Bankruptcy 101, More or Less
At the August 31, CSD meeting, the bankruptcy attorney was on hand to answer some questions. The following is taken from my notes. I am not a lawyer and don’t even play one on TV. So far as I can see, Chapter 9, Municipal Bankruptcy, is a very, very complex issue and a lot of questions remain, but some issues seem relatively clear. Such as:
--Private property and the value of your private property will NOT be affected
-- If LAFCo votes to dissolve the CSD and the voters affirm that dissolution, Chapter 9 goes away with the CSD and the county assumes all the debt and liability and assets, something the County has made clear it doesn’t want to touch with a ten foot pole.
-- Repayment of any debt is based on the Districts “best efforts.” Basically, that means you can’t get blood from a stone. The creditors cannot jeopardize essential services to settle the debt. If the CSD has no assets other than those needed to supply essential services, then they’re a stone with no blood, so that’s that. Not clear is whether the community could set up some sort of repayment plan based on future revenue, or vote to assess themselves some “taxes,” “assessments,” or “fees,” etc. so as to repay the legitimate debts actually owed and so restore municipal credit-worthiness & etc.
-- In Chapter 9, the District can sell any assets it has, so long as that doesn’t jeopardize delivering the essential services. For example, it can’t be forced to sell the firehouse or water office to settle any debts, but if it has some extra land that’s not being used for anything, that could be sold to pay off the debt. Not clear, at this point, whether land and rights of way that can/will be used for a wastewater system are considered “extra” or would be “essential services” related, since wastewater treatment is an essential service.
-- The revenue from the previously sold bonds cannot be touched.
-- The District can hire professionals POST filing of Chapter 9, and the Court will review their payment, i.e. oversee the bill for their services to make sure the fees are proper and in line with other municipalities, etc.
-- Lawsuits brought against the District (in LOCSD’s case, the majority of the suits are against the CSD) will be “frozen.” Lawsuits BY the CSD to defend the community and the interests of the district, are allowed to proceed.
-- All unpaid-legal fees billed to the CSD PRE Chapter 9, are considered unsecured debt (i.e. take a number, get in line, good luck) (Julie Biggs, the CSD’s attorney has stated that despite the unpaid, “unsecured” debt still owed for all their previous work, they intend to stay in the trenches working for the CSD, which means, if they want to get paid for work already done, they’ll have to take a number like everyone else, get in line, and good luck). All the lawyer-bashing folks in this community might want to think about that for a while. RWQCB fines are considered “unsecured debt.” and repayment again will be based on “ability to pay.” (blood from stones, take a number, get in line, good luck.)
-- Not clear yet is the status of the CSD vis a vis their being a designated party in the CDO hearings. Defending their own interests (Fire house, water office, etc.) appears to be allowed, but it’s possible that they could argue before the Bankruptcy judge, that the cost of defending that CDO is damaging financially and threatens the budget, hence “essential services,” and so ask for a stay.
-- Pay Attention to this one: For individual homeowners who have or will get CDOs ( that means all of us in the Prohibition Zone), Chapter 9 will have no effect. Neither will dissolution or non-dissolution. Nor will the County taking over the project “save” anyone either. The only “defense” the community has is the CSD as “lead defendant,” and/or each person’s personal attorney and/or any “group” attorney hired by the Prohibition Zone Legal Defense Fund (private donations being accepted at the Coast National Bank.) And the only “hope” the community has is to contact the RWQCB itself to ask the Board to reconsider their Mad Pumping Scheme and instead come up with a Faster! Better! Cheaper! voluntary,(initially, later mandatory) interim Septic Tank Maintenance Program with a variety of mitigation efforts possible until a wastewater project can be built.
-- For the immediate future, the Chapter 9 judge could try to expedite the release of the now-frozen funds, which would ease the crunch. She will likely be calling all parties together to get a first-hand look at this tangled mess (Lord help her). Then, it’s a matter of setting up a reorganization plan, the trying and/or settling of various suits, the outcome of the Blakeslee Plan, what happens when/if the County starts on the wastewater plans & etc.
Since this is Sewerville, stay tuned.
The T.A.B. Conference
The Talk About The Bay conference at the Morro Bay Veterans Hall, Saturday, Sept 2, was well attended. SLO City Councilwoman, Christine Mulholland moderated. Featured speakers included Dan Berman, Program Director for the Morro Bay National Estuary Program, Peter Douglas, Exe. Dir. of the Coastal Commission, and Assemblyman Pedro Nava gave some excellent and informative speeches. Haydee Debritz, the UC Davis Researcher, brought along the results of her research into Toxoplasma Gondi (commonly known as “catch scratch fever” in humans) which is sickening and killing sea otters. I had first seen her several years ago when she started her research by addressing the “pet owning community” in order to get help with getting ahold of cats and cat poop to test. The research results pointed up just how complex this natural world of ours is and how many unseen linkages there are and how, like a game of pick-up-sticks, in science, when you pull out one stick ,two or three more may come along to point you in two or three different directions.
Come to think of it, all of the speakers focused more on less on just that: The importance of taking the long view, the critical issues of interconnectedness, sustainability, and the necessity of rethinking old paradigms
The conference was taped by AGP Video and will be replayed. I suggest tuning in and watching it. Most informative. And if you own a cat, and are unaware of Toxoplasma, you should take a look.
The following is a Press Release, Aug 29, 06, from the CSD. Am looking forward to reading the report when it comes out.
At an “It’s All About Clean Water” Town Hall meeting earlier this month, the Los Osos Wastewater Plan Update was presented to the public by Ripley Pacific. The milestone plan now goes before an even tougher audience: As the nexst step, the integrated approach to wastewater management will undergo independent scientific peer review from the National Water Research Institute.
The peer review service is part of NWRI’s mission to create new sources of water through research and technology and to protect the freshwater and marine environments. The review panel will consist of water and wastewater specialists from academia, private sectors, public utilities, and regulatory agencies.
“The focus, interdisciplinary objectivity and real-world expertise they will bring to bear will be invaluable in shaping and ensuring the best plan possible, “said Lisa Schicker, district board president.
The peer review process, overseen by District Engineer Rob Miller, is expected to be completed later next month.