A Fight Over City Hall—Literally - WSJ

I don't know who the bigger idiots are the City for risking money on a golf course or the bankers for loaning $9.2M backed by two buildings only worth " a few hundred thousands." Either way they both deserve what they get from this realtionship.

By IANTHE JEANNE DUGAN

A financial firm is fighting City Hall—and angling to take over the building itself.

Buena Vista, Va., borrowed $9.2 million through a bond offering in 2005 to refinance a municipal golf course. It pledged as collateral, of all things, its City Hall and police station. Now, amid financial difficulties, the city says it can't pay its debt, triggering a showdown over these public buildings.

On the other side of the battle is a big New York insurance company, ACA Financial Guaranty Corp., which is obligated to pay bondholders if the city defaults.

"They put up City Hall to finance the golf course," says Bonnie France, a lawyer for ACA. "It's collateral, so they could lose it. I've worked in public finance for 30 years and never seen this happen."

Municipalities across the U.S. are struggling with huge debts and shrinking revenue, making them vulnerable to similar situations. Harrisburg, the capital of Pennsylvania, is publicly flirting with bankruptcy. And when Central Falls, R.I., couldn't pay its debt recently, it handed its finances to a receiver.

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