Sunday, July 26, 2015

Updated: "Special Project" Revenue Bond Hearing Scheduled

Fairhope, Alabama.

Updated August 6th to include clarifications from the city clerk.


St, Michael Catholic school
According to a legal ad in the July 10th edition of the Courier newspaper, a public hearing concerning a proposed $12.5 million bond to be issued by the city's new Education Building Authority will be held this Tuesday at 9AM in the council chambers. (see ad below)
The proceeds from the (tax-free, municipal) Bond will be used "to acquire, construct, and install capital improvements consisting of educational buildings, facilities, equipment, ... et. al. ... on real property at 11732 Higbee Rd.

The project will be owned by the city's new EBA (a public corporation), and leased/operated by the St. Michael High School (an Alabama nonprofit corporation); the revenue from the lease will be sufficient to pay principal and debt service on the Bond.

"The public hearing will provide an opportunity for all interested persons to express their views, both orally and in writing on the proposed issue of the Bond with respect to the project."

(As it was explained at the last council meeting, the Authority needed to be formed as a 'public corporation' to ensure tax-free status for the buyers of the proposed bonds according to complex federal IRS laws;  it allows for better terms for the borrower as well.)


H. Hosch, standing second from right
No other notices of the hearing were published as is usually the case with other city committees; when asked about the ad after the last council meeting -- the mayor, council president, city attorney and city clerk denied any knowledge of it, who had arranged or paid for the ad.

The city clerk says she is usually the only person authorized to place legal ads for the city; but the mayor's secretary, purchasing department, and Planning Commission's secretary are also authorized in some cases.

Update: The Times received this e mail from the city clerk on Aug 6th.

I wanted to clarify what I stated to you about legal ads:

“The city clerk says she is usually the only person authorized to place legal ads for the city; but the mayor's secretary, purchasing department, and Planning Commission's secretary are also authorized in some cases.”

I never stated I am usually the only person authorized to place legal ads for the City.

The Purchasing Department (Dan Ames) is required by law to put legal ads in the newspaper for bids; sometimes locally and sometimes statewide depending on the type of Bid Project.  After the Bid Award, there are several other items that are required to be put in the legal section of the newspaper (The Bid Law specifies which items and what documents must be published).

The Planning Commission has requirements for Zoning Ordinances and legal ads that are required to be published for public hearings.

Other departments may or may not post legals ads, but you are noticed when a Press Release is sent out for the newspaper and other media venues; usually from the Community Affairs Department.

The City Clerk is required to publish all ordinances (and some resolutions) after adoption except bond issues which are not required to be published.  If it is a rezone to the Zoning Ordinance, I have to publish the proposed ordinance for 2 consecutive weeks and then the public hearing can be set, but not less than 15 days after the last publication date (per Code of Alabama).

Why the ad was placed two days before the new Authority was formally authorized by the city council is being questioned as well.

No mention of the planned bond hearing was made during the July 13th council meeting either.

Appointed simultaneously at the July 13th council meeting as its initial directors were Fairhope residents:

*Gary Cowles
*James Bailey
*Ellis Olinger III

When asked about it by a Times education reporter,  the Archdiocese's bond attorney Heyward Hosch replied only that: "As stated in the notice this is a hearing only, as to the location and nature of the project described, the construction of St. Michael Catholic High School. No meeting will be held and consequently no agenda has been prepared."

Only the "representatives" of the Authority are mentioned as being at Tuesday's meeting, possibly from the bank issuing the bond.


When the new Authority was approved during the last city council meeting, repeated assurances were given the city would never be responsible in any way for debts incurred by the Authority; but since it was also compared to the city's only existing such entity, the Airport Authority (as well as the Industrial and Health Boards), a number of citizens have since questioned that;  the city currently pays about $500K a year for the AA's debt service. (see video below)

Another big concern expressed to the Times is how the matter came up and was enacted suddenly, without first seeking more public input -- something this council is becoming notorious for.

Is his usual manner, councilman Mueller asked the puzzling question on everyone's mind: "If there is no liability by either party ... why does Montgomery (state legislature) require it?"

He was told it is a matter of federal, not state law.


Despite lingering uneasiness about the debt and the way it was handled by the city council, such education building authorities appear to be relatively common around the state (the city of Daphne formed one in 2007 for the Bayside Christian School); and the Times can find no history of problems/issues concerning debt or debt-service payments with any of them.

But, we were told by someone with experience with another city Authority it could lead to additional requests for city investments or "in kind services"  for the religious school in the future.

Also, we have learned there is at least one more private school in the city interested in forming another Building Authority for improving its school buildings as well.


Anonymous said...

Are we going to have to maintain their roads and ball fields too? Do they expect free eletricity?

Anonymous said...

It will suck more money away from public schools.