There is no sugarcoating it: Madison County was body-slammed in federal court today. U.S. District Judge Carlton Reeves ruled that Madison County must pay the bonds for the Parkway East Public Improvement District if the PID defaults. The court stated the county guaranteed the bonds, all $27.7 million of them.
The fiasco began when Parkway East failed to make payments on the bonds and defaulted. Madison County paid the bonds for only two years. The county argued it only had to pay them for two years if it was not reimbursed by the PID per the terms of a contribution agreement between the county and the PID. Madison County officials said the county had not guaranteed the bonds and the taxpayers were protected from paying the remainder of the bond debt to bondholders. The insurer of the bonds, Assurance Guaranty Corp., assumed responsibility for paying the bonds and sought reimbursement from Madison County for past and future payments. The court said sorry, Madison County, you are ultimately responsible for all $27.7 million of Parkway East bonds.
The court stated:
Both sides agree that the contract is not ambiguous and, therefore, that the analysis is limited to the four corners of the contract.
The Court has reviewed the contract again. It sees no reason to deviate from the analysis contained in its prior Order.
The two-year deadline for the District “to reimburse the County is independent of the duration of the County’s duty to make bond payments.” Id. at *4. The contract contains no time limit on the County’s duty to make bond payments. Id. “Nothing precluded the County from seeking to” add such a limit, or perhaps a ceiling of the money it would agree to pay. Id. “But such a limitation is not present.” Id.
In other words, the plain language of the contract requires the County to forever make bond payments on the District’s behalf, as long as the bonds remain outstanding. The alleged “two-year” cap the County has repeatedly sought on its payments comes from a different provision of the contract.1 And the idea that the County’s bond payments were to be temporary, a “line of credit,” or a “bridge loan,” while certainly plausible, was never incorporated into the four corners of the document.
Prior order? JJ reported in June 2015
U.S. District Judge Carleton Reeves denied in April motions for summary judgment filed by Radian Asset Assurance Company and Madison County. Radian insured $27.7 million in bonds sold by the Parkway East Public Improvement District. The district defaulted on the bonds, but Madison County paid $2.033 million to bondholders for the scheduled payments for two years. Radian sued Madison County for reimbursement of the payments it made to bondholders after the county stopped making payments. Madison County claimed it only had to pay the bondholders for two years per a 2005 contribution agreement made between the district and Board of Supervisors. However, Judge Reeves disagreed with the county and ruled there was no limit of two years on the county's liability to the bondholders if the district defaulted on the payments. Earlier post with much more information.Judge Reeves tipped off his intentions in an order he issued a year ago:
The County argues that its duty to cover the District’s bond payments lasts only two years. It derives this length of time from the third part of the contribution agreement, as presented and segmented above.
The two-year limit, however, refers to the amount of time the District has to reimburse the County. It does not apply to the County’s obligation to make bond payments. The first part of the agreement contains no time limit on the County’s obligation to make bond payments...Earlier Parkway East posts
The language of the agreement suggests that the District’s insolvency cannot be a reason for the County to be dissatisfied. The County’s duty to make bond payments is, in fact, triggered by the District’s inability to pay. If the District’s insolvency entitled the County to be dissatisfied, the County’s agreement to make missed bond payments would have no meaning; it would never be reached.
It also would be unusual for a time limit in part three of the agreement to apply by implication to part one, given, among other reasons, the fact that part three opens with the words, “[n]otwithstanding the above.” When this bond deal was being put together, the parties were represented by capable counsel. Nothing precluded the County from seeking to limit, in the first part, any advanced payments for a period of two years. Undoubtedly, there would have been resistance from the other side. But such a limitation is not present. The amount of time the District has to reimburse the County is independent of the duration of the County’s duty to make bond payments.
Court says there is no two-year limit (2015)
S&P downgrades Parkway East bonds
Bond insurer says county misspent $1 million in bond funds
Editorial: Parkway bailouts are not a loan (2012)
Kingfish note: Madison County fell victim to a Bob Montgomery special. The county has repeatedly said taxpayers were protected and that it would only have to make payments for two years. The county will now have to fork out a major amount of dough for the BM special.
Here is one little tidbit of information. Ready for this? Mike Espy was discussing settlement terms with AG. Yup. Several sources told JJ that he had the plaintiffs at the settlement table. The new board of supervisors terminated his employment and did not keep him for this litigation even though a trial was scheduled for this summer.
UPDATE (9:00 PM): The Madison County Board of Supervisors issued this statement:
Statement by
Madison County Board of Supervisors President Trey Baxter
Regarding the
Federal Court’s Ruling That the County Continues to have to pay millions In
PID Shortfalls
Today the
Federal Court ruled that Madison County is responsible for paying millions of
dollars on the bond for Parkway East after landowners went bankrupt. While the County is appreciative of the Court’s
time and work in this matter; we disagree with the Court’s interpretation of
the agreement.
Our position is
and will continue to be, that Madison County’s only obligation is to advance
shortfalls in the PID collections if the PID is paying Madison County back in
two years.
While the
current Board of Supervisors inherited this issue, we will work through other
legal avenues with the goal of making sure that the taxpayers of Madison County
do not make any payments for which they are not responsible.
71 comments:
Elections do have consequences...and this election at the Madison BOS resulted in the citizens of Madison getting a big tax raise which was totally avoidable.
Way to go new guys!
Madison County BOS just approved a major TAX INCREASE!
Good. That is the way it is supposed to work. Maybe governments will quit backing private development with taxpayer guarantees.
Court got it correct. Hate it, but that's the result. And, the change of attorney for the county didn't affect the outcome. Sorry about that, sore loser @12:47
Sue the land owners / developers and take the land at least.
The lawyers for the county should have made sure the county was protected is case of default. Also I am sure those voting to bind the county to this deal were involved in a criminal way; can not void this debt if proves?
Just curious @ 12;47, how did the election of a new BOS cause this ? This agreement was agreed to and approved years ago by the old BOS. (And the old BOS entering into this agreement may have been one of the reasons why some of them were voted out.)
And how was this avoidable if Madison County had retained the old BOS and not elected new supervisors ? From reading Judge Reeve's Order, it sounds clear that, regardless of who is on BOS now, the contract was clear that Madison County would have to pay. The judge based his opinion on the terms of the contract, not who the members of the BOS are/were.
This was a dad decision and bad agreement for Madison County, but I don't see how it was caused by the present BOS. Please explain your logic in blaming the new BOS.
1:23 PM
Perfect logic.
Facts say X
You say "not X."
That is powerful stuff sir...no really.....
Make that extra $3,000,000.00 tax payment payable directly to Phillette would you?
Better keep this quiet. This incompetent administration sounds like a perfect opportunity for Josh Harkins to take over Madison County.
And no garbage pick up this week either in the county
@1:50. I think you have hit on something here. Its a perfect solution. Plenty of land in the deal to be developed - by someone, certainly no personal interests being taken care of. It fits the model.
(Does Guv's daughter become the appointed manager so that she keeps in the deal?)
Who owns the land? I would hope that when the landowners defaulted on the payments that someone - insurance company? - stepped in and foreclosed. Sounds like the county just bought an expensive piece of property smack in a flood zone.
Judge Reeves got this one wrong andshould be reversed on appeal. The County's obligation was to pay for 2 years. The PID's obligation was to reimburse the County for those payments. When the PID failed to do so, it breached the agreement and relieved the County of further obligations to the PID. Under Judge Reeves' theory, only one party is being required to perform under the contract.
And now...let the new BOS make more financial decisions for you Madisonites....
like...
Rudy!
That's right. Don't settle with Rudy...wait around for another federal judge to tell you that you owe money to a guy who did work for you....and pay the following:
- Phillette's salary,
- Rudy's award of millions
- Dorsey's attorney's fees of hundreds of thousands
- David Mockbee's attorneys fees of hundreds of thousands
The BOS of Madison is starting to make Kenneth Stokes look like a brain surgeon.
The first line of your second paragraph should read, "The fiasco began in 2005 when the Madison County BOS voted unanimously to back the Parkway East bonds." Andy Taggart, Doug Jones, Karl Banks, Paul Griffin and Tim Johnson put Madison County taxpayers on the hook for $27.7 million of private developers' bonds.
A couple of large prominent families made big money on this deal. They were the landowners that sold the land to the developers. The land would have never been sold if not for the guarantee by the county. The original landowners are the ones who lobbied the former BOS for the guarantee. They made the big money and the taxpayers get fleeced. Also, the attorney representing the BOS at the time was the same attorney that represented St. Dominic, a major landowner on the project. Can we say "Conflict of Interest"?
Most of the land is too low to ever be developed.
Montgomery counsel for PID. Butler Snow was bond counsel. Original Board of Directors were James Lowe, Antonius Fertitta, Ray Turman, Jon Crocker
AND THE MOST CORRUPT STATE IN THE NATION MOVES ON TO CONTINUE TO HOLD THE TITLE !!!!
KF, Montgomery did what he is suppose to do for his client. He represented the PID'S interests. He had a fiduciary relationship with the PID. It is the original BOS and their attorney that screwed up. They were the ones who should have been representing the taxpayers. Montgomery is the wrong person to blame.
Andy Taggart led the charge, knowing Baptist was anticipating the purchase he wanted to make sure the road bonds were retired and if Baptist could rely on the BOS to pay the debt he would have represented his client well. Congrats Taggart you pulled it off!!! NOW where is the FBI? The tax payers demand justice and expect a formal investigation. Oh I left out that the Parkway East project started in 2003 prior to Andy being elected. That board said "NO" to the contribution agreement Montgomery presented to them. Andy got elected and was responsible for getting the contribution agreement approved by the BOS.
2:44 - sorry you are no longer getting your paycheck from Madison county. Makes it improbable that you have the money to back your prediction?
So - I'll come wash your pickup for a month if your prediction comes anywhere near close. Rudy will not win in federal court.
A more interesting bet, though, would be whether his case even gets heard in federal court. But for that bet, you need to agree to clean my house for a month if it doesn't.
Yup, the attorneys are NEVER to blame for NOTHING. Most stand-up ethical group of people and profession you'll ever meet in your life.
If you are wondering where the extraordinary waste of money went, check the land roll through which this "Parkway" runs. Check who owns a lot of that land and check the date of purchases by these owners. This should lead you to the people who should be paying this bond interest. Also it wouldn't hurt to look at who and how much those involved with this bond deal got paid.
Trey Baxter here this, a contract will always be upheld in a court of law. If it is not upheld that sends a message to ALL business's that contracts are no good. Contracts are the basis of ALL deals!!!!! Please wake up and stop costing us taxpayers legal fees!!!!!
RIP Dick Ambrosino.
I tend to agree with 3:54. If Montgomery rep'd the PID, his only duty was to the PID, and he did his job and protected the PID's interests. Who rep'd the county ? It's the county's attorney and the BOS who had a duty to, but yet may have failed to, protect the county's interests.
Not that it's worth anything, but can't the county sue the PID and get a judgment against the PID and then maybe gain title to the land ?
Bugs @ 2:42, I hope you're right and that Madison County doesn't have to pay any more. But I don't quite understand the logic of what you said. The county's duty was not to the PID; the county's duty was to the bondholders. In the event the PID defaulted on paying the bondholders (presumably because the PID had no money to pay with), the county agreed to step in and pay the bondholders, at least to a certain extent. (The county was basically acting as a personal guarantor of the PID's debt.) Yes, the PID was supposed to pay the county back for any debt the county paid on behalf of the PID. But if the PID didn't have the money to pay the bondholders, then the PID likely doesn't have any money to pay the county back either ? But just because the PID didn't pay the county back doesn't seem to relieve the county of its separate obligation to the bondholders.
This is HIGH-larious!
All these Ole Miss lawyers involved, and no one asked a simple question - "what happens if they default?" Seems to me that would be the first thing I'd want to know if I was signing a contract that might make me responsible.
Madison gets fleeced, but I'm sure somehow it's Jackson's fault. Ha-ha!
Rudy Rudy Rudy. Rudy for Mayor of Madison. At least he was smart, unlike the current characters and he got things done. Rudy for Mayor!!
@2:44 (or is that you, Dorsey ?), what does Rudy have to do with the Parkway East PID bond issue which this article is about ? I know it's hard, but try to stay on task here.
But since you, for no reason, mentioned the Rudy suit, you should know:
-The county is already paying Phillette and won't incur any new or additional expenses from her.
-More likely than not, the county will not be required to pay Rudy millions, maybe even nothing at all. His first estimate of unpaid bills was 600k, now it's 1.4 million. How did he come up with the new 800k ? Was he not aware of missing another 800k in work when he filed his suit ? Who forgets about 800k in unpaid bills ? My impression is he is just making up new bills to try to bolster his claim and extort a settlement.
-The county will not be required to pay his atty's fees.
-If either atty is charging hundreds of thousands in fees, they're ripping their client(s) off.
Poor Katie....call Joey.
Easy fix folks. Wait till next legislative session and get Tate to add it to his bond bill. Problem fixed.
I love Rudy!!
Every lawyer knows his first obligation is not to represent his client but to cover his tracks. If the client can be represented whilst that obligation is being carried out, well and good.
Look under shell number three for the Indian PhD who was lining pockets (his own and those of others). We really can't blame the guy with the mop who was once cleaning up aisle three. All he did was grin and make bank deposits.
Under shell number two is a hunka-burnin' love who wrongly assumes he's flown under the radar. More on shell number one later. Meanwhile, his sphincter is perpetually tightened up.
Espy was too dumb to understand the logistics and was happy simply to attend the Banks Bar-B-Ques. All he did was say, "Looks good to me".
For the wife of the unelected, yet deposed, County Supervisor, please spend your time doing something you're competent doing. Posting on a blog ain't it. Perhaps verifying land titles is your thing. Maybe uncontested divorces and wills.
In retrospect, anybody with half a grain of sense who ever rode out that way should have recognized right off that the entire length of this boondoggle is a swamp, if not a federally protected wetland that can never be developed.
So, are we talkin' here about a pig in a poke, a swindle of magnificent artistic proportion or just every-day incompetence and ordinary thievery?
Who were the lawyers for the county? Because this sounds like malpractice.
fBI needs to investigate this fiasco. Tim Johnson Rudy Taggert Ambrosino Montgomery sehti follow the money. Johnson was trying to build the ginger skinner interchange for 5% real estate commission on land sales Rudy grabbed $5 million design fee
Well I'm no lawyer but as a long time employee of Madison County I can tell you that the new supervisors came in with a chip on their shoulder blinded by political revenge and are costing this county a ton of money. I pray they don't bankrupt this great county.
I agree an investigation should be performed. Let's start with Taggart who represented Baptist and the BOS at the same time and used his power to benefit Baptist at the expense of us taxpayers.
They can just convert this years bond money to pay for this. Wait a minute, they didn't get any bond money this year because the young guns pissed off the whole house.
FBI? How about local DA? AG? Auditor? Why should we always depend on the feds? And, why would this be a federal fraud case?
7:22, the attorney representing the county is the same one who represents ST D Hospital. St D has land on the property and wanted to build a hospital there. Connect the dots.
If I remember correctly at least one rating agency rated these bonds as general obligation bonds. How many more Mississippi PID bonds were sold as (and thus probably are in the eyes of the holders and the courts)GO bonds?
http://www.researchandmarkets.com/reports/2885722/summary-parkway-east-public-improvement
St. D? The same St. D that fought the new hospital on I-55 N several years ago? All of a sudden we need a hospital up north?
7:55 Good question. DA,AG ,Auditor all took campaign contributions from Rudy ,all attorneys involved. DA funded by BOS of rankin and Madison county so further compromised. I don't know of one county in our nation funding a interchange on a federal highway. Why would county pay $5 million engineering fee prior to receiving federal permit? Appears Madison county has taken its debt in the last 12 years from $10 million to over $130 million with this latest pkwy east ct ruling. Really pathetic!! Illinois has Rudy Blago we have Rudy and Tim
If there wasn't a problem why was Espy trying to cut a deal?
Meanwhile Andy Taggart exits out the back door.
7:44 - Hey Mr. Overby. Howz thangs?
There is an old saying that " You can't get blood out of a turnip, but you can put the turnip's ass in jail". Sadly, this rarely applies in Mississippi.
If you can't or won't hold individuals responsible for their actions, there is no reason for them to act responsibly.
Indeed, the court records in Mississippi are filled with cases where those who complete services aren't paid what is owed by local governments and where those who are supposed to provide services don't deliver on their contractual obligations.
And, if the legislature fails to attach penalties or removes existing penalties or doesn't create remedies in the laws, stealing becomes legal.
how much bond debt does Madison have versus Rankin? And how much is it for public-private enrichment projects?
4:21 -- Commas (,) don't cost money. Think of it was taking a breath on the computer screen.
Your first, rambling sentence reads like something a Trump supporter would write.
Can I please get someone to guarantee a multi-million loan to me without requiring collateral? I promise I'll pay it back.
7:20 - While criticizing the syntax and lack of commas of others, please take a moment and explain this sentence from YOUR post:
"Think of it was taking a breath on the computer screen."
Both 7:44 and 2:18 are ignorant.
7:20 - I am a Trump supporter!
Between the $55 million reunion interchange bond issuance and the $30 million parkway east bonds equals $85 million of county debt.Thank Andy Taggert Tim"Elvis" Johnson and Rudy Warnock tor this corruption. Jail time if this is looked into by any competent prosecutor.
Anon 4:48: It is my understanding that the Judge was interpreting a contract between the County and the PID, not a contract between the County and the Bondholders. If so, the County has no duty to the Bondholders because they are not a party to the contract. The Bondholders no doubt claim to be 3rd party beneficiaries of the contract, but that doesn't alter the fact that the PID must perform its obligations under the contract in order to hold the County to their obligations. If Comcast promises me HBO for $15/month, my children cant complain when the cable is cut for non-payment.
8:09 -- yes. I made a typo, adding a "w." Thus, what should have been "as" became "was." If that's in the same category as a 50-word "sentence" with no punctuation, so be it.
9:19 -- glad my instincts are good. I'm (a) surprised you didn't type in all caps; and (b) guessing the you're/your distinction baffles you.
"8:09 -- yes. I made a typo, adding a "w." Thus, what should have been "as" became "was." If that's in the same category as a 50-word "sentence" with no punctuation, so be it."
It ain't my job to categorize 'em. Sounds like something you might do though.
Don't chunk glass houses into someone else's moat until you swim through the gators in your own.
9:52 AM
Lost Rabbit was 18 million...and not guaranteed by the county. The BOS worked a deal to get the land moving there yes. And it is working.
Parkway East is a mess...but it too was settled but yall screwed it up when you hired your new BOS.
Reap what you sow.
SHEILA!!!! Where are you???? All we heard in your campaign was "CHALK BOARD CHAT".... You had ALL the answers when campaigning from the cheap seats. Now we hear silence from you. Everyone now sees you are full of shit. No answers only criticism. Go back to knitting lady!!!
So is the county going to get stuck with the Parkway South (Sethi,Ambrosino) bonds too?
@ 6:42 - Nice try Festus, but even a back bencher like you knows you can't blame 20 years worth of inside train robberies on the Pinkerton Detectives who just got hired four months ago.
Why hell yes. The developers now know that they can not pay and the board will have to pay. If you were a developer and had a dumb ass Board of Supervisors like we have wouldn't you take advantage of their lame asses. Esspecially with the Lawyer they have phillette.
Well county needs to sue responsible parties now!!
8:59 - Please pay attention. The dumb ass board you mention, for the most part, got walking papers last November, along with their lawyer.
8:48 AM
Keep on with your silliness.
This new BOS is costing Madison millions more for no reason.
The math will demonstrate the truth....and it will be painful.
It doesn't matter when you replace one dumb ass board with another dumb ass board.
People should learn someday they are not exactly dumb asses. Most know exactly what they are doing.
WOW !!!!! Sounds like Madison County is almost as corrupt as Jackson, Hinds County, Mississippi. If what ya'll are saying is true, why is there no investigation going on ? Andy is a good lawyer but he is a better preacher---that will give you something to think about !!!!
WOLVES IN SHEEP CLOTHING !!!!
Who else didn't get garbage service in the county last week?
Not only did my garbage not get picked up they failed to pick up anyone on my street. I called up to the county asking to speak with my supervisor and was told that he was busy and they didn't deal with the daily operations of the county. I was eventually connected to a nice lady that said she would have someone call me back. Still waiting on the call. I'm pissed and so are my neighbors. You better believe I'm going to be at Monday's meeting to give the new board a piece of my mind.
I find it interesting the Espy clan is screaming "we were going to settle" after the fact.
i also find it interesting the media and bloggers keep referencing settlement "rumor". Wonder who fed you that line.
The BOS and its legal counsel screwed Madison County for YEARS. Explain to me how replacing the incompetent lawyer, who was part of the problem, even relevant here? How are we blaming the new BOS?
It's simply a distraction to steer attention away from the incompetency of the past.
"You better believe I'm going to be at Monday's meeting to give the new board a piece of my mind."
Sure you will be, Gumpster.
Miz Banks, of the Karl-Klan, employed by Public Works Solid Waste made the call to stop garbage pickup mid route last week. Waste Management was contracted to begin work on Monday, May 2. You can thank the Ghost of Banks for the garbage smell, not the current board.
Garbage collection failure was because Karl's in-law decided to work on CPT. It was her last Friday in charge of the solid waste department before the collection was to be taken over by a private contractor, so she decided that although she was getting paid through the end of the day, the workers could have the afternoon off and us taxpaying citizens could live with our own garbage. (Guess which neighborhooods were not collected and which were.)
On the PID bonds, would love for someone that is touting the pending 'settlement deal' provide any support for their claim.
KF? KF? Where are you KF? You constantly tout Espy because he will leak to you those items that he wants made public. You as a good lap dog comply. But other than Mikey telling you that he had this settled, what other reason is there to believe that crap?
This disaster was created two boards (or more) back, and several attorneys back - let me count the numbers. Hard to believe that those that lost their honey hole of the Madison treasury can still be trying to convince the citizenry that they were the good guys and all this is the fault of the three new members of the board.
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