COURTHOUSE FINANCED BY NONPROFIT GROUP.

Byline: Charles F. Bostwick Staff Writer

LANCASTER - Los Angeles County's new $109 million courthouse opening today in Lancaster doesn't belong to the county - it belongs to a private nonprofit corporation set up so the county doesn't have to ask voters to approve bonds.

The Los Angeles County Courthouse Corp., headed by an unpaid board appointed by the Board of Supervisors, is among 27 nonprofit corporations and joint-powers authorities created by the county over decades to finance construction of hospitals, courts, jails, parks and other facilities.

``What we do is lease facilities,'' said Deborah Lindholm, assistant treasurer and tax collector. ``I think it's a fairly common way for municipalities to acquire property over time.''

Established in 1984, the courthouse corporation has financed 10 courthouse construction projects - from Downey to Chatsworth - through lease revenue bonds and ``certificates of participation.''

The money to pay off the courthouses comes from extra fees added in Los Angeles County, under legislation passed by state lawmakers in the 1980s to fund new courthouses, to parking tickets, traffic tickets and criminal fines

The money goes to the investors who have purchased the certificates and thus ``participate'' in the lease payments.

The certificates are regarded legally as a leasing technique, not debt, because payment is tied to an annual appropriation by whatever government is using the facility, experts say. For investors, they have to worry about defaults that are more frequent than in municipal bonds.

E-Muni, a firm that dispenses information on municipal bonds, says in theory the certificate holder could foreclose on the government building or equipment financed by the certificate, but so far no investor has ended up owning a piece of a schoolhouse or a storm-drainage system.

In the Antelope Valley courthouse's case, the certificates issued in 2000 were for $115.5 million. By the time they are all paid out in 2034, interest will have added another $136.3 million - an annual interest rate of about 5.2 percent.

They are paid off through rental payments - amounting to $6 million this year and going up to $7.7 million a year starting in 2005, when principal starts being paid off, documents show.

The whole arrangement upsets anti-tax activists. They see the arrangement of creating an independent entity to lease property to a government as a subterfuge, aimed at getting around state constitutional limits on adding debt without voter approval.

``They are, in our view, done exclusively for the purpose of avoiding voter approval,'' said Howard Jarvis Taxpayers Association representative Jon Coupal. ``Even though they look like bonds, they walk like bonds, they quack like bonds, they claim that these things are not bonds.''

Government officials say the rental payments that pay off the certificates don't obligate a government to levy any tax. In the courthouse's case, the money to pay the rent comes from the court-fine surcharges, not the general fund, officials say.

In the Antelope Valley, the courthouse construction was put on hold until projections showed countywide court-fine surcharges were enough to pay off the costs.

But Coupal said the certificates in fact represent ``long-term financial obligation of the municipality.''

``They're once again trying to find a way to shut the people out of the process,'' Coupal said.

Gail Fry, president of a local government reform group called Civic USA, said she has concerns about financing public facilities through private entities. The public might have less access to information about how their money is being spent and the arrangement could pose conflicts for the board members, such as the judge on the courthouse corporation board, she said.

Fry said she understands the frustration government officials could feel in needing voter approval for facilities. But she says she is concerned that California citizens are under the impression they have a say in approving local governments' debt.

``What I think is the public should at least be informed this is the way they are doing things,'' Fry said.

Charles F. Bostwick, [phone]

chuck.bostwick(at)dailynews.com