Prosecutor urges against transfer repayments

SANDPOINT — Bonner County commissioners continue to warily circle the knotty dilemma of $3.1 million in long-term loans amid a growing body of legal research that deems the transfers illegal.

Commissioners stopped short of grappling with a potential solution on Tuesday, although they are considering a resolution that would declare the loans void and not subject to repayment.

The resolution, drafted by Commissioner Mike Nielsen, is slated for discussion by the board at its regular business meeting on Tuesday.

The two inter-fund loans of $1.6 million and $1.5 million were drawn from the county’s solid waste fund in 2011 and 2012 to finance a new juvenile detention center and complete renovations of the courthouse.

They are being paid back over a 15-year period at a rate of 0.20 and 0.30 percent.

However, the county’s bond counsel on the courthouse financing determined the long-term loans were contrary to state law and the Idaho Constitution, which prohibits a county from incurring a debt beyond a single fiscal year unless it’s approved by voters. An Idaho deputy attorney general concurred last month that such loans appear to be illegal.

The Bonner County Prosecuting Attorney’s Office also found last month that the loans appear to be contrary to state law.

However, Prosecutor Louis Marshall said his office cannot guarantee that a court would concur with its opinion.

“We could take this to the courts to try and get a definitive answer. The problem with that is we don’t know what the answer is going to be,” said Marshall. “The court would be relying on the same law — or lack thereof — that we’ve relied on and the attorney general has relied on.”

Then there is the issue of repayment. It can be argued that the county has a moral obligation to repay the money it borrowed, but it could be illegal to do so, according to the prosecutor’s office.

“We exacerbate the situation because we’re violating the same statutes as the transfers,” said commission Chairman Cary Kelly.

The prosecutor’s office is recommending that the county make the solid waste fund whole during the annual budgeting process, which could include fee increases or other measures.

Former Commissioner Lewis Rich, who was on the board when the transfers were effected, remains unconvinced that the transfers can be construed as loans.

“That opinion, I don’t think, is going to wash,” said Rich, who discounted the AG office’s opinion because it did not come from Attorney General Lawrence Wasden.

Nielsen, however, is firm in his belief that transfers were improper, a conclusion that’s shared by the attorneys who have parsed through the matter.

“They’ve all addressed the issue and have all come to the same conclusion — that to borrow money is to transfer money. It’s basically the same thing,” said Nielsen.