How could anyone have been so stupid? More than a few readers must have joined us in that thought while reading an interview with a former commissioner on Whidbey Island last week.
Former Holmes Harbor Sewer District commissioner Bill Spalding told Herald reporters that the district had indeed been warned by state officials against issuing a disputed set of bonds. Both the attorney general’s office and the state auditor’s office told the district not to go ahead with the $20 million bond sale.
As Spalding told The Herald, there were the warnings at the time, "But nobody will give it to us in writing."
Well — there’s no shortage of written materials about the commission’s apparent mistakes now. And, as the new commissioners say, the district will be employing quite a few attorneys to try to work through the issues caused by the bond sale. No doubt, the attorneys will contribute to the volume of writing.
The state auditor and the attorney general’s office both believe that the district had no power to issue the bonds at all. The commissioners were apparently receiving some sort of contrary advice. Given the knowledge and experience that state experts have, ignoring their advice would appear to be a dubious strategy in even the most routine case. For a small sewer district — with 500 customers — planning to issue $20 million worth of bonds for a project outside its own area, ignoring such cautions would seem to be an invitation to trouble, at best.
In any case, the commission received a timely warning. And the district told the state that the matter had been put on hold. That should have been the end of the matter.
But it wasn’t. And now attorneys and a whole new set of commissioners — thank heavens for that, anyway — will be at the center to trying to sort out the mess made by people who may have thought they had the right to do what they had been warned against, as long as the warning wasn’t in writing.
Despite all the complaining about our elected leaders, there aren’t many public officials who would do something this stupid. This case is such a rarity that Auditor Brian Sonntag has written his first letter referring a matter to the federal Securities and Exchange Commission for possible examination. And the tiny district apparently will end up second only to the Washington Public Power Supply System for the largest bond default in state history. All of that is probably little consolation to the people in the district at the moment. They deserved much better.
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