Jordanelle Special Services District Sued for Defaulting on Bonds
We received an email over the weekend tipping us off to the fact that Jordanelle Special Services District (JSSD) was being sued by Wells Fargo and USSA for defaulting on its bond obligations. According to the complaint provided, “Plaintiffs [Wells Fargo and USSA] purchased revenue bonds from the Defendants [JSSD], thereby investing nearly $30 million in Defendants’ projects in Wasatch County. Defendants rewarded the Plaintiffs’ investment by defaulting on the bonds, acting in bad faith and against the rights of the Bondholders, mismanaging the properties underlying the bonds, violating the Utah Assessment Act, and improperly using the bond proceeds in an attempt to gain a windfall at the expense of the Bondholders.”
JSSD is a special service district that serves the citizens of the Jordanelle Basin in Wasatch County for both water delivery and waste water systems. According to the complaint filed in district court, properties within the district were foreclosed upon by Wastach County (which eventually became the property owner). The complaint then states that Wasatch County did not continue to pay bond payments to Wells Fargo and USSA (the buyers of the bonds, along with Koch financial who is not part of this suit) but instead tried to force the foreclosed properties back on Wells Fargo and USSA (the plaintiffs). The plaintiffs argue that this is not legal and that Wasatch County should be held liable for paying for bond payments that it has foreclosed upon and currently holds.
The plaintiffs are asking for compensatory damages, putting certain funds collected by JSSD into a trust, a court appointed receiver to manage the JSSD water reclamation facility, an order from the court assuring that Wasatch County is the responsible party, and costs associated with this legal action.
So, why should you care about this? Well, if you are in Wasatch County, there is a chance that you are going to not only going to pay for this legal action but also for the amount owed on the $30 million worth of bonds sold (even if you don’t live in this special service area). If Wasatch County ends up having to pay bond holders (either all at once or on the bond schedule) you know who Wasatch County really is? You and your property taxes… or should we say you and more of your property taxes.
If you are in Summit County, this is a cautionary tale for now. However, whenever a bond is issued by a Special Services District, the governing board is on the hook for it. For instance, say a bond was issued by a new “Silver Creek Sewer District” for $25 million to put in a sewer in Silver Creek. Then a bunch of homes were foreclosed on and ended up being owned by Summit County. The bond still has to be paid. Who pays it? All Summit County residents. Likewise, say the Basin Rec bond passes this year. If something happens, all of Summit County is ultimately liable for the bond and any legal fees. It’s just something to think about.
There is much more to this story, including some interesting audio of testimony under oath by a JSSD board member in front of a Utah Legislative committee that may or may not exactly jibe with the legal complaint filed. We have to do more research on that. So, expect more over the coming few days.
Update: We never followed up on the audio recording and the recommendation from our source to listen to it. It allegedly contained some interesting information per our source; however, about that time the Salt Lake media had picked up on the story and we decided they likely had more time to investigate.
h/t to the citizen who provided this information. This is exactly the type of information that we as citizens deserve unfettered access to. We really appreciate your efforts.
These bond issuers & buyers knew of this likely outcome ahead of time. they are the educated financiers of our country.(USAA, WELLS FARGO & lets NOT forget KOCH). 1.this was a poorly constructed “deal” for the people –like me who are making close to $zero in my mutual funds thanks to shotty investing by said Plaintiffs, and for all the people of Utah whom this WILL affect directly.2. i get so fed up with big banks & corps running to we the people -our government- for yet one more bailout! that is an end run around we the people to make us pay indirectly for the failure of those to whom we people we entrust our life savings. 3. the bigger funny thing along the way –to the public trough- that needs a criminal investigation is : why is Koch NOT a plaintiff? what benefit did they construct to serve them? because we the people all know they are after all the property & money & rules to break & bail out they can a mass. calling a spade a spade-Koch is a spade! http://www.dailykos.com/story/2015/02/03/1361864/-EXCLUSIVE-Koch-Brothers-Rick-Scott-And-Jeb-Bush-Exposed-In-Florida-Pipeline-Scandal
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