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September 8, 2010     Feather River Bulletin
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September 8, 2010
 

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EATH ER RIVER t Surrounding Areas Since 1866 , J , 50 CENTS Wednesday, Sept. 8, 2010 Vol. 144, No. 5 '! , FRC TO ASK COUNTY FOR $5 MILLION Linda Satchwell Staff Writer Isatchwell@plumasnews.com Faced with a cash-flow hole of $1 million and growing, Feather River College is tak- ing the unprecedented step of asking the county for an ad- vance on its tax revenues. At a special meeting of the Feather River College board of trustees Thursday, Sept. 2, college president Dr. Ron Taylor said he has looked into the legality of going to the county for financial as- sistance. According to Taylor, under the California Education Code and the state constitu- tion, the district "can ask the county treasurer for an advance of funds against anticipated taxes in order to meet cash flow needs." Because the state has not passed a budget in a timely manner, FRC is struggling to make up the shortfall. According to Chief Finan- cial Officer Jim Scoubes, the state apportionment the college receives is $500,000 per month. The state has al- ready missed two payments, leaving FRC short $1 million in cash. Taylor said the college could make it through September; after that, he's concerned about meeting payroll and other basic expenses. Further, he's heard the state may not pass a budget until the election in Novem- ber or, worse, that Governor Schwarzenegger won't sign off on the budget unless it meets his requirements no budget would be passed until he leaves office in January. The college is also looking into loans from local and re- gional banks. It is drawing on its line of credit from Umpqua Bank for the first time. It arranged the credit line to help with cash flow during construction of its new library building. The college has just about run through its Tax Revenue and Anticipation Notes loan. The TRANs has allowed 52 community college districts to borrow more than $2 bil- lion in short-term financing through the program since 2005. By the end of September, however, FRC will have depleted its $1.9 million in TRANs funds, as well as any cash on hand. There is also a "legal inter- action" between the TRANs loan and the county money that FRC is requesting. Scoubes explained the TRANs agreement mandates that the college will not borrow any other money from the county. The money requested of the county, therefore, is termed a "transfer of funds" in the FRC resolution. Whether Plumas County Counsel Craig Settlemire or TRANs bondholders see it as a "trans- fer" or a "loan" remains to be seen. "Technically (the agree- ment) says we can't borrow any other funds from the county. That's our obstacle. We're working on how we can do that," said Scoubes. Further complicating things is the upfront money needed to keep construction moving on the new Learning Resource Center. While the state reimburses FRC from a fund not tied to the budget process, it re- quires proof the college has already paid a bill before it pays the college. Scoubes said he had hoped to finish the LRC project with the Umpqua line of credit. Now, the concern is that Scoubes would have no money to write that check, which will mean he won't See Advance, page 12A PDH board resists legal recourse to Measure B Linda Satchwell Staff Writer Isatchwell@plumasnews.corn Plumas District Hospital's board held its first post-Mea- sure B election meeting Sept. 2. In fact, board members held two meetings: a special meeting and a regular month- ly meeting. The special meeting held two agenda items of note. The first was to discuss possible action following voter ap- proval of Measure B and its impact on bondholders and the district. The second was ongoing negotiations between the board and Chief Executive Officer Dick Hathaway over a new contract -- his current contraCta-sbeen extended through the end of Septem- ber. Tension in the room was palpable, with many mem- bers of the public in attem dance from both sides of Mea- sure B. With district counsel Steve Gross on conference call, the discussion seemed to be go- ing in a confrontational di- rection. Gross said he'd been in conversation the day be- fore with Hathaway and Chief Financial Officer John Nadone, along with PDH fi- nancial advisor Gary Hicks and bond counsel Brian Quint. They were in agreement, he said, that the tax cap posed "an impairment of the security of the bodh_01der:s that hold the $3.2 million in bonds ... those bonds were sold with respect to a securi- ty that constituted an unlim- ited taxing authority of the district to tax real property to generate revenue to pay debt service on the bonds," said Gross. He said the board had adopted a resolution when the bonds were sold, which said that the district would "protect the security" of the bonds. Further, the district is ob- ligated to inform bondhold- ers of "any material events that may affect the bonds or the district's ability to repay the bondm" Gross said he got a jump on this, informing the sole bondholder, United Health Group, lhrough .its investmenf ad'gisor of the Measure B results. They discussed the election and its potential effect on the security of the bonds and, he said, "We anticipate the bondholder will be extremely concerned about the impair- ment of its security and will request further assurances that the district will take any and all necessary steps to protect their security." Gross suggested the likely necessary step "could be in the form of a lawsuit that challenged the validity of the measure." Board member John Kim- mel maneuvered the discus- sion onto more neutral ground. He first suggested $50 per $100,000 would be more than suffioient to ser. vice the $3.2 million in debt. When Gross replied that even if it were sufficient to- day and, likely, into the fu- ture, "that doesn't mean that the security hasn't been im- paired" if the bondholders wanted to sell the bonds. In that case, the bonds would probably sell for a signifi- cantly lower amount because of the tax cap, compromising the current bondholder's in- vestment. Undaunted, Kimmel looked for a solution that involved the hospital taking on re- sponsibility for the bonds, "Would they give us the op- tion to buy it back first?" he asked. "I would think that would be an option you could proba- bly talk wRh ,the bondholders  about in lieu of some other action to challenge the mea- sure," said Gross. Board member Bill Elliott, backed up Kimmel's think- ing, and also suggested the hospital could return the "$2 million in proceeds that we haven't spent. That would mitigate any risk," he said. Though Gross didn't use the phrase "precedent set- ting," it did seem the hospital bond issue might be carving out new territory once again. He explained the bondhold- er is a large investor, and a promise from the hospital to pay on the bonds might not be enough. "Protecting the security" of the bonds is tied to the fear of a "ripple effect," Gross said. See Recourse, page 11A DFG likely to appeal class ruling in pike litigation Diana Jorgenson Portola Reporter djorgenson@plumasnews.com For more than a year, the class action lawsuit of east- ern county citizens and the city of Portola versus the Cal- ifornia Department of Fish and Game over economic im- pacts of the Pike Eradication Project was out of public sight, until Judge Hilde's rul- ing to certify the plaintiffs as a class a couple of weeks ago. In an update to Portola's city council at its regular meeting Aug. 25, City Attor- ney Steve Gross reported he attended a case management conference for the court to meet with attorneys from both sides of the pike eco- nomic impact lawsuit the previous Monday to discuss procedural issues and time- lines. "At that case management conference, the attorney for the state of California in- formed the court that they were working on their writ as we spoke, which means they will file a writ to appeal the court's decision. Based on that representation by the state, the court stayed every- thing for a month," Gross said. Speaking on behalf of the Department of Fish and Game, Jordan Traverso, deputy director of Communi- cations, Education and Out- reach, declined to comment. "The department has a longstanding policy that pro- hibits us from commenting on ongoing litigation," he said. Judge Hilde's comprehen- sive, 22-page ruling granted class certification with three subgroups. Class A is com- prised of persons and entities having businesses in the Lake Davis area that filed claims with the California Claims Board that were re- jected. Class B is composed of per- sons and entities owning real estate in the area that filed claims that were rejected, and Class C is for persons, en- tities or political subdivi- sions injured by the 2007 poi- soning that filed claims that were rejected. Class C consists of the city of Portola, but was designed to incorporate Grizzly Lake Resort Improvement District and Plumas County should they file, which they did not. Judge Hilde found suffi- cient commonality in the complaints filed with the Vic- tims' Compensation Board to qualify as a class, with differ- ences accounted for by the three subclasses. She also found it beneficial to avoid multiple lawsuits since more than 102 litigants had retained class counsel. Since more claims were filed with the claims board than retained counsel -- up to 200 according to estimates in the ruling it is possible those claimants might also file suit. Anyone who did not file a claim with the state in 2008 would be ineligible to join the suit at this point. According to Hilde's rul- ing, individual damages would still require proving and would be determined through an administrative proceeding at a later date. David Diepenbrock, attor- ney for individual plaintiffs, and Gross, attorney for Por- tola, both emphasized going to trial was not the only way the case could proceed. They continue to talk to legislators about creating leg- islation to provide compensa- tion to those claiming dam- ages from the poisoning of Lake Davis. Senator Dave Cox was sup- portive of the idea, but be- cause of state budget prob- lems, he felt he needed the See Pike, page 11A ,L b !I Homegrown harvest The Homegrown Festival on Aug. 28 featured cooking demonstrations using the freshest regional produce. Sean Conry of Longboards Bar & Grill showed his magic with dessert, filling Amaretto soaked peach halves with mascarpone cream, garnished with Amaretto cookie crumbs and chopped walnuts, and drizzled with honey. For more information on the festival and other local farming news, see page 6A. Photo by Mona Hill To subscribe to the Bulletin, call 530-283-0800