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Someone attempted to do something about MBIA and the Sports Authority

And others expressed their disapproval about it. What the “it” is, and who it was that was trying to do “it” remain unclear.

Who dunnit?

Who dunnit?

A surprise legislative maneuver has local government lobbyists scrambling to defend the agency that pays the debt on Houston’s sports stadiums against an alleged takeover attempt by the company that insures its bonds.

The insurer, MBIA, has hired lobbyists to circulate language that would prevent the Harris County-Houston Sports Authority from spending money on anything other than debt service and legally required payments without its creditors’ approval.

Sports Authority chairman J. Kent Friedman said the draft, which names neither the Sports Authority nor MBIA, appears innocuous at first glance.

“It’s extremely well done. You have to be an insider to know what this really does,” he said. “In effect, they would take over running the Sports Authority. I’m convinced they’ll try to stick it on some other piece of legislation at the end of the session, on the floor so it’ll get as little notoriety as possible, and try to slip it through.”

A Houston-area lawmaker had considered attaching the language to a pending financial transparency bill, Friedman and others said, but quickly dropped it when a lawyer whose feedback he had sought realized its implications. The legislator could not be reached Friday.

[…]

Harris County lobbyist Cathy Sisk called the legislative maneuver “bizarre,” saying the insurer appears to be trying to get lawmakers to do what a judge did not.

“We’ve pretty much alerted everybody in the delegation to watch for it,” Sisk said. “I’d like to think that means it doesn’t have much of a chance of being attached to anything, but you never know. Anything can happen in the Texas Legislature.”

City of Houston lobbyist Kippy Caraway said her team also is on alert.

Kevin Brown, a spokesman for MBIA affiliate National Public Finance Guarantee Corp., said what the firm seeks in its lawsuit against the Sports Authority and the goals of the draft amendment are different.

“The legislation that we have been promoting seeks to achieve greater transparency and accountability from certain governmental entities that are in financial distress,” he said. “The Sports Authority’s opposition to that legislation should raise serious questions for Houstonians and other stakeholders about the authority’s financial condition and the reasons for its objections.”

The draft amendment runs two pages and would apply to a “political subdivision in condition of financial stress,” as defined by five points that describe the Sports Authority.

The amendment says such an entity “may not, unless authorized by (its) creditors” spend money on anything other than debt service, payments required by law or a contract, or to maintain its assets. The draft also would, among other things, require the entity to submit to its creditors a plan stating how it will address its financial woes.

See here, here, and here for the background on MBIA and the Sports Authority. Frankly, the most important piece of information in this article is that the Chair of the Sports Authority is now being referred to as “J. Kent Friedman” again, after a brief run of being called “Kenny Friedman”. Whether this represents a return to copy-editing standards on the part of the Chron or the documenting of a brief midlife crisis on Friedman’s part also remains a mystery.

Things that the story left a mystery:

1. The identity of the legislator. Why wouldn’t you just say who the legislator was? So what if he couldn’t be reached for a comment by the time the story went to print? The fact that this amendment was drafted and this legislator was shopping it around before pulling it back isn’t in dispute, so no one’s reputation is on the line. What purpose is being served by holding back this information?

2. The full text of the amendment. Reporter Mike Morris has clearly seen it, since he quotes from it, but it runs two pages and all we get is a couple of sentence fragments. The amendment was apparently not filed, since I can’t find it via an amendment search using the phrase “political subdivision in condition of financial stress” or a combination of the words. But clearly it exists, so a document could be made of it and uploaded somewhere for the rest of us to see.

3. The bill that the unnamed legislator was going to try to attach it to. At this point in the session, it could only be attached to a Senate bill, and if adopted it would thus require a conference committee to get the different versions straightened out for final votes. If we knew the Senate bill in question, we could then ask the Senate author what he or she thinks of this maneuver. Given all of the sturm und drang we’ve seen recently, that might have made for a more interesting story than the one we got.

As it happens, from prior communication I’ve had with MBIA representatives, I was able to get answers to these questions. The bill in question was SB14, specifically the committee substitute CSSB14, authored by Sen. Tommy Williams. The House legislator was Rep. Jim Pitts, who was the House sponsor for the bill. I don’t know how you can call Rep. Pitts, who is based in Waxahachie, a “Houston-area lawmaker”, but I suppose that’s a minor quibble at this point Rep. Jim Murphy. The amendment, which was drafted but not officially filed, is here. Again, I’m not sure why this information wasn’t in the story. Be that as it may, MBIA disputed Friedman’s contention that this was an attempt to “take over” the agency, saying that the main purpose of the legislation was to enhance transparency and accountability. At last report, a point of order had been sustained against CSSB14 in the House, so this is all likely moot at this point. But we still should have known more about what was happening at the time.

UPDATE: I have since been informed by Judge Emmett’s office that the legislator was Rep. Jim Murphy, not Rep. Jim Pitts. I suspect this was a matter of confusing one Jim for another.

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One Comment

  1. Bayard Rustin says:

    MBIA is playing hardball because they’re in trouble. A cursory search on Google news archives speaks volumes about their financial situation. What I don’t understand is how MBIA’s ratings downgrade means that the Harris County-Houston Sports Authority has to cough up more money in the short term. I suppose if I were an investment banker specializing in municipal bond offerings, I’d understand. I’d like to know too if other government entities are going through the same thing with MBIA.