Friday, March 03, 2006

"LUS tries for third time to get cash from bonds"

"Lafayette Utilities System will take another stab at borrowing money to start its telecommunications business Tuesday when it introduces for a third time an ordinance to issue up to $125 million bonds."
So opens Kevin Blanchard's article on the latest fiber-optic bond issue. As is standard for him, Blanchard's story is a model of journeyman journalism. He'll lead you patiently through how we got into the current situation and what's being dealt with in the new bond issue.

What makes this a story this morning is that the bond ordinance is now available at the LCG website, linked from next week's city-parish council agenda.

I took a preliminary look at the ordinance last night and that was enough to convince me that I'm not really in a position to really read it with complete confidence. There's levels of lawyering that's dressed-up common sense. This is a good bit beyond that, a thirty five page document of which probably half is consumed by explicit definition. But I did understand it well enough to gather that "Residual Revenues," "Credit Event," and "default" were key definitions. Every bond issue, I presume, has to have rules for what happens in the case of default by the issuer and this one is no exception. What's interesting, and what BellSouth will be wanting to challenge, is the conditions under which default is triggered. That's a big chunk of what has gone on in preceding lawsuits and hence a big chunk of what is being dealt with now.

The story notes that default is well-defined but that the city-parish gives itself the explicit ability to loan itself market-rate money -- a capacity anticipated in the the Local Government (un)Fair Competition Act that gave BellSouth the capacity to trigger all this mess. Blanchard treats this as the obvious "out" that will be taken to make sure that default never has to occur. That strikes me as right.

Bear in mind that all this legal back and forth, beginning at (un)Fair law and continuing through the endless BellSouth fueled litigation is intended to increase the costs of purchasing services to the citizens of Lafayette and to make it more likely that any stumbling blocks along the way result in the collapse of the system. It is a hugely unfair law that imposes constraints on our community that no private provider would ever be asked to endure. BellSouth regularly transfers money within its company in whatever way serves its owners best. We should be able to do so as well. The fact that BellSouth has gotten the state of Louisiana to impose conditions on us that it would never tolerate should be a lesson to us about our legislature... we should already know about BellSouth. (As Mike has recently reminded us.)

Repeal is the solution.

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