A Baldwin County resident recently asked county commissioners a number of questions related to the Sibley-Smith Mega Industrial Site and the spending of millions of dollars of Special Purpose Local Option Sales Tax (SPLOST) funds to make such a reality.
Pam Beer’s questions were raised during the public comment portion of the Oct. 15 commission meeting. At the end of her three-minutes, as much time as anyone is allowed to address commissioners during the public comment portion, she was told that commissioners would get back to her with a response.
Such has now happened.
During the Oct. 15 meeting, Beer told commissioners she understood that in 2015 members of The Development Authority of Milledgeville and Baldwin County (DAMBC) wished to acquire approximately 1,700 acres of property in order to develop a mega industrial park.
“The development authority issued $4.8 million in industrial development revenue bonds, and the city and the county each agreed to pay off the bonds at $2.4 million each,” Beer said.
She explained that city and county officials, along with development authority officials later signed an Intergovernmental Agreement (IGA) with each other.
County officials agree with Beer on that point.
“At the time, it was the belief of both governments that this was an important project for our community to foster future economic growth in our county,” officials said in their response. “Both governments were told by the development authority and the development authority counsel very specifically that future SPLOST proceeds could be used to retire the financing being obtained by the development authority. Both governments relied on these assertions in entering into the IGA.”
Beer said the IGA was drawn up and spelled out the project.
“In the contract, it states: ‘In order to finance the acquisition of the project, project costs, and pay the principal and interest for and/or redeem the series 2016 bonds, the county intends to adopt a resolution calling for the SPLOST election, and to allocate a portion of the revenues derived thereby for payment by the county of the entirety of the project costs, and or outstanding amount of the series 2016 bonds,’” Beer said.
County officials also responded to that comment.
“The county and city began negotiations in an effort to reach an agreement for an IGA on a possible upcoming SPLOST referendum,” according to the county’s response. “They were not successful and the county called for the referendum without an IGA with the city. General obligation bonds that included Smith-Sibley debt was specifically included in the referendum.”
As it turned out, voters approved the new SPLOST referendum.
Since SPLOST was approved by voters, Beer asked commissioners if they had used the revenues to pay off the entirety of the project as required in the contract they had entered into agreement with two other government entities.
Beer aswered her own question at the meeting, saying, “No.”
She told commissioners that instead of them doing such, they decided instead to issue $26 million dollars worth of bonds, and backed with collections from the SPLOST.
As a result, Beer said another $2.5 million was incurred, raising the total to $28 million that must be paid back.
“And you say you don’t have the funds to pay off the mega site bonds as required by the Intergovernmental contract you signed,” Beer said. “You issued the $26 million in bonds knowing you had already obligated yourselves to use SPLOST proceeds to retire the debt. And I think I read somewhere that the county’s position is that you can’t use the proceeds from the $26 million dollars in bonds to pay off the type of bonds issued to pay for the mega site. And you say for some reason you have to purchase the property out right to pay it off?”
Beer said she didn’t understand that part either.
“You say you don’t have the funds to pay off your part of the mega site bond debt,” Beer said. “Yet, when you purchased the Lawrence Building for about a half a million dollars, you said it was done with excess economic development SPLOST money. I’m not saying I’m against the Lawrence Building purchase, I’m wondering why you didn't use that half million dollars to pay off a part of your financial obligation on the mega site.”
County officials issued the following response related to those particular comments.
“Following the passage of the SPLOST referendum, bond counsel for the county informed us that bond proceeds could not be used to pay off the development authority debt,” county officials said. “In addition, he informed us that the SPLOST proceeds could not be used to pay the development authority debt.”
The city, as well as the development authority were informed of such opinion from bond counsel, county officials said.
The county also pointed out that everyone with the exception of Milledgeville Mayor Mary Parham-Copelan had been made aware of that matter shortly after voters approved the referendum.
“In fact when the city officials sued the county, the city lawyers argued that the SPLOST proceeds could not be used to retire the mega site revenue bonds,” county officials said.
As it turned out, former Ocmulgee Judicial Circuit Superior Court Judge E. Trenton Brown III, now serving on the Georgia Court of Appeals, ruled in favor of the county.
The city, in turn, appealed the findings of the court, but withdrew its appeal.
Such legal actions resulted in what county officials described as “significant” legal costs for the county.
County officials also replied to Beer’s comments concerning the Lawrence Building on the campus of Renaissance Park at Central State Hospital.
The purchase of the Lawrence Building involved a different set of facts and circumstances, according to to county officials.
“The purchase of this building was an important piece of the puzzle in developing the Parham Food Service economic development project,” county officials said. “The money spent by the county aided in the fruition of the project. In addition, the county received the Lawrence Building in return for its monetary contribution to the Parham project. Further, the contract on the Lawrence Building requires the development authority to pay the county the entire purchase amount, plus eight percent, if not repurchased in five years.”
Under current state law, county officials said SPLOST funds can be used to purchase real estate.
“They could not be used to pay an existing debt for the development authority,” county officials said.
Both the city and county have paid their portion of the development authority debt from their respective general funds, county officials said.
More than 18 months ago, a new way of paying the development authority with bond proceeds was discovered, according to county officials.
They provided the following account:
“If the county held title to the mega site property, the bond proceeds could be used to pay the debt. This was presented to the city and the development authority. All sides agreed this was a legal solution to the problem. The county agreed to take title to the property, pay off the debt, convey a one-half interest in the property to the city and allow the development authority to manage and market the property for industrial development.”
County officials pointed out that city leaders rejected the proposal.
The county contends the city “has used their potential approval of this solution as leverage” in the ongoing dispute over Service Delivery Strategy.
“As a result, through no fault of the county, the county and city have incurred hundreds of thousands of dollars in additional interest costs,” county officials said.