EDITORIAL for February 10 through 13, 2018
I’m CAVE MANager Paul Lotsof. In case you’ve been hibernating for the past
three years you may not know that a pair of companies based in Phoenix have
expressed plans to build thousands of new houses along Highway 90 in Benson.
El Dorado Holdings and El Dorado Benson LLC say that they will build and sell
about a thousand houses every year for the next 28 years. When asked who will
buy all those houses their answer is to trust them. That’s what they do and
they are good at it.
In May of 2014 El Dorado Benson LLC bought about 20 square miles of land from
another company that also planned to build houses. That company went
bankrupt. Shortly after the land was purchased a character named Mike
Reinbold began to show up at the Benson City Hall and he identified himself as
the Benson Project Manager and also a principal of the El Dorado companies.
Very few people know how Reinbold got appointed project manager or even who
appointed him. But we have been able to dig up some tidbits about Reinbold’s
past.
In the late 1980s Reinbold and some associates proposed to build an expensive
aircraft maintenance hangar at the Portland International Airport. They
convinced the airport authorities that there soon would be a vast unmet demand
for aircraft maintenance and that public bonds should be used to finance the
project. Those bonds were guaranteed by the Oregon State Employees Pension
Fund. To make an extremely long and complex story short, the Oregon Attorney
General’s office filed lawsuits against Reinbold and his associates, claiming
that over 60 million dollars had disappeared and were unaccounted for.
Benson’s public officials are all well aware of what happened in Portland and
they appear to be agreeing with Reinbold that what happened 25 years ago has
nothing to do with the housing project has been proposed for Benson.
But the parallels are unmistakable. Just as public bonds were used in
Portland, Reinbold proposes to use similar bonds to finance his Benson project
and the Benson City Government has already played an important role in forming
the necessary special taxing districts which are to issue the bonds. And just
as the demand for aircraft maintenance in Portland was vastly overestimated,
only a fool could think that El Dorado will be able to sell a thousand houses a
year for 28 years in Benson.
Let’s take a look at some events over the past couple years and see if you think
any of this is suspicious. In mid 2015 the Benson city officials decided to
hire a law firm to give them advice on bonds and special taxing districts. It
turned out that there are only two law firms that specialize in special taxing
districts that issue bonds. One is a giant law firm called Greenberg Taurig.
On June 22, 2015 their bond specialist attorney addressed the Benson City
Council. Michael Cafiso’s presentation was filled with stern warnings about the
risks in setting up special taxing districts and he used the word “disaster” to
describe what might happen. After that presentation Reinbold said he wanted
nothing to do with Greenberg Taurig so the city hired the other firm, Kutak
Rock, whose bond specialist is Ken Guckenberger. Guckernberger also used the
word “disaster” to describe what might happen.
Over the years both the city and the Benson School District have used the
services of a well known investment company based in Saint Louis. It’s been
around over 100 years and is called Stifel Nicolaus. Stifel has a bond
consultant named Mark Reader. Reader did a presentation before the city
council. Reader also used the word “disaster” to describe what might happen to
the taxing districts. Reader suggested that the city get a financial statement
that shows that El Dorado has the financial means to carry out their grandiose
proposals. Reinbold said he wanted nothing to do with Reader or Stifel
Nicolaus. So the council passed a resolution to have nothing more to do with
that company. They hired another bond investment counsel instead.
Heard enough? Well, there’s more:. There have been two members of the
Benson City council who have expressed skepticism about El Dorado and its
housing project. One skeptical council member is David Lambert and the other
was Lori McGoffin. McGoffin recently resigned her council seat to take a full
time job with the city. To me it looks like she was bribed into shutting
up. Only last week the remaining council members decided to fill McGoffin’s
seat with Pastor Lupe Diaz who is a big supporter of Reinbold and El Dorado.
Here’s what Diaz had to say during a special council meeting on December 28th:
Voice of Diaz: “You have the ability to be able to change everything here for
Cochise County and several counties that are going to be affected by this
project. I’m really excited about it”
So now we have yet another puppet on the city council.
Still another development is that the city council voted to have no part in the
management of the ten taxing districts so Reinbold and his friends get to do
nearly anything they want.
My opinion is that there is no question as to whether a disaster will take
place. The only question is when the disaster will take place. My best guess
is that it will take well over a year before the bond holders lose their money
and the lawsuits are filed left and right, and the federal and state
investigators descend on Benson . Not in time to influence the election that
will take place this August. So almost certainly the El Dorado puppets on the
city council will be re-elected and that’s a shame.
I’m CAVE MANager Paul Lotsof and the opinions you’ve just heard are mine and not
necessarily anyone else’s. If you’d like a copy of this editorial or you’d
like to express your opinions go to the CAVE Web site and click on
Editorials. We’re at CAVFM.com. That’s CAVEFM.com