The way that city staff want to finance our new city hall is a) more expensive than traditional means, and b) less transparent and accountable to the public, at least according to the state treasurer.

In my post below about the weekly city council packet, I noted that I didn't know a bunch about the so-called 63-20 financing scheme in which Olympia would set up a separate organization to pay for the new building. City staff are recommending that we use this system.

Turns out that our state treasurer, Mike Murphy, isn't a big fan of the 63-20:

Let's keep public finance public.

That's the message Washington Treasurer Michael Murphy sent last month to the state's legislature, which in 2005 asked him to report on so-called 63-20 capital project financing.

The 63-20 format -- the numbers refer to a 1963 IRS ruling -- allows states and municipalities to establish nonprofit public benefit corporations to finance projects. The corporations aren't subject to the same rules, regulations and disclosures that govern most public borrowing; the bonds they sell don't count against state debt limits.

"Its proponents say 63-20 financing offers a convenient way to get badly needed government buildings built in a way that is more easily digestible by a budget-conscious legislature than more traditional state-issued bonds or certificates of participation,'' treasurer Murphy said in an e-mail.

"The main way it achieves this supposed convenience is by skirting public works laws,'' he added.

Read the entire post

Here is a link to Murphy's report (beware pdf file). If you feel strongly about this, don't forget to email your city council members.

Here is a more recent op-ed from the Tacoma News Tribune on Murphy warning the City of Tacoma not to go down the 63-20 path :

When it comes to public- financing schemes, state Treasurer Mike Murphy is like your mother: If he tells you it’s a bad idea, you’d be smart to listen.

So when Murphy warns Tacoma city officials against using so-called “63-20” financing for its long-awaited Urban Waters project, it’s a huge red flag.

“If you want to pay too much, do a 63-20,” Murphy told The News Tribune last week when a reporter inquired about about his views on the matter.

...

Murphy has two good reasons for disliking 63-20 financing. Under this arrangement, the city would contract with NDC to build and operate the facility. The city would lease space from the nonprofit for 20 to 30 years, then assume ownership.

Murphy notes that the nonprofit would have to borrow at higher interest rates than city utilities would get in the municipal-bond market. So the city would be paying more in the long run.

Murphy’s second and no less important objection is that the nonprofit would operate and control a public facility but not be subject to any of the public disclosure or other legal requirements that would apply to the city. In fact, being able to avoid public competitive bidding and contracting rules seems to be one of Larkin’s arguments for going the lease-to-own route; it would save time and maybe money, she contends.

I would hate for the city council to get stuck in the same mud that brought down the convention center a few years ago. While it seemed at the time that most people opposed the convention center because they simply didn't like the city being involved in a "non public" project, the entire thing came down because the numbers didn't mesh.

Now, instead of taking the route of open, public financing, the city is trying to cut corners.