Edifice wreck - issue on expanding convention centers

Reason, Oct, 1997 by James Plummer

The San Diego City Council isn't very happy with Richard Rider.

His meddling has made the council stop its $200 million expansion of the city's convention center. The council had already started appropriating money to prepare for construction when the California Supreme Court stepped in. Rider, the 1994 Libertarian Party candidate for governor, had noticed that the council forgot to ask the voters, as required by law, what they thought about this whole thing. The court said he may have a point.

The city charter and Proposition 13 require that all bond issues be put to a vote. But the San Diego government thought it could get around that requirement by creating a paper entity, the San Diego Convention Center Expansion Finance Authority, to issue the bonds and expand the center. The city would then lease the facility from its own authority. This popular trick of local governments in California is known as "lease revenue." Carl Fabian, lead counsel for Rider and his fellow plaintiffs, calls lease revenue "the phoniest thing you can imagine.... They're just transferring money from one pocket to another."

The Supreme Court may agree. After local politicians and journalists repeatedly dismissed the suit as frivolous, and some public officials even threatened countersuit for lack of probable cause, the court agreed to hear the case. Rider v. San Diego goes to trial this fall.

San Diego will argue that the 1947 law authorizing these paper agencies (passed to build a parking lot for the National Football League's Rams when they moved from Cleveland to Los Angeles) doesn't require that bonds they issue be put to a vote. Rider and his allies say the bogus corporations must be held to the same legal restrictions as their parent bodies. A decision is not expected before early next year.