100% FALSE. Interest rates can only be regulated under the state the lender has their charter or corporate HQs (forgot which), that’s why no bank is chartered in CA per the SCOTUS. I guess you have not seen credit card rate the last 35 years in CA either-18%035% and even 140% for “cash call”, or try going to a “payday” lender where the annual interest rate is over 100%.

But if such a practice of making high interest business loans in lieu of conventional redevelopment (now defunct) was to become widespread, I can think of a number of cash strapped cities that might be tempted to abuse this. They could start selling zoning to the highest bidder. Once again, I am not making accusations. I assume everything was done on the proverbial “up and up.” What I am doing is discussing whether this is good public policy and practice since we are likely to see more of it.

Example:
Owner A comes along and wants to expand their property. But the city denies the expansion for ambiguous reasons.

Owner B comes along in a nearly identical property and agrees to borrow money from the city and their expansion plans are approved.

This is why if a local government entity is going to offer a loan (say for surplus property sale) it is better to have an independent appraiser set the market interest rate for the loan. Not doing a loan for market interest arouses suspicions.

Doubling the interest rate is not necessarily usury, but it could create the appearance of a business buying influence or the city selling permit approvals to the highest bidder.

A local government can sell surplus property and take back paper on an installment loan. But this is entirely different.

Although I am not a lawyer, paying the carrying costs of a business would likely be illegal for a local government to do in California. This is not a joint venture for a “public-private” project.

Could the city have waived permit fees and accomplished the same thing because the expanded facilities would generate taxes for the city?

And what about the appearance of extortion: “we will give you your expansion permits if you allow us to make double the going interest rate on a loan to finance your improvements?”

Think again Frank.

Occupy got tired of getting sprayed in the face with mace and hauled off to the slammer in cattle cars while the rest of you were trashing them.

Don’t forget that Occupy protested at the SF Federal Reserve Building (52 arrested), protested at Obama’s campaign HQ’s in DesMoines and marched on both the Capital Building and the Supreme Court in DC while you folks conveniently weren’t paying attention.

When’s the last time the Tea Party took a stand or did anything that mattered?

Last I read all the Tea Party heroes back in DC voted to raise the debt ceiling. 😀

The author’s accusation that Ventura is loan sharking doesn’t hold water either. Each U.S. state has its own statute which dictates how much interest can be charged before it is considered usurious or unlawful. California usuary law prohibits lending at interest rates above 10%. Clearly Ventura is not charging “loan shark” rates as the author charges.

Assuming that the casino is low risk, are we to believe that they would be unable to secure the loan for a rate a lot more favorable to them than 8%? Is there no other lending entity out there who could match or undercut the City’s proposed rate? What planet are we living on? I would have been happy to refinance my house in order to make that kind of a loan.

Then there’s the question of “whose idea was this?” How strange is it for any business in need of expansion funds to go knocking at the City’s door for a loan? It simply isn’t the first place one would normally consider tapping for an $850,000 loan much less for an interest rate that seems ludicrous on it’s face.

Was it the City’s idea? Very doubtful unless you believe there’s a whole group of City employees who do nothing more than sit around and figure out who might want to borrow money from the City at usurious rates.

Perhaps this is a legitimate transaction that can only be understood by financial wizards, but to lesser lights such as myself, it looks more like a bribe disguised as a loan.

I wonder if the casino could have expanded their facilities at all without City approval?

Hmmmm?