Mesa’s financing scheme relies on issuing “notes” which rely on repayment from Federal Transportation Funds for projects which have been canceled or no longer needed.
Mesa plans on issuing “notes’ totaling more than $110 million. Federal funds for 16 road projects have been designated by Mesa to repay the “notes”. The amount expected to be received by Mesa will be insufficient to repay the “notes” and Mesa taxpayers will be obligated to pay any deficiency.
If Mesa taxpayers are ultimately required to make up any deficiency, the city may be responsible for securities fraud. Additionally, the Arizona constitution requires taxpayer obligated bonds to have a public vote and Mesa’s plan could be unconstitutional.