Darian
02-08-2014, 12:57 PM
I've been thinking about the following quote I posted in another thread and am not entirely satisfied with the answer provided by DWR staff:
"Spoke to staff about what is the post construction liability of the water contractors in the event they default on the duty to repay the bonds and what is DWR plan to recover that amount should a default occur?? For about a minute, all I got was silence and then, "I don't know." The staffer said DWR doesn't anticipate a default as, by law, public water agencies have the ability to raise rates for their customers. Also, they have the authority to tap into property tax assessments (something I was unaware of)."
Altho the answer provided to my question was accurate, it didn't quite go far enough. Consider that Westlands and maybe other water contractors are reported to have failed to repay a loan granted many years ago from the Feds. Repayment of this loan is mentioned in the Legislative Summary of HR 3964. If we accept that Westlands could raise property tax assessments in order to repay the loan, then the failure to repay appears to be voluntary; not due to financial hardship.
So, given the history of default and failure to recover the money on the part of the Feds, already part of the record, what are the chances that Westlands and possibly others will default on repayment of the bonded debt?? If they do default, will the state attempt to recover the money for repayment?? Are there incentives/penalties included in the contract?? If so, what are these incentives/penalties?? Are deliveries cut off?? Does the cost per ACF increase??
Without the answers to these and other questions, it seems that the state has their head stuck in the sand.... :confused:
"Spoke to staff about what is the post construction liability of the water contractors in the event they default on the duty to repay the bonds and what is DWR plan to recover that amount should a default occur?? For about a minute, all I got was silence and then, "I don't know." The staffer said DWR doesn't anticipate a default as, by law, public water agencies have the ability to raise rates for their customers. Also, they have the authority to tap into property tax assessments (something I was unaware of)."
Altho the answer provided to my question was accurate, it didn't quite go far enough. Consider that Westlands and maybe other water contractors are reported to have failed to repay a loan granted many years ago from the Feds. Repayment of this loan is mentioned in the Legislative Summary of HR 3964. If we accept that Westlands could raise property tax assessments in order to repay the loan, then the failure to repay appears to be voluntary; not due to financial hardship.
So, given the history of default and failure to recover the money on the part of the Feds, already part of the record, what are the chances that Westlands and possibly others will default on repayment of the bonded debt?? If they do default, will the state attempt to recover the money for repayment?? Are there incentives/penalties included in the contract?? If so, what are these incentives/penalties?? Are deliveries cut off?? Does the cost per ACF increase??
Without the answers to these and other questions, it seems that the state has their head stuck in the sand.... :confused: