Check out BART IDIOT HALL OF FAME ON
Remember when BART helped a few giant multi-national corporations establish lucrative tax shelters?
You probably don’t. It hasn’t been written about much in the press. The type of deal BART agreed to has gotten some attention, but even so, most people are unfamiliar with the scheme and how it works. BART’s tax shelter deals almost cost the transit agency $40 million in 2009 when the financial sector was melting down. One of the agreements withered and BART lost $5.5 million. Few people know this.
So what sketchy tax shelters am I talking about? They’re called lease-in, lease-out, or LILO agreements. BART calls them lease, leaseback agreements in their financial reports.
In a LILO deal a public transit agency like BART leases its trains or train operating equipment to a private corporation for some extended period of time. The corporation immediately turns around and leases the property back to BART. The terms of the lease are incredibly complicated and circuitous. I wont go into details here. It’s the kind of creative accounting and contract law that vast financial disasters are made from, and it’s mind-numbing in detail.
Why would BART ever do this you ask?