SAN FRANCISCO - The Nevada Supreme Court will hear a case brought by opponents of the Las Vegas Redevelopment Agency who want to place a measure on the ballot that the city attorney has said could eviscerate the agency and its bondholders.
The opponents, led by the powerful Culinary Workers Union Local 226, gathered signatures for two ballot measures. One is a referendum to repeal the city's current redevelopment plan, and the other is a measure that would require voter approval of any new redevelopment plan, and also voter approval for all lease-purchase bond issues, such as the city plans to use to finance a new city hall.
Earlier this month, the City Council declined to place the measures on the ballot, agreeing with city attorney Bradford Jerbic's advice that they are unconstitutional. But the state's high court has agreed to hear the case next month.
Despite the ongoing legal dispute, plans continue for an $85 million Redevelopment Agency bond issue this week.
"We're getting a clean opinion from bond counsel that the bonds are valid and legally issued," Steve Heaney, managing director of underwriter Stone & Youngberg LLC, said yesterday. "The opinion we're getting from the city attorney is that the petition is unconstitutional and that's why they kept it off the ballot."
It's been a star-crossed issue: original plans for a $188 million sale were aborted the week of the Lehman Brothers bankruptcy in September.
"The plans are to try and price sometime this week," Heaney said. "We're still in discussions with both the agency and our sales desk in terms of what we think we've got out there. It's a pretty heavy week."
Jerbic, the city attorney, painted a very dire picture of the potential impact of the proposed ballot measures for the City Council earlier this month.
He said that repealing the most recent revision of Las Vegas' redevelopment plan, as one ballot measure proposes to do, would not simply revert the city to the previous plan.
"You don't go back to the old ordinance that gave you a redevelopment agency with a little less property that was on the books before 2006," the attorney said. "It goes away, period."
That would have dire consequences for the agency's outstanding debt, Jerbic said.
The City Council followed his advice to reject the ballot petitions as an unconstitutional impairment of contracts.
The Redevelopment Agency has $23.3 million in outstanding bonds and $50.8 million in tax increment notes, Jerbic said.
"To abolish the agency is to abolish the income stream, the tax increment that pays over $80 million in obligations," he told the council.
"To repeal the agency, as proposed by the referendum and petition, will absolutely impair - it'll end our ability to pay over $80 million in obligations, and therefore, is unconstitutional," he said.
Chris Bohner, research director at Culinary Local 226, and an individual plaintiff in the case, said Jerbic's arguments are overblown.
"We disagree with the city attorney," he said. "We are not abolishing the agency. The tax increment would still be available for existing bonds."
Bohner added that he did not think the strength of his side's case was disclosed in preliminary bond documents for this week's deal.
"Our opinion as bond counsel that the petition that deals with redevelopment could not be applied to any bonds that are outstanding if it is adopted," said bond counsel John Swendseid. In other words, he said, even if a referendum does go before voters in June, and it is approved, bonds issued before then remain valid. "The mere filing of a petition does not change the law," he said. "We continue to operate under the law as it is."
The Supreme Court, in accepting the case, agreed that an expedited review is in order because of imminent election deadlines. The ballot measures would be on the city's June 2 ballot, with absentee ballots going out weeks earlier.
Oral arguments are set for April 6.