Wednesday, September 2, 2015

Ridgeland Board of Aldermen approve refinance for TIF bonds. (Video)

The Ridgeland Board of Aldermen voted 6-1 last night to approve a refinancing of $1.9 million in TIF bonds.  The bonds were issued in 2005 for the construction of the Lowe's on County Line Road.  The small room was packed with Ridgeland citizens as several grilled the aldermen and Mayor Gene McGee over the proposed refinance and the original bond issue.

Ridgeland issued $5.3 million in TIF bonds in 2005. LR Company, LLC made the bond payments but Ridgeland agreed to backstop the bond payments if LR Company was unable to make them. LR Company stopped paying the bond notes in 2011 and has not made any payments since then. Mayor McGee said the company had no assets and the city had no legal claim against the owner of the company, Andrew Mattiace. The company was formed on May 2, 2005 and dissolved in 2012. The city assumed financial responsibility for the bond payments. 

LR Company was supposed to pay the bond notes with sales and ad valorem taxes that would have been paid to Madison County and the city of Ridgeland. The city paid $97,575 in 2011 and $96713 in 2012. City Clerk Paula Tierce told JJ yesterday that "The receipts from the tax district was $546,211.06 and the debt service was 680,658.64 for FY2014, which is from July 1, 2013 to June 30, 2014." Thus the city would have paid $134,447 to the bondholder, Trustmark Bank*.  The shortfall is currently $94,000.

Mayor McGee admitted upon a question from the audience that the city did not conduct due diligence on LR Company to determine if it had assets to cover payments in case the taxes were too low to repay the bonds. The room where the Board of Aldermen met was standing room only as members of an overflow crowd grilled the Mayor and Aldermen on the refinance and original issuance of the bonds.

Mayor McGee told JJ that a refinance would lower the interest rate by at least three points. The current rate is 6.8%. The city actual debt service is $678,658 per year (not counting the deduction of ad valorem and property taxes from amount.).   Demery Grubbs of Ridgeland's financial advisor, Government Consultants, Inc., said the city receives  $584,273 in taxes from the TIF district.  He said the shortfall was "approximately $94,000".   Mr. Grubbs said the city "looked at a five-year note program" so as to stay "within state law".  He said "I was quoted a working number that is not secured at 3.5% or within a range."   He said the new payment would be around $420,000. He said over $129,000 per year would come back into city coffers as a result of the refinance.

Kingfish note:  The proposed deal is a good business decision for the city.  It lowers the interest rate by at least three points.  That is money saved.  No one at the meeting told this correspondent he or she opposed the actual refinance.  What seems to have the citizens riled up against City Hall is that there was no due diligence on LR Company and the city was left holding the bag on these bonds when LR Company quit re-paying the bonds.   They repeatedly asked city officials why they did not obtain a personal guarantee from Mr. Mattiece before the TIF bonds issued.  They thought they were not given a satisfactory answer. 

*All 2005 bonds were sold to Trustmark Bank in a private sale.


Anonymous said...

Jackson resident here. I don't keep up with Ridgeland aldermen so who is the guy in shorts? On the board of aldermen? Please say he is.

Anonymous said...

Redistribution of wealth the Republican way! They take your tax dollars and give them to the already wealthy.

Anonymous said...

On the video of the community meeting at Ridgeland HIgh, posted here on JJ on August 21, Gene McGee repeatedly stated that no Ridgeland tax dollars had been spent or would ever be spent on the TIF shortfall for the Lowe's development. What we learned last night is that funds from the Ridgeland general obligation fund have been used the last several years to cover the shortfall needed to pay those TIF bond payments. Gene McGee flat out lied about this, and the aldermen who were in attendance when those statements were made did nothing to correct the lies that had been told to citizens at that meeting.

We also learned that the mayor and city attorney were advised by the AG's office, in a telephone call, that making such payments from general obligation funds of the city was likely illegal; as a result, the city attorney withdrew a request for a formal opinion letter from the AG on this matter in order to avoid a paper trail on what is likely illegal activity our mayor and board of aldermen have engaged in the last few years.

So where are we now? Andrew Mattiace was let completely off the hook for these payments, the mayor and aldermen engaged in legally questionable conduct to cover the payments for Mattiace for several years, and they now have voted to refinance this so that a portion of the money can be used to "repay" the general obligations fund for the money that was secretly diverted to the TIF payments. And, as the cherry on the top, any shortfall in funds available for future TIF payments will fall totally on the taxpayers.

I just hope the FBI is watching all of this.

Anonymous said...

5:43, don't hold your breath waiting for the FBI to do anything! i feel sure that the appropriate "governmental relations" law firms have all been well-paid already to grease the skids on this fiasco. after all, as a former governor once said, "Mississippi is now open for business!"

the whole scheme sure fits together now. congratulations on some very excellent investigation by citizens of ridgeland and mr. fish into the crookery in ridgeland city hall. too bad the elected representation in this state is like a box of fish-hooks, you try to extract one crook from the mix and you find that they are all in it together! safety in numbers, as the saying goes.

Anonymous said...

Yes, 5:27, that is Alderman Wes Hamlin. You can tell he takes his job very seriously. It looks like the meeting interrupted his yard work, doesn't it?

Anonymous said...

5:43 prepare to get attacked by the ones hoping to make money off the deal.
It is ashame that we in Mississippi have to call on the FBI to clean up our dirt laundry.
This is a slam dunk for our state auditor unless all of his time is spent avoiding federal prosecutors himself.
It is amazing that the media hasn't been all over this. If it is not racial, the hypocrites at the CL are not interested.

Anonymous said...

I suppose I am naive so please help me.

Local governments use their powers to help new business come in and
compete with existing business. Take a Lowes competitor such as Prassell
Lumber, a quarter of a mile from Lowes. They pay taxes to local governments and those governments use their power to issue bonds to bring in a competitor for an existing business.

Anonymous said...

7:07 do any of these guys take their responsibilities seriously? It appears Mr. Mattice has a nose ring attached to McGee, and McGee in turn has all his little puppets on a string?

Anonymous said...

So basically if Mattiace does not receive TIFS, go zone bonds, sales tax relief incentives or money from Barksdale/Bailey he is not capable of developing a profitable development.

Anonymous said...

BTW about this same time Ridgeland named him developer of the year!

Anonymous said...

7:22 it is commonly referred to as crony capitalism, republican welfare, only the wealthy, politically connected need apply.

Anonymous said...

What a joke!
I noticed on one of the Ridgeland alderman's Facebook requesting all to go to the Maryland generated web site for Costco & take the bogus survey. Anyone voicing ANY & ALL who object to Costco is ban from the sight.
They even have this holier than thy warning. This coming from a group of people having trouble with the truth.
Greed, lies, deceit!!! Shame! Shame! Shame!

Anonymous said...

Remember, when the smokes clears the only thing better than a Gene McGee deal is a Haley Barbour KioR style deal.

Anonymous said...

I feel like I just walked into a southern semi-interactive Dan Brown novel.

Flashback Clearly Over Here... said...

Actually, 8:12, I feel like I just walked through the picture-show we went to back in the fifties. It's dank, sweaty, stinky and smells.....there is sticky stuff all over the carpet and it gets all the way up to your ankles and stays there when you go outside into the daylight. It won't come off and you make a noise if you reach down and touch it. And there is Gene Magee on the corner, smiling, hawking tickets to the show, motioning for us to 'come on in', and there are the aldermen, holding out their hats to collect coins. Someone is selling popcorn and I can't decide who that is.

Anonymous said...

Wherever ones stands on this Costco matter, the more & more that is uncovered at Ridgeland City Hall, any & all honest moral citizens should be ensenced by the manner in which these guys operate. It seems as if it is in total & complete disregard of the law. It would appear that these men are the most stupid people in Ridgeland or the most corrupt. That should concern every citizen in this city. This is still America. We should be able to honestly & legally disagree. Honesty & legally are the keys. Open your eyes people. Learn for yourself how they conduct your city business. Don't rely on a smiley handshake or pat on the back. Get involved & you will be sickened.

Anonymous said...

It is time for a clean slate in Ridgeland. Gene McGee has held the office for too long and he has forgotten who he is suppose to be working for. Ditto for D.I.Smith. The question now is who will step forward to challenge the status quo.

Anonymous said...

Wow, I am so thankful to all you smart anonymous posters for enlightening the world on the evils of Gene McGee and those evil rich developers! Who knew that the Legion of Doom was right here in our hometown of Ridgeland? Those guys orchestrated the downfall of the housing market nationwide, so Lowe's sales would drop in 1,500 US Stores, and all just so Mr. Mattice would be let off the hook on $350,000 that was paid for work on the city streets and infrastructure... and now, thanks to the genius work of 'neighbors' (a self-appointed justice league of retired teachers, doctors' wives with nothing better to do, and a certain failed state senator, who all live in certain gated neighborhoods so the rest of us can't enter), we have discovered that the mayor and alderman are actually trying to -- GASP -- incentivize MORE economic growth so they don't have to raise taxes??? WTF are they thinking???

This whole episode only confirms what my dad has told me for years: people are idiots.

Anonymous said...

7:34 That facebook page that you refer to that was generated out of Maryland is "owned" by three locals: two of which stand to profit from land purchased to profit off Costco's nearby development, and one that is the daughter of one of the Alderman and whose husband is an appointee to the zoning committee!

Anonymous said...

10:03 that sadly makes sense. The only people I have found supporting this proposed Costco Warehouse site are those uninformed as to the facts or those greedy wanting to profit without regard to the best interest of the city. Like the Bible says, " the root of all evil is the love of money".

Anonymous said...

DI Smith use to be against tax increases. Why did he promote and vote for this one?

Anonymous said...

This perspective from the Madison County Journal is enlightening. Lengthy, so couldn't post in its entirety (leaving out comparisons to Yates, Galleria, St. D, etc., but the first sentence alone would tell why a City would consider the big picture.

"...all of Mattiace's developments inside Ridgeland (five in total) have generated $1.75 billion in sales, $16.6 million in ad valorem taxes and created over 6,000 jobs.

The fraud allegations brought by Costco opponents are serious with serious implications if proven, allegations that shouldn't be tossed about loosely without more compelling evidence. A bank statement? A photo of a briefcase filled with $100 bills exchanging hands? Anything!

The Lowe's TIF wasn't a bad idea, it just came at a bad time, when the largest business there, Lowe's, was impacted hard by the Obama recession. Globally, Lowe's net income was down nearly 19 percent in 2009.

The city has a viable development there instead of mini-storage units and other junk. Yet, there were shortfalls to the tune of $600,000 on that TIF the city made up and now McGee's "crime" is refinancing the Lowe's borrowing at a lower interest rate so the TIF pays its way? A "crime," yes, because it all gets back to stopping Costco.

There's no doubt Costco should have been handled differently in the beginning, but it's not worth tearing the city apart and slandering good people, many of whom for the last two and a half decades have worked hard to make Ridgeland what it is today.

If a high-end development like the one Mr. Mattiace has proposed for Costco fails, that end of the Highland Colony with its fragmented ownership by banks caught up in a mortgage fraud scheme and probably seeking to unload sooner than later is more likely to become another west Briarwood Drive with a hodgepodge of low-income credit unions, office and medical buildings and total car care facilities before it becomes another County Line Road. The parcels are too fragmented, and few have the financing and resources to put together a kind of deal like Mr. Mattiace has.

Where was everybody two decades ago when the land was zoned C-2 (allowing a Costco)? Even though Brame Road landowners could argue that the Greenwood Plantation residential development destroyed the tranquility of their country living, - as could many others about other developments west of I-55.

If Costco goes away, all the allegations go away and residents retreat to their gated communities never to speak of TIFs, PIDs, PURDs, PUDs or tax rebates again. That's what matters.

The truth is, there are rules of civility and decorum upended by social media given the rate at which information - any information, true or false - can be spread nowadays.

We would commend to all the Rotary Club's Four-Way Test, an ethical guide for Rotarians to use for their personal and professional relationships:
1. Is it the TRUTH?
2. Is it FAIR to all concerned?
4. Will it be BENEFICIAL to all concerned?

We fully understand the frustrations and fears of homeowners over traffic and crime, but is bringing in a wrecking ball of largely unsubstantiated allegations necessary for the overall good of our community?

If the Costco opponents succeed, will another developer be willing to risk putting together another deal that will satisfy tastes? Hopefully so, for the sake of us all."

Anonymous said...

What a twist of trash! So now the citizens are to blame because the mayor was secretively,covertly, deceitfully untruthfull to the citizens of this city, which has been very well documented. It is the citizen's fault that the public trust of this city has been destroyed. When are you bad citizens gonna learn to shut up & just pay your taxes. Who do you think you are?
It is alright if some laws were broken with the TIF bonds. This mayor is busy. He does not have the time for due diligence of a surety or check if he is following Mississippi law.

Anonymous said...

Obama recession.... Ha! I stopped reading there.

Anonymous said...

Kingfish, how is this a good deal for the city?

The debt service on the original TIF bond was approximately $680,000 per year through fiscal year 2017. If you use FY 2015 as the starting point, that means three payments of $680,000 would be due to retire the bonds in 2017, for a total of $2,040,000.

Assuming they can get the bond terms discussed at the board meeting, the refinanced bond has a debt service of $420,000 per year, but it extends the term of the bond by an additional two years, through 2019. Again, using FY 2015 as the starting point, it will require five payments of $420,000 to retire the bonds in 2019, for a total payment of $2,100,000. This is $80,000 higher than the debt service on the original bond.

While I understand that some might argue that the lower yearly debt service decreases the risk that the city might have to dip into its general funds again if sales taxes continue to decline at the Lowe's project (which I would argue is offset by the fact that it exposes us to that risk for an additional two years), the refinance increases the overall cost of the TIF bond to the city. In what sense is that a good deal for Ridgeland taxpayers? Am I missing something here?

Anonymous said...

Actually, do I need to amend those numbers, since FY 2015 has already closed and we are on FY 2016, right?

If so and you use FY 2016 as the starting point, the original bond would require two more payments of $680,000, for a total of $1,360,000. The new bond will require four payments of $420,000, for a total of $1,680,000. Thus, the new bond increases total payments by $320,000.

That is a very significant difference. Particularly when you consider that Ridgeland is already in a deficit spending situation with its budget.

Am I looking at these numbers incorrectly?

Anonymous said...

How many of you Ridgeland taxpayers were relieved from paying taxes as a result of the Obama recession?

Anonymous said...

Since the city let Mr. Mattice's LLC off the hook as surety for the bonds, the bonds should have been defaulted rather than put on the backs of taxpayers. McGee said this was a "good business deal"! We see now why McGee is a politician rather than a businessman. He could not make it in the business. No due diligence on the surety whatsoever. He throws the law & business under the bus!

Anonymous said...

12:36 If I understood one of Mr. May questions correctly during the refinancing discussion, he asked that very question, and as most questions that night it went unanswered!

Anonymous said...

8:41 You are exactly correct. Rather than refinancing, those bonds should have been defaulted. But, who cares, it is just taxpayer money!

Anonymous said...

The auditor needs to drive his mobile home up to Ridgeland & bounce on these boys. If not, why do we even have an auditor? And, an Attorney General. Ridgeland City Hall is not an island unto itself. It still is subject to the laws of the State of Mississippi.

Anonymous said...

9:22 could this just be a continuation of coverup? If we individual taxpayers conducted our business like this, we would be in jail. Are elected officials above the law?

Anonymous said...

I assume the reason why the city has refused to answer Mr. May question, "Is it legal", is they do not feel it germane to any of their actions.

Anonymous said...

With all the many bond issues that the city has done & with the huge amount of legal fees that this city pays, one would think they could give a concerned citizen an answer to this month long simple but very serious question. Hmmmmmm!

Anonymous said...

@8:41 am -- Letting it default is a terrible idea. It's a good deal for the city (and citizens) because paying the shortfall and now refinancing the TIF preserve the city's credit rating. The mayor and aldermen did the right thing.

And it's not illegal, no matter how loudly Bill May pounds his fist. The group is grasping at straws on this red herring to try to drum up support against Costco. Huge waste of everyone's time to be talking about the Lowe's deal.

Anonymous said...

Bill May garners NO respect. Bully on the playground with nothing to do. Fulfilling a personal vendetta due to his rejection by Butler Snow. One has nothing to do with the other. The things he spews are untruths.

Anonymous said...

The people of Madison the City really hope you get your Costco your aldermen & mayor have worked so tirelessly for! Thanks Gene we love you in Madison!! Keep up the good work!

Anonymous said...

gm will need more than bsosc to get him out of this one -

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