General Authority is Not Necessary
Posted 04-08-1997
One of the most controversial issues that has arisen since I took office in January 1996
was the issue of whether Westmoreland County should create a General Authority. This month
I would like to share with you my perceptions of the issue and my reasoning about why I
opposed the Authority's creation.
Last fall, Greg Zappala of RRZ Public
Markets approached the Board of Commissioners with an idea about creating an Authority
with the sole purpose of doing bond issues to create a pool of money from which
municipalities, school districts, and non-profits could borrow at reduced interest rates.
On the surface, with little detail and little explanation of the consequences, the idea
did not sound terribly controversial. However, at that time I asked the question, is there
a demand for such an entity and shouldn't we do a study to ascertain the level of demand
before creating the Authority.
In late January of this year, Mr. Zappala
returned with additional information. He told us he had a prospective client in the health
care industry that was looking to do a $130 million bond issue. The county's General
Authority would possibly receive $200,000 from this proposed effort. The potential client
was not identified but it seemed like there was a real push by my democratic colleague to
get this effort created without much more discussion and certainly without studying the
demand for the creation of the pooled financing effort.
As the media began to ask questions about
details of this project the public's attention was aroused. The commissioners had little
to share with the media because we honestly didn't have details including the identity of
the potential health care client. Each story in the newspapers caused more citizens to
call and express concern that the effort was not in the best interest of the people of our
county.
In early March I asked Mr. Zappala in
writing to identify the potential client of the $130 million bond issue. I also asked him
to show in writing any statement he had from banks that would guarantee that this bond
issue would not jeopardize the county's financial position, and to provide for me a
written explanation of how the authority was to operate. At the same time I wrote to five
banks in Westmoreland County to get their perspective on the concept of a general
authority and how it would impact their operations.
Slowly, responses from the banks came in
and each response was nearly the same. They questioned the need for the Authority, and
stated that through the Community Reinvestment Act banks are directed to make loans
available to municipalities, and they believed they were doing the job reasonably well.
They also questioned why the county would want to create public sector competition for
their loan programs. The banks responses were very much in line with a principle I believe
in, the role of government should be to assist the private sector when possible rather
than compete against it.
The public hearing demonstrated
overwhelmingly that the citizens of the county opposed the creation of the Authority.
Public opinion had been so poisoned, particularly by the comments of an aide of my
Democratic colleague, that the Authority would never have operated with the public's
confidence. After hearing the testimony, Commissioner Marolt suggested the action to
create the Authority be pulled from our agenda for the upcoming meeting. Since I did not
support the effort, it would not have two commissioners' support to appear on our agenda.
So with little fanfare the issue of the General Authority disappeared and hopefully will
not be resurrected again.
The whole episode was a case study in how
NOT to present an issue. It also brought to light the relationship of the investment
banker to the Board of Commissioners, and raises the question of whether an
"unofficial financial advisor" should also have the opportunity to do all the
financing activities in our county with no competition. I think by the public's response,
the Board of Commissioners should re-evaluate how we go about carrying out future bond
issues. |
