Call the COPs

COPs are "certificates of participation." Some agencies call them revenue anticipation notes or some such. The idea is to get money upfront when you have identified a revenue stream. They aren't necessarially bad but what's going on in Riverside County is pure abuse.

The COPs are being issued to refinance the county's 2007 series B auction rate certificates and to fund a cash funded reserve fund. The certificates were originally issued in 2007 to finance a portion of an 800 MHz public safety radio communications system and to refinance outstanding 1997 COPs. The COPs are secured by lease payments made by the county for use and occupancy of the County Administrative Center and several facilities financed with the 1997 COPs. Once completed, the project may be substituted into the lease. Lease provisions are standard and typical of California leases, including two years of rental interruption insurance. To date, the project is proceeding on budget.

Got that? Rolling over 11 year old debt and adding to a cash reserve fund. What would Suze Orman say?

The quote from a Marketwatch article last month announcing a Fitch downgrade. I expect wholesale California multi notch downgrades by the time the Legislature finishes their emergency session.