Law and legal issues

SAN FRANCISCO — Vallejo, Calif.’s bankruptcy ordeal has served as a harsh, precedent-setting example that will keep other cities from filing despite rising fiscal pressures, officials said Friday.

Arkansas’ chief lawyer last week said the proposed constitutional amendment that would raise the interest rate limit on public debt is titled correctly and adheres to statutory provisions.

The Santa Rosa Bay Bridge Authority board will work with bondholders to establish a creditors' committee in hopes of restructuring $115 million of debt for a toll bridge in northwest Florida that is headed for default next year.

DETROIT — Independent financial ­advisers meeting here Thursday questioned the Securities and Exchange Commission’s Martha Mahan Haines about which advisers must register with the SEC under the new regulatory reform law, while Haines announced that the agency will hold its next field hearing on munis in Chicago on Nov. 16.

Former New York Comptroller Alan Hevesi pleaded guilty to a felony on Thursday in a pay-to-play kickback scheme. Hevesi admitted to accepting nearly $1 million in benefits in exchange for approving $250 million of pension fund investments.

The Harrisburg Authority is unable to end three derivatives with Royal Bank of Canada and use those termination funds to help meet a Dec. 1 payment to bondholders of its incinerator debt, according to board member William Cluck.

Westchester County Executive Robert Astorino wants to join a lawsuit challenging the legality of a tax enacted last year to help fund mass transit capital projects in the New York City area, he announced Wednesday.

WASHINGTON — The Governmental Accounting Standards Board is set to kick off a series of public hearings next week on its preliminary draft pension-fund accounting and financial reporting standards that are designed to boost the disclosure of public pension liabilities but are proving to be controversial.

WASHINGTON — Municipal market participants should not expect the Treasury Department to simply rubber-stamp the existing tax-exempt bond rules for issue price when it comes to Build America Bonds, a Treasury official told bond lawyers at a recent meeting.

SAN FRANCISCO — Industry experts echoed concerns Wednesday about regulatory changes in the municipal bond industry and the possible impact the changes may have in the coming weeks and months.

Despite recent warnings from some financial experts that the ongoing financial troubles of state and local governments will lead to municipal bond defaults, state credits remain much more stable than corporate credits, Moody’s Investors Service said Wednesday.

CHICAGO — Indiana auditors warned that the long-struggling city of Gary could face insolvency as it tries to overcome massive drops in property tax revenue tied to the state’s two-year-old tax cap legislation.

A former state representative has filed suit against the use of $198 million from Louisiana’s budget stabilization fund to balance the fiscal 2010 budget. The money was taken out of the fund after a dispute between House and Senate leaders over when the money would be repaid.

With just a month before the general election, federal indictments were unsealed Monday charging four Alabama state senators, an employee of the Legislature, and six other individuals in a bribery conspiracy involving electronic gambling legislation.

New Jersey and Atlantic City officials worked out a plan Tuesday to allow the state’s gambling center to spread out a $9.5 million budget deficit over five years as it prepares to issue nearly $36 million of refunding and new-money debt in the near term.

WASHINGTON — Market participants are sharply divided on the Municipal Securities ­Rulemaking Board’s draft proposal to prohibit dealers from underwriting new negotiated or competitive bond issues if they served as the issuer’s financial adviser on the transaction.

Rhode Island Superior Court will hold a hearing Tuesday regarding the constitutionality of the state’s appointment of a receiver to oversee Central Falls’ finances. Motions were filed Monday.

SAN FRANCISCO — National Public Finance Guarantee Corp. withdrew a motion Monday asking a federal bankruptcy court to allow California state payments to the bankrupt city of Vallejo to flow to bondholders instead.

ALAMEDA, Calif. — The California Supreme Court upheld Gov. Arnold Schwarzenegger’s employee furlough policy Monday.

Moody’s Investors Service placed under review for possible downgrade Monday a combined $86.4 million of Harrisburg Authority water bonds and Harrisburg Parking Authority revenue bonds because the city could enter Pennsylvania’s distressed communities program.