Judge: Anaheim Can Sell Bonds for Convention Center

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LOS ANGELES — A ruling by a Superior Court judge in Orange County, Calif., has cleared the way for the Anaheim City Council to sell $300 million in bonds for a convention center expansion.

Underwriter Citi terminated the original $265 million bond deal, which had already priced, after an activist organization filed a lawsuit May 12 seeking to invalidate the bonds.

The bonds, priced by Citi for the Anaheim Public Financing Authority March 25 to finance a convention center expansion, had been slated to close May 14, according to the official statement.

Attorney Cory Briggs, who filed the lawsuit on behalf of the Coalition of Anaheim Taxpayers for Economic Responsibility, said he plans to appeal Friday's ruling.

"We were assigned to a new judge on the day of the trial, so nobody expected him to be able to get up to speed on all the complexities of this body of law and the twists and turns of the city's financing racket," Briggs said. " He did the best he could with very limited prep time. We expect a different result in the Court of Appeal, which is where we will go next."
The deal had consisted of $258 million of tax-exempt bonds, as well as $7 million of taxable bonds maturing in 2015 and 2016. The proceeds were to refund 1992, 1993, 2002A and 2010 lease revenue bonds and provide $200 million to finance a convention center expansion.

"I am thankful that the court recognized the need to expeditiously review this matter and confirmed what the city and most people knew all along:  That this case, brought by outside special interests and a handful of community members, was entirely frivolous and of great harm to the city's economic prosperity," Anaheim City Attorney Michael Houston said in a prepared statement.

Houston said the lawsuit has likely cost the city tens of millions of dollars in increased construction and financing costs.

In 2010, the City Council passed a resolution establishing the Anaheim Tourism Improvement District (ATID) to promote local tourism and convention-related programs. Hoteliers in the Anaheim resort district agreed to self-assess 2% in hotel bed taxes within the ATID boundaries for projects in the Anaheim resort district. The creation of the ATID also designated $6 million from the general fund to pay for the Anaheim Convention Center's 200,000-square-foot expansion project. City officials estimated that if bed tax revenues grow 3%, they will bring in $450 million in revenues, more than the amount needed to repay the bonds.

Briggs argued that the hotel bed tax should have been put to all voters, not just hoteliers.

Unlike Anaheim, San Diego received an adverse ruling in a very similar case. On Aug. 4, a San Diego judge ruled against the city in a validation lawsuit seeking the judge's opinion on the legality of assessing hotel bed tax increases based on a vote solely from hoteliers, rather than the entire electorate.

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