The long-running legal battle involving bonds issued by the City of Buena Vista and the company that insures those bonds has taken a new turn.
In 2005, Buena Vista issued $9 million worth of municipal bonds to cover the cost of building a golf course that was intended to bring in much needed cash for the city.
But the course never generated as much money as expected and last year Buena Vista stopped making payments to bondholders saying it could no longer afford them. That left the insurer of the bonds – ACA Financial Guaranty – on the hook for the amount still owed.
The two sides failed to agree on a settlement and now ACA is suing to force the city to resume payments.
Buena Vista says the suit has no legal basis because in 2005 it pledged its city hall, its police headquarters and the golf course as security against default. City leaders maintain the insurance company's only option is to foreclose and take possession of the property.
In its court filing, ACA contends the city is financially sound and fully able to make the bond payments and should be ordered by the court to do so.