Guest opinion: Lamar’s debt lawsuit sets a bad precedent
By going to court to shield itself from the consequences of its own profligate policies, the city of Lamar has done as much to undermine the rule of law and fiscal responsibility as any entity could. In suing the local power authority to relieve itself from debt it willfully incurred, like a cookie-stealing child running from the paddle, the little city is telling the world that the rules don’t apply to it.
In 2004, Lamar decided it was worth going into debt to refit a local gas-burning power plant so that it could burn coal. The aging plant had become costly to run and coal at the time was considerably less expensive. Lamar not only agreed to incur the debt associated with the refitting, but it also became the operating authority for the project.
From the outset, the project was something of a comedy of errors, with cost overruns, technical problems and management issues. All these costly issues led members of the Arkansas River Power Authority (ARPA) — including Lamar — to approve more bond-backed debt to try and put the effort back on the rails. Unfortunately, when a defective boiler failed an emissions test, snarling lawyers from WildEarth Guardians broke from their strained leashes and sued the project into submission. The punitive settlement with the voracious sue-and-settle enviro NGO effectively scuttled the project, leaving the ARPA members with a pile of debt and no power plant.
ARPA, to its credit, valiantly tried to do right by its members by restructuring electricity purchasing agreements to keep rates reasonable and offering members each a $600,000 settlement — enough to at least cover most of the principal payments on each member’s share of the $118 million debt over the next 30 years. But that wasn’t good enough for Lamar, which has since gone to court demanding to be freed from the debt obligations it took on quite intentionally.
Let’s concede that this was a pretty bad deal for Lamar. No one likes to take on risk and come out on the losing end. But then, that is why it is called “risk.” Lamar’s decision-makers knew — or should have known — that their investment might not pan out. In Colorado, a state crawling with litigious environmental NGOs, the city should have been aware that a power plant fueled by coal, the most villainous of fossil fuels, could fall into the crosshairs of WildEarth Guardians or another such group. Then there is taking into account that sometimes in a large, technical project, regulated by overzealous bureaucrats, stuff happens.
The point is that the grown-up response would not be to throw a legal temper tantrum and try to use the court system to shift the consequences of your ill-advised choices to someone else.
There is more to this than just that principle, however — there’s the potential for practical consequences, as well; if Lamar successfully uses the law to dodge the effects of its own actions, it will set a bad precedent and signal to every other local government entity that it’s OK to gamble recklessly with taxpayer money, because if they bet wrong they can just use the courts to reset everything back to zero.
What would it look like if every local government played this game?
The city of Grand Junction is now considering building its own city-run broadband fiber optic network, thus inserting itself into the broadband market as a provider. Grand Junction currently has a rich private-sector broadband market with 20 some-odd companies meeting market needs quite handily without the “help” of municipal government.
Other cities that have done what Grand Junction is now mulling have repeatedly proven that when city government becomes a wheeler-dealer in fiber optics communications, it usually ends up badly. Across the nation, broadband schemes have burdened cities with millions of dollars of debt, and left them holding the bag for inefficient monopolies that drive away private businesses whose specialty is building and delivering broadband.
But there’s a back door to municipal boondoggles, just ask Lamar. Pursuing bad ideas that will cost millions of dollars is no big deal because, heck, we’ll just sue this or that party to get out of the debt. Problem solved.
This ridiculous logic fuels many a progressive-minded municipality. Consider the genius stroke of putting in miles and miles of bike lanes in traffic-congested Colorado Springs. Heck, if Colorado Springs knew it had the option of suing someone to relieve the debt it might incur for its proposed bike lane debacle, maybe it would still be pursuing the brilliant plan to further jam up already congested city traffic by taking out car lanes to make room for more bikes.
We should feel sorry for the taxpayers of Lamar. But it’s hard to feel bad for a city that proclaims the principles of a contract dead, then runs to the courts to reaffirm its lack of accountability.
Marjorie Haun is a freelance writer in western Colorado.
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