Law and legal issues

The Metropolitan Transportation Authority broke state law when it agreed to new sale terms for the Vanderbilt rail yards in Brooklyn, plaintiffs allege in a suit filed yesterday in New York State Supreme Court.

SAN FRANCISCO — California Gov. Arnold Schwarzenegger backed off on a blanket threat to veto more than 700 bills if he didn’t get a water infrastructure deal, taking action on all of them Sunday, his deadline to act on bills the Legislature approved in its 2009 regular session.

SAN FRANCISCO — The Sierra Kings Health District in Reedley, Calif., last week filed for Chapter 9 municipal bankruptcy protection after discovering that the proceeds of bond sales in 2006 and 2007 were misused.

WASHINGTON — The trustee for millions of dollars of toll revenue bonds issued in 1998 to finance South Carolina’s first publicly owned and privately built toll road, the Southern Connector Project, is warning investors that the bonds will probably default on Jan. 1, 2010, because of insufficient revenue.

PHILADELPHIA — The Securities and Exchange Commission cannot set up a corporate-style disclosure regime for the municipal market under its rules because it does not have the statutory authority to do so, the SEC’s muni chief told financial advisers here yesterday.

SAN FRANCISCO — The tangled tale involving bonds issued for the failed Copia “wine shrine” in Napa, Calif., could reach a major turning point later this month when a bankruptcy judge will consider confirming a plan to conclude the museum’s almost 11-month-old bankruptcy case.

BRADENTON, Fla. — Two appeals now have been filed contesting a Florida judge’s decision to validate $650 million of certificates of participation sought by the South Florida Water Management District to finance the purchase of U.S. Sugar Corp.’s land for Everglades restoration.

WASHINGTON — A Securities and Exchange Commission official asked a congressional committee yesterday to strengthen its draft bill to regulate over-the-counter derivatives so that all securities-based swaps are treated as securities. However, the request was met by resistance from the panel’s chairman and another regulator.

SAN FRANCISCO — The Los Angeles World Airports Board of Directors on Monday agreed to a $75 million settlement with bondholders in a seven-year-old dispute over United Airlines special facilities revenue bonds sold to make improvements at Los Angeles International Airport.

The House Financial Services Committee late Friday distributed a discussion draft of legislation to regulate over-the-counter derivatives that appears to be substantially similar to one floated by the Obama administration this summer. The move left unresolved technical glitches that render meaningless a provision intended to restrict small municipalities from participating in derivatives transactions, attorneys said yesterday.

SAN FRANCISCO — If there was any doubt before, it was removed Thursday by the California Supreme Court: the state’s current budget is out of balance.

WASHINGTON — The Municipal Securities Rulemaking Board could bring in roughly $2 million in additional revenue from a rule change proposed this week that would eliminate the exemptions on underwriting fees for most short-term municipal securities, the board’s spokesperson said yesterday.

WASHINGTON — Moody’s Investors Service conducts “virtually no surveillance” of its municipal bond ratings, despite its claims to the public and Congress that it robustly monitors all the securities it rates, a former chief compliance officer warned the Securities and Exchange Commission in a March letter.

DALLAS - A legal dispute over a riverside parcel of land in downtown Baton Rouge should not deter voters from approving bonds that would finance a large tourist attraction planned for the site, East Baton Rouge Parish officials said Monday.

BRADENTON, Fla. - The Miccosukee Tribe of Indians in Florida has said that it will appeal last month's circuit court validation of $650 million of certificates of participation requested by the South Florida Water Management District to purchase land that will help restore the Everglades.

CHICAGO — A group of investors who hold a piece of Menasha’s $24 million of city appropriation-backed steam plant revenue bond anticipation notes allege in a federal lawsuit filed earlier this month that the Wisconsin city committed fraud in misrepresenting its intent to repay the now-defaulted notes.

WASHINGTON - The Securities and Exchange Commission should require credit rating agencies, rather than issuers, to send rating information about municipal securities directly to the Municipal Securities Rulemaking Board's EMMA system, issuers and bond attorneys argued last week.

BRADENTON, Fla. — Jefferson County, Ala., officials now say they are seeking a $25 million line of credit from Regions Bank to bolster government operations and return laid off employees to work.

WASHINGTON - Four months after members of the House Financial Services Committee introduced four pieces of municipal bond-related legislation, only two are expected to move forward this fall and the other two are likely to languish.

WASHINGTON - House lawmakers yesterday easily approved a bill that would extend funding for highways and other surface transportation by three months, after some controversy, as well as a measure to extend funding for airports for the same period of time.