The city of Buena Vista, Va., walked away from a $9.2 million debt on the municipal golf course two years ago, and ACA Financial Guaranty Corp. has filed suit, asking a judge to order the city to resume payments. If the city refuses, the firm could foreclose on the golf course.
Nearly two years after the city of Buena Vista, Va., walked away from a $9.2 million debt on the municipal Vista Links Golf Course, it finds itself headed to a courtroom, the Roanoke (Va.) Times reported.
The city was sued June 13 by ACA Financial Guaranty Corp., the firm that agreed in 2005 to insure bonds used to finance the course. ACA has been making payments since the city’s default in late 2014, the Times reported.
In a lawsuit filed in Buena Vista Circuit Court, lawyers for the New York firm are asking a judge to order the city to resume payments. Should it refuse, that would lay a legal foundation for a step that ACA has so far been reluctant to take—foreclosure on the golf course and the buildings that house city hall and the police department, which Buena Vista pledged as collateral when the bonds were issued, the Times reported.
Although ACA signaled in correspondence earlier this year that it would rather avoid the unusual step of taking possession of a city hall, the firm’s attorney said that remains an option, the Times reported.
Language in the lawsuit spells out how the city would not be able to find a new home for its evicted governmental offices without the permission of ACA, should the firm prevail in court. But first, it seems that ACA will make another argument that the city should pay up, the Times reported.
“The city is engaging in conduct that it would never allow from its own citizens,” ACA’s attorney, Steven Higgs, said in a statement that followed the filing of the lawsuit. “The City Council should honor its promises and pay back the money it borrowed. Even the city has to pay its debts.”
The legal action is the latest chapter in a long-running dispute over the financing of the Vista Links golf course, which Buena Vista proposed in the early 2000s as a financial boost for a city struggling to maintain its waning industrial base. The idea was that revenue from the course, along with the residential and commercial development that it would generate, would help Buena Vista pay off the lease revenue bonds used to fund the initiative, the Times reported.
But the golf course struggled financially, and the recession made things worse for the city. Under a deal worked out in 2011, the city was allowed to make half payments for the next five years, with the unpaid balance to be added to the end of the bonds’ lifespan, the Times reported.
Then, in December 2014, the city council voted to stop making payments, which left ACA holding the bag. City officials have said that while they are no longer able to survive financially under the terms of the bond issue, they are open to a settlement of some kind with ACA, the Times reported.
The city’s attorney, Brian Kearney, declined to comment to the Times on the lawsuit.