There’s a provision in the statutes that says many financing arrangements with a term of less than five years don’t need LGC approval. This provision has been in the law since well before installment financing under Section 160A-20 was approved by the State Supreme Court back in 1991.

The exemption drew attention recently when the State Treasurer raised questions about a local government’s using the exemption at the same time as it was seeking LGC approval for another financing, and perhaps not telling the LGC staff this was going on. I hasten to point out that I’m not involved in the deal in question, and I know nothing beyond what’s in the press release.

I understand why the LGC staff might be troubled – the LGC is a regulator, and a regulator is always going to be upset if they think you’re trying to put one over on them, whether or not that’s your intent. And by not bringing it up while you’re discussing something else, it adds to the appearance that you’re trying to hide something.

 My only quibble with the Treasurer’s statement is the reference to the use of the 59-month exemption as a means of “evading” LGC review. I don’t like that characterization. The statute that provides an exemption from LGC review is as much a part of the statutes as those that require LGC review. It’s not a loophole, it’s an express authorization. If a local government decides to avail itself of that authority, that in itself shouldn’t be viewed as the local government’s doing anything wrong. There seems to be more going on in the situation the Treasurer is talking about, but I don’t like “evading.”