The City of 29 Palms has once again screwed the pooch. The state is demanding that they return the proceeds of the Project Phoenix bonds immediately.
The California Department of Finance for the 8th and final time has told the City of Twentynine Palms NO to Project Phoenix in a letter dated October 7th 2012. It is the worst possible answer.
OK folks did you read the above? Do you understand that the State of California in its Sovereign role, said not only No to Project Phoenix, but No to the transfer of the Bond Proceeds and demands that they be returned to the successor agency.
The letter suggests that if the City continues to follow its present course that the State Board of Equalization will pull ALL USE TAX AND PROPERTY TAX ALLOCATIONS, respectively, to the City if the Agency fails to recover the Bond Funds from the City. In other words the City better get its ducks in a row or the state is going to put them out of business.
We told you this would happen some months ago. I know the City Council is used to listening to the likes of City Manager Warne and City Attorney Munoz for legal advice but they better get a second opinion real damned quick, because these guys are dragging the City down to bankruptcy.
We see the next move by the City Manager and City Attorney is to ask the City Council to file suit against the State of California.
If the City of Twentynine Palms files suit against the State, as suggested by the letter from DoF, all tax allocations will cease. The City has about $9 Million in their rainy day fund. This will fund the city for about a year. The State holds all the cards. The State will put the City’s suit not only on the back burner but behind the stove. Here the Golden Rule applies, the State will wait the City out. The city will run out of money before it ever gets to court. Munoz knows the drill, he has used it on more than a few of us in town.
This is a huge turn of events folks. If we continue to seek the counsel of the City Manager and City Attorney along with RSG we are sure to be bankrupt by the end of the next fiscal year. Our Council would have been better off never receiving counsel from these guys and just followed the States recommendations. We are now hopelessly in a 30 year debt spiral that will keep our city the backwater burg that this bunch has made us.
If we do not stop right now and follow the instructions of the Department of Finance and make right the wrongs that have been done in the name of 29 Palms, the Department will put the city out of business. This is not an idle threat. This is for real.
Its going to be hard to explain this kind of FUBAR.