Mike Krause, CEO of the housing authority, said what would happen to the debt depends on the source of funds used in securing the loan. “When federal dollars are involved, it is likely that HUD (U.S. Department of Housing and Urban Development) will have a legal interest in the property. Neither the city (Wilmington) or the county (New Hanover) has a legal interest, ‘per se,’ in our properties,” he stated in an e-mail.
Arthur Cottrill, WAVE’s director of finance and administration, said the Cape Fear Public Transportation Authority cannot incur debt for operation without prior approval from the city and the county, as is laid out in the inter-local agreement between the three parties.
“The authority has not requested nor has approval been given to incur debt under the agreement, and to my knowledge neither the city or county have incurred debt on behalf of the authority under this agreement,” he added.
Cape Fear Public Utility Authority spokeswoman Carey Ricks said the county or city could file a lawsuit and pursue the authority’s assets if it didn’t pay the debt agreed upon for general obligation bonds and certificates of participation, as were agreed on in the inter-local agreement between the agencies. If CFPUA didn’t have enough assets, then the governments would each be liable for its own debt or bond that was initially transferred to the authority, she stated in an e-mail. For revenue bonds issued in 2008, the trustee, U.S. Bank, is responsible for taking whatever actions deemed necessary to enforce the rights of the bondholders. This could include taking custody of the authority’s funds and appointing a consultant to assist in evaluating the authority’s budget, she stated.
Date posted: December 28, 2010
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