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