[Mpls] Bad Deals produce Bad Debts

[Victoria Heller]

If the Target Center defaults on its debt service payments (already delinquent) someone has to pay off the municipal bond holders.   The City (and Steve Cramer) have already proposed a "special levy" against the taxpayers to pay these debts.   The rich guys who buy municipal bonds (to avoid paying taxes on the interest income) are GUARANTEED repayment - by the "full faith and credit" of the taxpayers.   In other words, when the City "buys" something, or "lends" money to a developer, it sells municipal bonds to get the cash.  But the money has to be repaid to the bondholders with interest.  If the "project" can't or won't make the payments, the taxpayers are on the hook.   This form of corporate welfare robs the poor and rewards the rich handsomely.  The "developers" pay themselves hefty fees up front (and so does the MCDA for selling the bonds).   If the "project" works financially, the developer scores again - by owning a multi-million dollar building that didn't cost him a dime.  If the "project" doesn't work, the taxpayers wind up holding an empty bag.   This financing scheme was intended to fund "public good" projects like schools, roads, libraries, etc.  Like many other noble programs, it quickly became abused by the clever and the connected.   Vicky Heller   [EMAIL PROTECTED]