Lawsuit over wording threatens Asheville bonds ⋆ American Lens

Lawsuit over wording threatens Asheville bonds

Roger McRedieLawsuit over wording threatens Asheville bonds
Action challenges “misleading” language, seeks to vacate Nov. vote
By Roger McCredie

ASHEVILLE – Two Asheville citizens have asked Buncombe County Superior Court to set aside the election-day vote that authorized the city to issue $74 million worth of general obligation bonds.

The bonds, which include $32 million earmarked for transportation and infrastructure improvements, $25 million for affordable housing, and $17 for parks and recreation, were approved by a lopsided 70%-30% margin.

Principal plaintiff in the suit is Sidney M. Bach, a retired attorney. His co-plaintiff is Asheville businessman and former vice mayor Chris Peterson.

Bach says the language of the bond questions, as approved by city council and presented to voters on the Nov. 8 ballot, was “defective,” resulting in “an unfair misrepresentation of material facts” that made all three bond questions “inaccurate, prejudicial and misleading.”

Also, Bach and Peterson contend, the apparently inadvertent use of the word “Charlotte” instead of “Asheville” in the resolution that authorized discussion of the referendum is sufficient to render that document null and void.

The resolution, adopted by council on August 9, calls for a public hearing “to consider the issuance of bonds by the city of Charlotte … ,” a mistake apparently made as the result of “boilerplating” language from another city’s resolution and not caught by any subsequent proofreading. The one-word error is sufficient to make “all the notices and actions” that came afterwards “void and invalid,” according to the complaint.

Parker Poe Adams & Bernstein, the City of Asheville’s outside bond attorney firm, has an office in Charlotte.

The bond orders, as published in local newspapers, said the city “shall” or “will” levy new taxes in an amount sufficient to pay for the bonds. But the actual ballot language substituted the phrase “may be levied,” thus making it sound as though there were a possibility that issuing the bonds might not, after all, result in a tax increase.

But, the suit alleges, the city has always been fully aware that the bonds, if passed, would raise taxes. To change the wording to “may” on voter ballots rendered the entire statement false and constituted a misrepresentation, the suit says, thus violating NCGS 159-61, which sets out the guidelines for referendum notices.

The suit states that on October 13, Bach had his attorney, Albert Sneed, send a letter to city council and the Buncombe County Board of Elections calling attention to the discrepancies, but that the letter was ignored.

The $74 million bond package carries an additional $36 million in interest, for a total potential debt of $110 million, and represents the largest taxpayer-funded initiative undertaken by Asheville in more than 30 years. The referendum was supported by a massive public relations campaign.

Bond critics expressed concern over the sheer amount of money involved as well as what they said was a lack of accountability in spending it. The bond descriptions were framed, they said, in such a way that the city is not bound to spend the bond moneys on any of the specific projects it says it may use the money for.  As long as a given project can be made to “fit” into one of the three bond categories, they said, money from that category may be used to fund it.

And Asheville Mayor Esther Manheimer, stumping for the bonds in an October forum, admitted that within each given bond category, it is “technically possible” to re-purpose monies for projects other than the ones officially listed in the bond questions.

“A lot of people are concerned about this and I wish there were some way that we didn’t have that flexibility [of language],” she said.

The suit was filed December 20 and, as in most such actions, the city has 30 days to respond. Under state law, no bonds may be issued while any legal action is pending.

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