By Mark Gutglueck
Thirteen years after the City of Victorville sought to utilize bond financing to carry out an effort to fully convert the former George Air Force Base into a civilian airport and according to the federal government defrauded investors in the creation and marketing of those bonds, the city this week once again geared up to use bond financing in the effort to enhance economic development at the aerodrome. The action taken at a special meeting called on Monday briefly showcased the debacle with regard to the 2008 issuance of $13.3 million in bonds and current City Manager Keith Metzler’s central role in the matter, which ultimately cost Victorville’s taxpayers close to $19.6 million in lawyer’s fees alone when the U.S. Securities and Exchange Commission interjected itself into the matter.
To pick up some spending cash when he was a teenager, Keith Metzler in the late 1980s and early 1990s had served as a caddie at the Green Tree Golf Course in Victorville. There he met many of the movers and shakers in the High Desert’s most prosperous city, including Terry Caldwell, then Victorville mayor who had been on the city council since 1972, and Jim Cox, who had been the city manager since 1969. Based upon that contact, a few years later, after he had graduated from high school and while he was yet a student at the University of California at Riverside majoring in business administration, Metzler in 1996 began with the City of Victorville as an administrative intern. As one of Caldwell’s protégés, Metzler over the next seven years made steady progress. In June 1997, after his graduation from college, he was hired as an administrative assistant. In December 1999 he became a redevelopment project manager. After just four months in that assignment, in April 2000, he was promoted to the position of deputy director of the city’s redevelopment agency. In April of 2003, he was given the added assignment of executive director of the Victor Valley Economic Development Authority, the joint powers agency involving the County of San Bernardino, the cities of Hesperia, Victorville, and the town of Apple Valley devoted to the civilian use conversion of the former George Air Force Base. In December 2003, he was made the city’s director of economic development. It was while in that role that Metzler engaged in activity that yet casts a cloud over his professional career and which has come to taint the reputation of the city and the members of the Victorville City Council past and current.
From the late 1990s until 2010, Victorville issued some $480 million in bonds in order to undertake all order of civic and capital improvements throughout the city and within its redevelopment agency. In 1999, Jim Cox had retired as city manager after three decades in that position. Thereafter, the city was essentially in the hands of Terry Caldwell, who was moving toward becoming one of the longest serving continuously elected local politicians in the state at that time; City Attorney Andres de Bortnowsky; Jon Roberts, who had been brought in after Cox’s departure to be city manager; and Buck Johns, an Orange County-based developer who beginning in the 1980s focused considerable attention on the High Desert and had bankrolled Caldwell’s political career and those of his allies on and off the Victorville City Council.
The city was intent upon the civilian use conversion of the former George Air Force Base, which had been shuttered by the Department of Defense in 1992. The base, originally named the Victorville Army Air Station when it was crash built in the summer and fall of 1941 as the Japanese attack on Pearl Harbor and the United States’ direct involvement in World War II fast approached, was located on the outskirts of Victorville near Adelanto. Throughout the mid and late 1990s, Victorville, led by Caldwell and Cox, outmaneuvered Adelanto, which had a competing bid with the Pentagon for redevelopment and eventual ownership/takeover rights to the base. Caldwell, who was an attorney and well-versed in the methods by which government operates, worked in close cooperation with San Bernardino County, Apple Valley and Hesperia through the joint powers collective of the Victor Valley Economic Development Authority, known by its acronym VVEDA, to convince the federal military base re-use authorities that VVEDA offered the best alternative for reclaiming the base. Adelanto, led by then-City Administrator Pat Chamberlaine and a series of warring political factions on the Adelanto City Council, proved no match for the more patient, knowledgeable, sophisticated and well-connected Caldwell and Cox.
On Friday, April 29, 1994 James Boatright, then the Air Force’s deputy assistant secretary for installations, signed a lease giving the Victor Valley Economic Development Authority essential dominion over 2,300 acres at the base. On January 9, 1995, the Air Force announced that it would deal with VVEDA exclusively in the discussion with regard to the annexation of the remaining 3,039 acres on the base that VVEDA had not yet leased. At 9 p.m. on February 1, 1995 after a vote of the city council, then-Adelanto Mayor Judy Crommie and then Mayor Pro Tem Mary Scarpa signed a copy of an agreement previously signed by VVEDA officials that had been forged between the Victor Valley Economic Development Authority and the City of Adelanto in which both entities agreed to end the legal wrangling over the base. With the signing of that peace pact, Adelanto gave up any land claims at the base and further utterly capitulated on all other ownership, entitlement, management, taxing authority and control issues while retaining its previously established water rights on the base property.
Once VVEDA safely had the base secured, Caldwell and his support network machinated further to have Victorville assume from the Victor Valley Economic Development Authority primary responsibility, control and ultimately ownership of the air base, rebranded as Southern California Logistics Airport. Victorville thereafter solidified its dominance over the airport through the creation of the Southern California Logistics Airport Authority, which was dedicated to the redevelopment of a 132-square mile area in and around the former Air Force base. Known by its acronym SCLAA, the Southern California Logistics Airport Authority was chartered with the five members of the Victorville City Council serving as its board of directors.
Victorville city officials were committed to transforming the former base’s runway and accompanying aviation facilities into the premier civilian airport in the Mojave Desert. Another portion of the base and its surrounding land was slated to house cutting edge technology and industrial operations. And after making the misstep of tearing out an existing rail spur that connected the base to the existing rail line that traversed the desert near the base, the city and the Victor Valley Economic Development Authority locked onto establishing the remainder of the base and its surrounding property as an intermodal transportation hub involving air cargo, rail freight and nearby Interstate 15.
The provision of infrastructure and utilities were a natural priority for the base conversion effort and Buck Johns and his corporation, the Inland Group, had an inside track on this highly lucrative element of the operations.
In 1998, Johns had used his connection to Caldwell to obtain without any competition or adversarial bids clearance to pursue the development of an electrical generating station in Victorville;ssphere of influence. Referred to initially as the High Desert Power Plant and later called Victorville 1, Johns and Inland Energy initiated the permitting process for that plant in 1998, and in conjunction with Baltimore-based Constellation Energy completed the project in just under five years. It fired up and tied into the State of California’s electrical grid in 2003.
Johns was able to use that success to get the city to venture money towards various other projects he was involved in. During the city’s efforts toward encouraging the development of energy sources, including the never-realized 550-megawatt Victorville Power Plant #2 (Victorville 2) and the 14-megawatt Foxborough Electrical Generating Station, the city squandered $116 million, according to the 2011-12 San Bernardino County Grand Jury. In initiating the relationship with Inland Energy, according to the Grand Jury, Metzler and the city did not seek out any other service providers. “The city entered into the no-bid contract with Inland Energy based on a proposal from the company,” according to the grand jury.
In less than four four years, between August 2005 and March 2009, the city paid out more than $13 million to Buck Johns and Inland Energy, with the lion’s share of that money going to plan for or construct power plants that were never built.
While the planning efforts toward the never-built projects provided a substantial windfall for the private interests involved, which in turn made hefty contributions to Caldwell and his circle of political allies including those who served with him on the city council such as Mike Rothschild and Robert Hunter, the city saw no tangible benefits from the more than $100 million in outlays it made to develop adequate electrical power generating capability at and around the airport. Most of the funding for Victorville’s failed pursuit of electrical independence came from bond financing.
Metzler, while yet in his late twenties and early thirties, was beholden to Caldwell and Roberts for putting him on the professional fast track at Victorville City Hall, which rendered him entirely willing to do their bidding. From 2003 until 2010, while functioning in the role of the city’s director of economic development, Metzler took action that a more seasoned municipal management professional would have been far more reluctant or cautious or unwilling to carry out. Indeed, Metzler found himself in a position in which he was clearly out of his depth, needing legal assistance to chart his way in the treacherous water he found himself in. Yet the one legal authority he could turn to was the city attorney, Andres de Bortnowsky, who was himself beholden to Caldwell and therefore militating more in favor of Johns and Inland Power than he was for the city.
According to the 2011-12 San Bernardino County Grand Jury, which had carried a review of the documentation relating to the contractual relationships the City of Victorville through its economic development division and redevelopment agency entangled itself in during the first decade of the century, noted that with regard to the project to develop the Victorville 2 power plant, “The development agreement with Inland Energy was based on a previous agreement between Inland Energy and Constellation Energy for development of the High Desert Power Plant. The agreement was written by attorneys representing Inland Energy using the High Desert Power Plant [Victorville 1] contract as a template. Although the city attorney reviewed and provided comments on a draft contract, it does not appear that the city attorney or other city managers actively negotiated the terms of the agreement to be substantively more beneficial to the city than the template contract it was based on. In fact, the agreement that the city entered into appears to be significantly more generous to the developer than the template agreement.”
The city made inadequate review of the contract terms, the grand jury found, pointing out that “the “agreement vaguely defines and poorly controls the provision of services. The agreement with Inland Energy allows for the company to be compensated for two types of services: (1) ‘development services’ and (2) ‘supplemental services.’” Ultimately, according to the grand jury, Buck Johns and Inland Energy managed to get Metzler to agree to have those “services… expanded to include assistance with the construction of the plant,” even though the plant was never actually completed. “Inland Energy was paid approximately $12.2 million from 2005 to 2010 for development services related to the Victorville 2 project. While these services, to an extent, may have been related to the Victorville 2 project, the supplemental services clause has been used to justify services completely unrelated to the project. Specifically, the city has paid over $607,000 to Inland Energy through May 2010 under this clause for other, consistently unsuccessful, projects. These expenditures have included over $166,000 for consulting services related to the city’s unsuccessful efforts to obtain federal grant funding under the U.S. Department of Homeland Security’s Immigrant Investor Program, also known as ‘EB-5’, and over $182,000 for consulting services related to the city’s unsuccessful attempt to develop and construct a power plant at the Foxborough Industrial Park in the Bear Valley Redevelopment Project Area. Additionally, Inland Energy was paid over $258,000 for consulting services related to the city’s efforts to investigate the possibility of becoming a community choice aggregator. While this service was related to the Victorville 2 project, it ultimately provided no tangible benefits to the project, the city, or Southern California Logistics Airport.”
According to the 2011-12 San Bernardino County Grand Jury, the contract performance terms were poorly constructed and implemented. “The development agreement contains no effective performance measures for Inland Energy,” the report states. “There are no specific mechanisms that would allow the city council or city management to hold the contractor accountable for its performance.”
Of note is that at a crucial time when much of this was ongoing, from 2007 until 2008, Metzler was distracted, attending classes at San Bernardino State University’s College of Business and Public Administration where he was getting his master’s degree in business administration.
It appears that Metzler either did not scrutinize the billings that came in from Inland Energy in the 2008 timeframe, or if he did, that he merely complied with the instructions given him by Roberts and Caldwell to simply rubberstamp the invoices for payment. John Barnett, the vice president of Inland Energy, in September 2008 was paid $37,750 for work that was never specified. In 2008, the city paid Barnett $346,250, at a rate of $226.61 per hour for what amounted to an average 29-hour work week on efforts that had no specific outcome. Between August 2005 and March 2009, staff at Inland Energy were paid roughly $4.48 million on activity that did not result in any progress toward the putative goal of constructing power plants for the city. While invoices provided to the city by Inland Power generally listed some ostensible purpose for the work, there were $330,201 in billings that were made which paid that were not tied to any explicated purpose or service.
The highly questionable use of a significant portion of the $480 million in bond financing that Victorville was using in its redevelopment activity at and around the former George Air Force Base caught the attention of the U.S. Securities and Exchange Commission, which in 2010 began looking into precisely how that money was spent. In August 2010, the Securities and Excahnge commission subpoenaed from the city all documents relating to $480 million in outstanding bond offerings. Over a period of more than two years, the Securities and Exchange Commission’s investigators pored over those documents, in the course of which they found a number of indications that the city had engaged in some highly dubitable practices both in the acquisition of the bond money and its application once it was in possession of it, with one circumstance in particular involving activity so egregious it merited action.
In April 2013, the Securities and Exchange Commission charged the City of Victorville, the Southern California Logistics Airport Authority, Metzler, the airport authority’s bond underwriter and the bond underwriter’s owner and vice president with defrauding investors by inflating valuations of property securing an April 2008 $13.3 million municipal bond offering.
In 2008, the airport authority publicly offered $13.3 million in tax increment bonds to repay part of a short-term debt, making the offering on the premise that the bonds could be backed by the collateral of four hangers, which the city claimed were worth $65 million. That value was used to determine the tax increment, thereby enabling the authority to meet a minimum 1.25 annual debt service ratio required for such bond issuances to take place. Securities and Exchange Commission investigators, through a check at the San Bernardino County Hall of Records, learned that the county assessor had valued the hangars at $27.7 million, less than half of what the city claimed. Based on that misrepresentation, a false statement as to the soundness of the bonds was made to the investors, i.e., the buyers of the bonds, the Securities and Exchange Commission (SEC) concluded.
Metzler, who at the time of the SEC filing was Victorville’s assistant city manager, the Carlsbad-based bond underwriting firm of Kinsell, Newcomb & DeDios, the firm’s owner J. Jeffrey Kinsell, and the firm’s vice president Janees L. Williams were responsible for false and misleading statements made in the airport authority’s 2008 bond offering, the SEC alleged. It also charged that the bond underwriting firm, working through a related party, misused more than $2.7 million of bond proceeds to keep itself afloat.
“Financing redevelopment projects by selling municipal bonds based on inflated valuations violates the public trust as well as the antifraud provisions of the federal securities laws,” said George S. Canellos, co-director of the Securities & Exchange Commission’s Division of Enforcement. “Public officials have the same obligation as corporate officials to tell the truth to their investors.”
According to the Securities and Exchange Commission, Victorville city officials, including Metzler, were engaged in so-called “handshake deals,” undocumented arrangements involving the expenditure of bond-derived funding.
Metzler and the city were motivated to make the misrepresentations, according to the SEC, because the city and its attendant agencies and adjunct entities including the airport authority had incurred more than $269 million in debt in the effort to develop the airport, and had exhausted all options in leveraging available tax revenues, including obtaining a bridge loan while hoping that operations at the airport would pick up and begin to generate revenue to service the accumulating and mounting debt. When such an increase in operations did not materialize, the city went forward with the bond issuance which the Securities and Exchange Commission claims was collateralized with the overvalued hangars.
In the early going, lawyers for the city and Metzler posited defenses for what had occurred that in the light of subsequent revelations were shown to be either inapplicable, inaccurate or embarrassing. In one 2013 filing, in an effort to dismiss the claims, the city and airport authority’s lawyers said that the difference in assessments didn’t change the debt service ratio, “upon which an investor might rely.”
“The alleged $37.3 million inflated value,” the city’s lawyers wrote in the filing, “ultimately boils down to only a $200,000 differential in tax increment,” which the lawyers said was too small to be material.
While initially the city, the airport authority and Metzler were represented by the city attorney’s office, within short order, Metzler was being represented by a different set of attorneys than the city and the airport authority. The city and its taxpayers were footing the bill for all of the defendants in the SEC action against Victorville.
Victorville and the airport authority were represented by Terree A. Bowers, Adam Bentley, Collin Seals and Karen Van Essen of Arent Fox LLP. Metzler was represented by Michael D. Torpey, James N. Kramer, James A. Meyers, Kevin M. Askew, Judy Kwan and Blake L. Osborn of Herrington & Sutcliffe LLP.
By 2015, the Herrignton & Sutcliffe were proving to be more aggressive than Arent Fox in propounding that much of what was at the basis of the SEC’s case was action by Kinsell, Newcomb & DeDios.
In a July 2015 filing, however, the SEC asserted Metzler could not logically or credibly lay responsibility for what had occurred at the feet of Kinsell, Newcomb & DeDios or other agents of the city, including city staff assigned to the airport.
Metzler was the “point person” most fully focused on the situation at the airport, including the value of its various assets, the SEC’s lawyers, consisting of Robert Conrad, Theresa Melson, Todd Brilliant. Sam S. Puathasanon, John W. Berry, Kristin S. Escalante, Amy Jane Longo and David J. Vanhavermaat, asserted. Metzler played “a significant role” in the bond offerings, according to the SEC, communicating with the bond rating agencies and giving presentations to potential investors. Evidence shows he knew the county assessor valued the hangars at less than half the amount he represented, the SEC contended.
“Metzler, in his motion, attempts to characterize this case as one about simple ‘mistakes’ that he made while surrounded by a team of professionals who should have fixed the errors instead of him,” according to the SEC. “What he ignores, however, is the compelling evidence of his intentional conduct to hide serious problems regarding the millions of dollars of tax increment that was needed to repay back the authority’s ever-increasing debt load.”
In time, the city’s legal representatives got on board with the strategy formulated by Metzler’s attorneys, and both sought to propound a defense that the city and Metzler had been victimized by Kinsell, Newcomb & DeDios.
An issue with the defense the city and Metzler were putting up was that the closer Herrington & Sutcliffe and Arent Fox lawyers came to being able to convince the judge hearing the case, U.S. District Judge John A. Kronstadt, as well as the Securities and Exchange Commission or the jury that was supposed to eventually be impaneled to hear the case that it was Kinsell, Newcomb & DeDios which perpetrated the violations and pulled the wool over Metzler’s his eyes in effectuating the misappropriation of $2.7 million in bond proceeds as alleged by the SEC, the closer they came to establishing, or at the very least strongly suggesting, that Metzler was negligent in his supervision of the airport operations and its financial affairs.
The matter became more problematic and damaging for the City of Victorville when the depositions of Caldwell, who elected not to seek reelection in 2010 after 38 years on the Victorville City Council, and Roberts, who left as Victorville city manager in 2009 to become the city manager of Steamboat Springs, Colorado, were taken in preparation for anticipated trial in the matter. Depositions are question and answer sessions conducted under oath.
Caldwell was one of the shrewdest and most sophisticated elected officials in San Bernardino County history who remains to this day a practicing attorney, having first passed the bar in 1975. During his deposition, however, Caldwell feigned brain fade, claiming to be unable to recollect anything relating to what had occurred in the city while he was mayor and on the council during the time in question. Moreover, despite having conducted hundreds of depositions in his capacity as a lawyer, he came across as a legal and procedural naif, and as a mayor and elected official who was unfocused and uninterested in the business of the city he had headed for the better part of four decades.
Roberts, likewise a top caliber municipal management professional who had been Victorville’s city engineer prior to the ten years he spent as city manager before going off to the Colorado assignment in 2009 and then remaining in Steamboat Springs for five years, malingered when he was subjected to questioning by the Securities and Exchange Commission’s legal team. Though he had remained in Steamboat Springs and continued to function as city manager there after having been injured in both a skiing accident and landing mishap while he was skydiving, Roberts attributed his inability to answer or even talk cogently during his deposition to those incidents.
During a closed session of the Victorville City Council when strategy for the city’s defense against the SEC suit was being discussed, the Sentinel has learned, city officials were laughing at the way in which Caldwell’s and Roberts’ conducting of themselves had thwarted the Securities and Exchange Commission’s investigation.
Ultimately, after the expenditure of $19.6 million on legal fees paid to Arent Fox LLP and its attorneys Terree A. Bowers, Adam Bentley, Collin Seals and Karen Van Essen and Herrington & Sutcliffe LLP and its attorneys Michael D. Torpey, James N. Kramer, James A. Meyers, Kevin M. Askew, Judy Kwan and Blake L. Osborn, Victorville fought the Securities and Exchange to a standstill. In a settlement agreed to on July 24, 2018, entered into on July 30, 2018 and publicly disclosed on August 7, 2018, all of the parties agreed to, according to the SEC, “final judgments against the city and the airport authority,” which imposed an assurance that “permanently prohibits each of them from violating the antifraud provisions of Section 17(a)(2) of the Securities Act of 1933. The judgment against the city also orders it not to issue municipal securities until an independent consultant review of their internal controls and practices is completed and the recommendations implemented. Furthermore, according to the SEC, the city and the airport authority… agreed to the settlement without admitting or denying the SEC’s allegations.”
Victorville Councilwoman Blanca Gomez told the Sentinel that during closed session discussions of the legal strategy for carrying out the city’s defense of the SEC filing against the city, the airport authority and Metzler, it was acknowledged that false representation had to be made in court filings and to Judge Kronstad to prevent federal authorities from discovering even more egregious action by the city in the securing of bond financing and the uses to which those funds were put.
This week, at its specially-called meeting which was also devoted to arriving at a determination as to how the city will fill the gap on the city council created by the removal of Councilwoman Rita Ramirez on March 2 , the city council took up a proposal to issue $6 million in bonds and simultaneously refinance more than $48 million in outstanding bonds from an $83 million bond issuance in 2007. The bonds to be refinanced were issued in roughly the same timeframe that the city was engaged in what the Securities and Exchange Commission said was the fraud relating to the $13.3 million in tax increment bonds collateralized by the overvalued hangars.
According to the report to the council completed for the special March 9 meeting prepared by Electric Utility Services Director Brenda Hampton and Finance Director/City Treasurer Bobby Magee, “Victorville Municipal Utility Services currently provides electric service to customers located at the Southern California Logistics Airport via a 34.5 kV Southern California Edison interconnection and distribution service. Beginning in 2017, Victorville Municipal Utility Services began to realize this service was limited in its capacity, due to the increase in peak demand, which can hinder future growth of its customers and the ability to provide reliable power.”
Hampton and Magee further related, “In 2007, the City of Victorville, through the Victorville Joint Powers Financing Authority, issued its variable rate lease revenue bonds (2007A Bonds) in the amount of $83,770,000 for the purpose of financing and refinancing improvements to the Victorville Municipal Utility Services electric system. The 2007A bonds are currently outstanding in the amount of $48,115,000 and have a final maturity of May 1, 2040.”
Upgrades to the city’s electrical system to ensure no outages during peak usage hours can be made, Hampton and Magee indicated, for roughly $6 million. “Victorville Municipal Utility Services has selected the lowest cost option and the most expedient by expanding the current 34.5 kV system, which would increase the capacity from 17.34 MW to 40.37 MW and will be sufficient to serve the current and anticipated load over the next several years,” the report states. “To ensure that Victorville Municipal Utility Services has all the required designs, equipment and materials for the construction of the project on a timely basis, Victorville Municipal Utility Services may be required to purchase longlead items prior to the issuance of the new bonds.” The item that was before the council, Hampton and Magee said, “will allow Victorville Municipal Utility Services to be reimbursed for certain capital expenditures, incurred from future infrastructure capacity expansion and distribution upgrades and contingent upon the issuance of the new bonds, in a total amount not expected to exceed $6,000,000. This will help Victorville Municipal Utility Services maintain a sufficient level of reserves and a strong level of liquidity to overcome unforeseen circumstances, such as revenue declines due to losing a major customer or increase in power supply costs.”
Hampton and McGee referenced the July 2018 settlement with the SEC in their report. “On July 24, 2018, the City, Southern California Logistics Airport Authority and the Securities and Exchange Commission agreed to a settlement regarding prior allegations related to the issuance of Southern California Logistics Airport Authority redevelopment tax increment bonds. As a result, on February 19, 2019 the city council approved revisions to its debt management policy.” In keeping with that revised debt management policy, Hampton and McGee said the city should take advantage of current market conditions and refinance its bonded indebtedness.
Hampton and McGee noted that the bonds issued in 2007 “were secured by the city’s pledge of lease revenues through a leaseback transaction encumbering certain city facilities as collateral. These facilities include City Hall, multiple city parks, fire stations, the city library, Victorville Police Station, and various city yards. The encumbrance of these city facilities may impair the city’s ability to receive grant funds that require deed restrictions.”
Hampton and McGee told the council “Since borrowing rates and costs for the long-term municipal markets are at historical lows, Victorville Municipal Utility Services has a cost-savings opportunity, not only by financing the current project, but also refinancing the existing 2007A Bonds. By pursuing this option, the city will be able to lock in a low and long-term fixed rate, eliminate the risk of paying variable rates during volatile market conditions and unencumber all city facilities.”
Saying they had consulted with Urban Futures, Inc. to advise the city and assist with the issuance of new bonds and had selected the law firm of Orrick Herrington, the firm that had represented Metzler during the 2014-to-2018 jousting with the Securities and Exchange Commission, to serve as bond counsel, Hampton and McGee recommended that the city “issue new debt and refinance existing debt to help finance the capacity upgrades at Southern California Logistics Airport.”
Ultimately, the city council voted 3-to-1, with Councilwoman Blanca Gomez dissenting, to undertake the preparation of the bond issuances to pay for the Victorville Municipal Utility Services electric infrastructure capacity expansion and debt refinancing.
Before that vote was taken, however, Romero Rodriguez told the council, “They mentioned something about the settlement in 2018 with the SEC. Does that include the fines that were paid in settlement for the embezzlement charges leveled against Keith Metzler that were settled out of court? Is that settlement part of the readjustment of the loan and the millions and millions of dollars of the attorneys’ fees with Orrick? Now the rating of the bonds, for that to happen, with the history of investor fraud being issued here on the bonds and the city being denied to issue bonds for some time, would that have an adverse effect on the ratings of those bonds? Also, here’s a question at the start of this whole thing: The properties that are going to be backing those bonds, did the tax assessor value them at the correct prices, and are we going to have the same thing happen that happened a few years back that cost us, the taxpayers, $30.6 million?”
Rodriguez said, “We also need to know: What are the properties that are going to be put up to back these bonds? They just said city properties. Parks? Is the golf course going to be put up again? Why don’t we go with – instead of just risking money to fund this venture with the city to build something – why don’t we just go with somebody who’s been doing this for hundreds of years already, Southern California Edison?”
Romero then referenced the city’s failure to deliver on past power plant projects, which he said had ended with city suffering a $4 million loss as the result of a lawsuit. “We never ever presented what we promised to. With that going on and on, I don’t see many companies and corporations climbing over each other to come work with us.”
Mayor Debra Jones invited Metzler to respond to Romero.
“The comments from Mr. Rodriguez are largely mischaracterized,” Metzler said. “With the comment about embezzlement charges, there’s no such thing as embezzlement charges. Embezzlement charges were never levied against the city, the airport authority or even myself in connection with previous bonds being issued. I would encourage Mr. Rodriguez to actually go back and read the actual case. In terms of history of fraud, there’s never been an actual history of fraud, and, in fact, I think to the question he was asking related to the two, anybody would be concerned if those actually occurred, but in this particular case as it relates to Victorville and its affiliated entities, that’s just a figment of imagination.”
By Mark Gutglueck