Whose Bonds Are These?

Here’s an interesting case from the Los Angeles area covered by the LA Times‘s Mike Boehm. The Long Beach Museum has been in a running battle with the city over money it failed to raise to cover bonds issued several years ago. The matter first arose as a de-accessioning issue but has now morphed into something different. The museum’s director did some legal research on the bonds in question and came away with a different interpretation of his institutions responsibilities. The issue would be me merely a local matter if the perilous state of municipal governments in the US didn’t make the likelihood of similar battles breaking out across America:

The documents, Nelson says, put the onus on the city to make good on the bonds should the museum’s fundraising fail — and say nothing about the museum foundation having to pay the city back.

Given the legalities of the situation, Nelson says, to make any repayment on the bonds now would be a misappropriation of museum funds.

And given the museum’s take on the matter, Long Beach Mayor Bob Foster says the consequence should be a loss of all city support. He has recommended cutting the $569,000 museum appropriation from the proposed 2010 city budget that the City Council is expected to vote on by Sept. 15.