Capitol Sources Say Dem Power Player Chuck Chvala May Be Stirring The Public Finance Authority Pot

Capitol insiders tell @NewsMacIver that Chuck Chvala’s name keeps coming up in association with the Public Finance Authority, a WI-based, shadowy issuer of tax-exempt “conduit bonds.” #wiright #wibudget #wipolitics Click To Tweet

MacIver News Service | June 11, 2019

By M.D. Kittle

MADISON, Wis. — Is an old Republican nemesis working behind the scenes to bring back a bill expanding the power of a controversial player in the conduit financing industry? 

Chvala is connected with the Public Finance Authority. Sources say that’s clear based on the discussions the Republican caucuses have had in recent days. They’re just not exactly sure how.

Capitol insiders tell MacIver News Service that Chuck Chvala’s name keeps coming up in association with the Public Finance Authority, a Wisconsin-based, shadowy issuer of tax-exempt “conduit bonds” for “public benefit projects.” 

Chvala served in the state Senate for 20 years, leading Democrats in the upper house from 1995 to 2002. He unsuccessfully ran for governor in 1994. He did not seek re-election to the Senate in 2002 after being charged with misconduct in office. 

More Questions Surface About Shadowy Public Finance Authority

As Senate majority leader, Chvala was a constant thorn in Republicans’ side, a legislative leader with a long enemies’ list and an even longer memory for transgressions against his power base.

Chvala, sources say, is connected with the Public Finance Authority. That, they say, is clear based on the discussions the Republican caucuses have had in recent days. They’re just not exactly sure how. 

In 2017, then-Republican Gov. Scott Walker vetoed a provision that would have expanded the PFA’s power, giving it the ability to take private property through eminent domain. The governor struck the last-minute legislation at the request of three conservative senators who threatened to vote against the overdue 2017-19 budget unless the governor removed the PFA language.

We do know that at one point after the PFA was created in 2010 through bipartisan legislation, the authority and a connected entity, U.S. Communities, were based at Chvala’s old Madison law office.

Reached at his Wilson Street office on Monday, Chvala said, “I have no interest in talking to the press.”

Some Capitol sources say Chvala is among a number of interested parties pushing Assembly leadership to move on PFA legislation. Its sponsors include the National Association of Counties, the Wisconsin Counties Association, the National League of Cities, and the League of Wisconsin Municipalities — all with a vested interest in the PFA.

Unlike the last attempt in 2017, PFA critics are worried that without Walker, a proposal might have an easier time surviving this time around.

One of Gov. Tony Evers’ top advisors is Chvala’s wife, Barbara Worcester, who most recently worked for a national housing developer. Worcester previously worked in the Capitol, in the last decade serving as chief of staff for then-Senate Majority Leader Russ Decker, a Democrat. 

“Some of the changes the folks behind the PFA have wanted may survive because of close connections,” one legislative aide said. 

But it will take Republican help to get there. Sources say Assembly leadership, like last session, has been pushing for the Finance Authority legislation. One Capitol insider says a motion may come up as soon as Tuesday afternoon’s Joint Finance Committee meeting.

The committee is expected to take up several budget bills, including borrowing for state building projects, funding for Agriculture, Trade and Consumer projects, and “action on items set-aside from previous executive sessions and any other matters related to the 2019-21 biennial budget.” 

Sources say the conversation on the PFA has been shifting in recent days — sometimes in the budget, sometimes out. One source said the Finance committee may be leery of taking more heat, particularly following passage of a transportation budget last week that has received a “lot of pushback.”

The office of Joint Finance Committee co-chair John Nygren (R-Marinette) did not return an email Monday seeking comment.

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As MacIver News Service first reported in 2017, when the push to bolster the PFA came back up, the antecedent of the Finance Authority was created in California by municipal bond movers and shakers, Stephen Hamill and Gerald Burke. They are the brains behind HB Capital Resources, Ltd., HB Consulting, LLC, and US Communities.

The Los Angeles Times in 2011 wrote that Burke and Hamill “do jobs normally reserved for public employees. They just make a lot more money doing it.”

The PFA has come under fire by some lawmakers for the relatively scant number Wisconsin bonding projects in which it has been involved.

“The former Alameda County public servants have made tens of millions of dollars for their private company by coming up with a novel method of issuing tax-free municipal bonds,” the Times reported.

As MacIver News Service first reported, the PFA has built a multi-billion dollar tax-exempt and taxable conduit bonds business by brokering deals like a $30 million bond package for Planned Parenthood Federation of America’s national headquarters in New York City. The authority also is involved in the massive shopping and entertainment center, “situated along the (New Jersey Turnpike) at the Meadowlands, with the multi-colored facade and indoor ski slope that has become the butt of many Jerseyans’ jokes,” as a story in described the 3.2 million square-foot complex. 

The PFA has come under fire by some lawmakers for the relatively scant number Wisconsin bonding projects in which it has been involved. 

“When it was suggested that less than 2 percent of their work is being done in Wisconsin, I have to question why the Legislature created it in first place,” said state Rep. Scott Allen (R-Waukesha), who has asked for an audit of the PFA. Nearly a decade after its creation, the Legislature has yet to scrutinize the authority’s books,

Scott Carper, listed as program manager for the PFA, did not return an email seeking comment. 

All of the PFA’s contacts, based on the phone numbers listed on the authority’s website, are from the East Bay counties in central California. 

The PFA’s absence from Wisconsin has been a huge concern for lawmakers such as Allen. As Bloomberg noted in a 2016 piece, “One of the most prolific issuers in the $3.7 trillion municipal market is a Wisconsin agency with no employees, coveted tax-exempt bond status and a nationwide client list.” Bloomberg went on to note that the PFA in 2015 issued bonds for more than 30 charter schools, senior living facilities, universities and real estate developers in 15 states. “None were from Wisconsin.” 

For a time, the PFA — in name anyway — was based in the downtown Madison law office of Chvala, a liberal politician who loved to stick it to conservatives anytime he could. 

Sources say the former Senate majority leader may be taking another stab at his previous pastime.