Saturday, September 09, 2006

Lafayette Appeals to the Supreme Court

It's official: Lafayette filed its appeal of the third circuit court's recent decision to the supreme court Friday. They've filed both a writ of ceriorari requesting that the State Supreme Court reconsider the third circuit's decision and a request for an expedited hearing in accordance with state law.

It's the first appeal of any sort that Lafayette has filed since the fiber battle moved onto the legal stage. The underlying truth is that Lafayette doesn't want to be in court. It wants, desperately to be building the system the people authorized. It's the corporations and their agents that are happy to be in court -- or in the legislature or in regulatory hearings--anywhere but out in the streets actually competing. The stark contrast between the community's goal of "getting it built" and the incumbents goal "delay" plays out most noticeably in the way decisions to appeal a court's finding against you. The incumbents are, mostly, happy to lose--and lose they have on multiple lawsuits--for a loss means a chance to appeal and serves their ultimate goal of delay. For Lafayette a loss means choosing between accepting the delay the incumbents want and serving their ends in that way or deciding to revamp their plan to avoid the delay of appeal.

Until now Lafayette's leaders have chosen to end delays by conceding points and moving on. This worked and played out to our advantage with the referendum. The city and people of Lafayette won and the incumbents failed in their intent of stopping the project through forcing an election. The election confirmed the judgment of the folks we'd elected to do the job but also legitimated the project beyond all doubt.

But that hasn't worked out as well with the giving way on the legal issues concerning a pledge. We went back to the table and rewrote the bond issue the last time it was successfully appealed in the third circuit. That rewriting turned out to not satisfy the incumbents who sued anyway--but withdrew their suit after Lafayette agreed not to pursue a multipronged attack on (un)Fair Competition law. A lawsuit went forward anyway--one fueled by invisible sources and having only one mysteriously motivated Lafayette resident. Occams razor: the simplest explanation is that the incumbents are behind this one too. This time avoiding delay by giving way has not worked out for Lafayette. Nothing, in the end, was gained by giving up a decent shot in the post-Katrina legislature for rolling back that recent law that was preventing both New Orleans and Lafayette from moving ahead with ambitious projects.

This appeal is a good thing, I think. It is my hope that a lesson has been learned: Making deals requires that you have an honest person sitting across the table. If you don't there's no point in the pretense of deal-making.

The Writs:
The writs are actually interesting (for legal documents :-) ).

The request for an rapid hearing cites law but also cites the economic damage done Lafayette and Louisiana by delaying economic development in the wake of Katrina and Rita. The document claims that every .1% rise in interest rates cost the citizens of Lafayette 1.7 million dollars. Or 17 mill for every 1 %. (Your Friend in the Digital Age...Sure.)
... the importance of the fiber optics project to the citizens of the City of Lafayette – and, indeed, of the State of Louisiana – cannot be overstated. One of the purposes and objectives of the several lawsuits which have been filed to stop this project is delay. Delay in the issuance of the bonds necessarily means that interest rates will increase, thus increasing the ultimate cost of the project, with resultant higher costs to consumers. Under the current market conditions, it is widely feared that interest costs will continue to rise. In the instant case, an increase of even .1% in interest rates would result in an increase in interest costs of approximately $1.7 million over the life of this project.
The appeal itself interestingly goes back to the city's previous loss and asks the court to reconsider the concession the city made then. Back then the city decided not to contest a bit about "pledges" and wrote a new ordinance that adopted points the 3rd Circuit had called for. Now it asks the Supreme Court to reexamine that reasoning.
... the Third Circuit failed to recognize this well-established form of pledge. Instead, the Third Circuit required a “default” of the bonds secured by the pledge, prior to the creditor being able to use the stream of income. This decision will have an immediate and potentially devastating impact on Louisiana’s municipal bond market, creating market risk for bonds and threatening the very ability to issue bonds at reasonable rates. Necessarily, the effectuation of public projects utilizing revenue bonds will suffer.
I understand that the Louisiana Municipal Association will file a friend of the court brief in support of this point. More is at stake than Lafayette's project. The Third Circuit is writing new law.

The appeal is actually pretty readable if you want to get a sense of what the conflict is really about and what motivates the city. Even though there is a fair amount of structured repetition (apparently the forms must be followed) its well worth a patient read.

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