SunCal released a statement yesterday saying that Lehman Brothers has nothing to do with its New Mexico property.
But Lehman Brothers purchased a 20 percent stake in D.E. Shaw, which is the capital partner in the Westland property, back in March 2007. The article on Shaw's website makes it sound like they got a down payment with "future contingent payments."
Maybe things changed between March 2007 and the bankruptcy?
This is germane because the SunCal plans on the west side of Albuquerque are huge...and they want to float bonds backed by taxpayer money to pay for their infrastructure. Otherwise known as Tax Increment Development Districts.
Don't take me wrong. I don't want SunCal to collapse, and I certainly hope D.E. Shaw doesn't. We've had enough.
Plus, I agree that a planned development would be a lot better than anything piece-mealed out there, if its going to happen (which I think should be a question rather than a given).
But the TIDDs have a lot of inherent risk for taxpayers. And at the moment, we're seeing SunCal have major difficulties in other parts of the country.
It really does beg the question: what happens if a company goes bankrupt and can't complete a project after all those bonds have been sold, when the future tax revenue meant to pay the bonds is dependent on completion of the project?
This is a question that applies across the board when it comes to how New Mexico hands these districts out.
Wednesday, September 17, 2008