, St. Louis MetroLink Sale to Go On

CHICAGO — A group of St. Louis-area residents yesterday launched a petition drive in an attempt to force a countywide public vote next August on a $150 million bond issue the Missouri-Illinois Bi-State Development Agency plans to sell later this month to cover cost overruns on its MetroLink light-rail expansion project.

“Members of our group believe that public officials have failed to represent the interests and concerns of taxpayers in regard to the MetroLink extension. We still don’t know all the details of why it is so far over budget,” local advertising professional Tom Sullivan, treasurer of the newly-formed Public Transit Accountability Project, wrote in a letter to bi-state board chairman Hugh Scott.

“Perhaps having to face the wrath of voters will cause Metro to be more accountable and responsive to the public it is supposed to serve,” he added.

Bi-State agency officials acknowledged that the petition drive was a disclosure issue but said it would not stall the sale, taking a position that county rules governing referendums do not apply to the ordinance approved Tuesday night by the St. Louis County Council.

Local bond lawyers were less confident and raised questions over whether bond counsel could sign off on the deal amid a looming referendum threat, regardless of the difficulties that the group faces in raising enough signatures to get the matter on the ballot.

“I have some real reservations over whether they could proceed while the referendum drive is playing out,” a prominent local bond attorney said.

The bi-state board and the City Council of St. Louis have already endorsed the measure and the deal is scheduled to price on Sept. 20. The date was pushed back a week after the county council delayed a final vote on the measure by a week late last month.

Banc of America Securities LLC is the underwriter on the variable-rate demand obligation securities with letter-of-credit backing from JP Morgan Chase Bank NA. Public Financial Management is financial adviser and Gilmore & Bell is the bond counsel. A Gilmore & Bell attorney declined to comment on whether the petition drive would impact the bond sale and said the firm was still reviewing various legal issues.

Revenue collected from a local sales tax is pledged to the repayment of the bonds, but that pledge is subordinate to the agency’s $414 million of outstanding debt for the $550 million MetroLink eight-mile expansion project. The bill for the project has since grown.

The securities are being structured in a short-term, floating-rate mode so that the agency can easily retire a portion of the debt with any proceeds of an award or settlement officials hope to receive in connection with pending litigation filed against the former companies that managed the project. Missouri state auditor Claire McCaskill has launched an audit of the agency as a result of the project’s troubles.

The coalition organizing the petition drive believes under the county’s charter that it has 15 days from the time the county ordinance is enacted, which occurs when it is signed by the county executive, to collect 500 valid signatures from registered voters.

If the group is successful, the action effectively postpones the ordinance from going into effect for 40 days during which the group must collect another 27,000 signatures which represents 5% of voters cast in the last governor’s election, to get the issue on the ballot next August.

The group believes that the county ordinance “does not meet the criteria for any ordinance that would be exempt” from referendum, said Sullivan, a perennial critic of the agency and a member of the group that last year unsuccessfully mounted a legal challenge to the county’s $40 million bond issue for a new baseball stadium for the St. Louis Cardinals.

Bi-state agency legal representatives believe the issue can proceed.

“The county charter generally allows referendums for ordinances, except ordinances that become effective immediately upon enactment” and ordinances relating to appropriations for the support of the county government and the payment of principal and interest on the county’s debts “are effective immediately upon enactment,” a statement read. “As such, the ordinance is not one that is subject to referendum under the County Charter.”

The ordinance amends the Memorandum of Agreement between the bi-state agency and St. Louis regarding the appropriation of the sales taxes for the project. The amendment allows the bi-state agency to receive additional sales taxes for the project and it allows the bi-state agency to issue obligations payable from an annual appropriation of the sales tax, a levy approved by voters in 1994.

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