"The Muni Bonds In The Hardin Jail Project: Who Lost Money?"
Excerpt:
We posted an investigative piece Monday about the back story on the empty jail in Hardin, MT, explaining how a consortium of companies made millions on the project that has netted exactly nothing for the struggling town.
But what about the $27 million in high-risk municipal bonds that were issued to fund the construction of the speculative jail in 2006 and 2007?
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Related:
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When Hilton's criminal history came to light, Hardin officials stopped contract negotiations. But if something doesn't happen soon the Hardin jail could face foreclosure.
Two Rivers Authority used a 27 million dollar revenue bond to fund the facility. The bonds were sold in 5,000 dollar increments. Some ended up in brokerage firms across the country. (((MAYBE AT GOLDMAN SACHS??)))
The plan was to pay bondholders by renting cells. But with no inmates, there's no income. The jail defaulted on its payments in May 2008. Two Rivers Authority has been paying off its debts by dipping into its reserve fund. But according to Two Rivers Vice President Al Peterson those funds have dried up.
The bond says the trustee, US Bank (US Bancorp) can seize control of the jail, with the permission of 66 2/3 percent of the bondholders. It can foreclose on the jail and sell or lease it to pay back bondholders.
Two Rivers' Officials thought a private security firm was the answer to their financial problems. American Private Police Force planned to lease the jail for 10 years. But when some questioned whether the company is legitimate, and the rap-sheet of its founder, Hardin officials put contract negotiations on pause. So for now the financial future of the Hardin jail remains in limbo.
Bondholders are scheduled to begin receiving payments November 1, 2011. But if they don't the they could sue.
In the meantime, the city of Hardin is one step closer to forming it's own police department. Hardin officials assured residents the American Private Police Force will not be involved. Big Horn County Commissioners voted in support of the department yesterday. The police department will cost the city about 1 million dollars a year. No word yet on how the city will pay for it.
U.S. Bancorp Announces $2.5 Billion Common Stock Offering
MINNEAPOLIS--(BUSINESS WIRE)--May. 11, 2009-- U.S. Bancorp (NYSE: USB) announced today that it has commenced a public offering of approximately $2.5 billion of its common stock for sale to the public.
The shares will be issued pursuant to a prospectus supplement filed as part of an existing shelf registration statement filed with the Securities and Exchange Commission on Form S-3. U.S. Bancorp intends to grant the underwriters an option to purchase up to an additional 15 percent of the shares sold to cover over-allotments, if any.
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. are acting as joint bookrunners for the offering.
