Monday, October 15, 2012

Editorial: Parkway bailouts are not a "loan" and it wouldn't matter if they were (Video).

Madison Mayor Mary Hawkins-Butler sparred with the Madison County Board of Supervisors over the Parkway East and Parkway South bailouts two weeks ago. Madison County made two bond payments in 2011 of $258,328 on May 11 for the Parkway South and $374,021 on October 24 for the Parkway East Public Improvement Districts after they sent a notice of default. The two PID's sold nearly $40 million in bonds to finance construction of the Galleria Parkway. The Mayor questioned the legality of the Supervisors making the bond payments for the Parkway East and South public improvement districts. Needless to say, supervisors and their attorneys did not agree with her assessment of the bailout.

Board attorney Mike Espy said the payments were legal because they are a loan. The Madison County Journal reported last week: "Board of Supervisors Attorney Mike Espy called the payment a short-term loan to the PIDs and said if not repaid after two years the county has the "probability and certainly the ability to step back" and terminate the contribution agreements unless the PIDs reimburse the county."

Mr. Espy repeatedly called the bailout a loan. He said it was legal for the county to make loans under the contribution agreement. Former board attorney Eric Hamer said the bondholders would sue the county if the payments were not made. Just one problem with Mr. Espy's assertions. He can call this bailout a loan all day but the payments posted below were made directly to Hancock Bank from Madison County. Hancock Bank is the paying agent for the bonds. Earlier post on whether payments were a loan.

The contribution agreement Mr. Espy cites did not say anything about a loan but instead said "the county shall advance to the trustee the outstanding amount required to satisfy the deficient debt service payment" (Page 3 of the Parkway East contribution agreement.). Issuing statement

It does not matter if the bailouts are a "loan" anyway because the Mississippi Code had something to say about counties making bond payments for PIDs last year:

"The issuance of bonds under the provisions of this chapter shall not directly, indirectly or contingently obligate the state or any governmental unit of the state to levy any taxes or to make any appropriation for their payment arising out of contracts authorized under this chapter."

"Any appropriation". Expenditure. Spending. Outlay. Grant. Even Loan. It doesn't matter what term is used, paying for those bonds is a spending of money on behalf of the PID and was banned by Section 19-31-29. Even though the law was changed this year to permit counties to make bond payments under contribution agreements, the new law is not retroactive. It is the contention of this website the 2011 payments were illegal as the law banned all appropriations for making bond payments on behalf of PIDs.

Mr. Espy argues they are legal because the agreement did not obligate the "full faith and credit" of the county. He also says Section 19-31-17 allows the PID to obtain revenue from "all sources". However, no one is disputing the ability of Parkway East and Parkway South to receive money from the county. The issue is what does Section 19-31-29 say about PID bailouts and it makes it clear the county can not spend any money on bond payments for PIDs. Thus the contribution agreement and the 2011 bond payments were a direct violation of the law at the time.

Earlier posts:
Are bond payments illegal
More on the Parkway bond payments. Its not a loan
Editorial: No tax increase for Madison County

Note: One interesting observation. Board President John Bell Crosby voted against the tax increase but was mighty silent. Here is a good piece of advice to the Board President. If you're going to vote against tax increases, then you better lead the fight against them if you want to win your little election next year. Just saying you voted for it won't be enough. Madison is not Jackson.


Anonymous said...

Here we go with these editorials again. I truly believe this should say PAID ADVERTISEMENT.

Why was the majority of the people attending the meeting were senior citizens? What does the younger generations feel about all these.

Kingfish said...

Actually Liar, I've been pretty consistent. Old Capital Green, Bond swap deals for Jackson, Farish Street, Convention Center Hotel, and so on.

Anonymous said...

Here we go with...

AGAIN you make no sense.

Anonymous said...

KF you are indeed consistent.
I don't, however, understand why the underlying cause is missed.
The difference between the GOP and the DEMs is whose friends and supporters get OUR tax dollars.
All the arguments made to fire up their bases are distractions so that both parties can continue to enrich themselves at our expense.
What is it about...oh...insider trading exemptions for example...that everyone missed? Oh, how does someone who never made any money at a real job go to Congress and become wealthy?
Follow the money more do that sometimes but not always.

Anonymous said...

Grandma either provide us with a cut and paste link to your blog ... or start your own then holler back with the cut/paste directions.

Since you repeatedly allude to an expertise -- your own -- that has no bounds why don't you show us how it is done.

Anonymous said...

Why we so testy???? LIAR is a big word, de careful.

Anonymous said...

Liar is a big word and it would appear to me that Liberals are taking great liberty with it recently.

If you don't have a record to run on, lie.

Anonymous said...

My take on "bagboy" getting elected Mayor of Madison. I spoke with him after I voted in the last election. He happened to be on Hoy Road waving signs on the street. I know him from a past short term positive business relationship, we are not tight or buddies. I voted for him the first time but not the second. To much apparent/seems like backdoor stuff for me.
What 2-3 weeks after the election he wants to be Mayor? Really? He had no idea before the county election? IMO this has serious questions about what-who-when-why.
I do not agree with everthing the city does but in my litle mind he would be a disaster for Madison.

I would like to see some minor changes in Madison but not with "bagboy" yes that name is not a compliment

Anonymous said...

wierdest string of comments. Stay with it KF. Something is not right here. This is a lot of money and things don't make sence. Appreciate your work.

Anonymous said...

Will Madison use its legal resources to seek court action to stop this???

Anonymous said...

2:21, put down the bong and slowly back away.....

Anonymous said...

Bag Boy is going to be the next mayor...rats are already jumping ship. Stories are being told to a certain govt agency. Everyone is covering their ass when the audit hits!

Anonymous said...

Rather have a bag boy over a land baron!!!

Anonymous said...

So bag boy is going to be mayor of his checkout lane on 4square?

Shadowfax said...

Are half the posts missing or deleted? Those who think bag boy will be mayor please line up for free gas at the Kroger gas island tomorrow night at eleven p.m. Bring your momma's truck too.

Anonymous said...

So bag boy is going to be mayor of his checkout lane on 4square?

Golf clap

Anonymous said...

testy be as testy do. de testies jes wooking fo nub

Anonymous said...

KF, for some of the comments to be this odd, you know you've got something by the tail. Keep up the good work.

Anonymous said...

And once again, where is the State Auditor?

Anonymous said...

Can't believe Gerald Steen hasn't rolled out his campaign manager, who is paid $2500 a month to improve the image of Madison County, to sugar coat this PID tax increase story! At least JB and RL voted against the tax increase!

Anonymous said...

Bag boy had to vote against the increase--but that vote deal was cut outside the board room--Just gave Rudy another contract for over a half a million to engineer some more roads they have no money to build--This happened Monday night--Keeping Rudy in the Money!!! Then everybody is happy--

Anonymous said...

Looks like they do have $1.1 million to build them, so they gave Rudy for Roads "up to" half that to plan them. Who knows, maybe he will come in under budget.... :-)

........Crosby suggested the county give funds to Madison Avenue “even though we don’t have $2 million to give them right now.”

“I expect when the board commits, we live up to it,” Steen said.

On Monday, the board also agreed to look at long-range planning for high-traffic roads that will need work within three to four years. They allocated up to $550,000 for county engineer Rudy Warnock to begin design work now on six roads.

“These are roads badly in need of repair,” Steen said.

The roads are: Rice Road from St. Augustine to Old Canton; Cedar Hill Road; Church Road; South Wheatley from School Street to County Line Road; King Ranch Road; and Clarkdell Road.

“We have $1.1 million set aside for road maintenance. This would come out of that road maintenance fund,” comptroller Shelton Vance told the board.

Anonymous said...

Just watched the Kenneth Stokes video--He reminds me of Gerald Steen!!

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