SHUT UP
Every Fairhope City council meeting begins with a prayer and the pledge of allegiance. What irony, when the council president then explains to attending citizens that their right to speak is a privilege— not a right. The council president then explained that the 3 minute limit on public participation was at his discretion. This is how our previous Mayor handled critics, complaints or investigations— absolutely no transparency. Make no mistake, as an American, it is your right.
The same council president, Jack Burrell, is embroiled in controversy over his participation in the Fairhope Airport Authority. His position is that we do not need to ask questions. Just trust them. Going with Jack is going Back. His position is with the previous administration and the good ole boys that ran it.
His most despicable accomplishment has been his ability to destabilize city government by undermining morale among employees of the city with his constant berating of newly elected Mayor Wilson who has embraced transparency. Those employees who support Mr. Burrell’s destabilizing tactics should be terminated.
Shut up or transparency? Your choice, but one thing is clear. More people need to show up at council meetings and letting the council know where we stand and if they cannot hear us then yell louder.
The Airport Authority is not acting in the best interest of Fairhope citizens and Mr. Burrell has a completely different agenda then what we voted for in the last election.
Mayor Wilson is clear on her position,
My History with the Airport Authority to Date
Dear Citizens,
I have put together the following timeline so you may better understand the facts involving the refinance of the land surrounding the airport. While it took a great deal of time to pull this information together, the facts are extremely important and I ask you to remain engaged and informed while I continue to strive for what is best for our great city.
The situation at the airport, along with other concerns that I’ll be addressing soon, will motivate some to mislead the community and potentially falsify the facts to discredit me to protect themselves. Know that I will stay the course and keep you updated. Transparency roots out special interests and you deserve the truth.
August 2016 After reviewing the state of the city’s financials, I discovered that there was minimal change to the total debt in the airport land loan since 2011. During the course of the last term, approximately half of the city’s debt can be attributed to two events: an $8.75M settlement of the Dyas triangle lawsuit and a $7.7M debt balance for land adjacent to the airport. In addition to $3.3M to fund the operating cost of the airport (over the last 10 years).
Sept 1 - Sept 12, 2016 I requested financials from the Airport Authority from Joe McEnerney, the chairman. I received the information which left me with many questions.
Sept 15, 2016 Had a conversation with Joe and Jack Burrell and asked the following questions. 1. Why was the land purchased? 2. Why was the loan structured the way? 3. Why hasn’t anything been developed in 10 years to help pay down the loan? 4. How long is the city obligated to this loan? 5. How can we better position the city? I stated that this was a huge appropriation – more than we pay our 5 public schools together. Joe told me that the debt had a balloon. 6. Since it was ballooning, how long is the city obligated to the loan? Jack responded, “indefinitely.” I made it clear that I wanted to be involved in the refinance process when the loan ballooned, which Joe informed me was ballooning in 2017. (I found out later that it was in fact 2020.) I advised Joe that this debt was a priority for me and I wanted to be involved in the refinance.
Sept 16, 2016 An email was sent by Joe to the airport authority and city clerk the very next day after our conversation. Oddly, I was excluded from this email and did not discover it was sent until a later date. The sense of urgency to suddenly refinance without commenting on our conversation the previous day was very disconcerting.
Joe stated, “I believe now with short term interest rates moving upward there is a window of opportunity for the Airport Authority to refinance its existing debt of $7,445,629. To this end, I would like to move up our annual debt review by a few months and discuss it at our September meeting. Here is some background material for you to consider and review prior to Tuesday’s meeting.”
Sept 19, 2016 I send the following email to the board: “Since we spoke last Thursday about my concerns over the land purchase in 2007, I’m thankful to see the importance of the refinancing on the upcoming agenda.
I want to be a part of the refinance process since it was the source of most of my questions when we all talked. My commitment to the voters is to make sure we’re making decisions that benefit all and I’ve promised too that I will make financial commitments transparent in order to restore confidence in the way our city prioritizes its spending.”
I also sent the following questions to discuss: · “I’m interested in the current challenges the airport has in making its budget numbers for this current full fiscal year 2016 · How are things shaping up for you in fiscal 2017 starting in October · Most importantly, I am interested in your long term goals and strategies that will significantly improve the cash flow of the airport, reduce the debt, and maximize the utility of the airport in its primary mission to stimulate the economic growth of Fairhope. Debt incurred March 15, 2007 $8,845,000 and has only been reduced by $1.4MM in almost 10 years. · What are the other expenses paid by the city of Fairhope besides the appropriation and travel? · What has the airport authority achieved in economic growth and development within the city since 2007? Do you have estimates or any reports on the economic impact for the city? · Has an annual report on economic growth & development been given by the airport authority to the city for review since 2007 - as stated in the agreement when we purchased the land? If so, I’d like to see these reviews.”
Sept 21, 2016 Joe issues the RFP to banks stating no prepayment penalty due by Oct 28, 2016 with a closing date on or about November 16, 2016.
Oct 9, 2016 I received a response from Joe McEnerney to my questions on Sept 19. For the purpose of this post, the responses were promising and restored my confidence that the airport had a plan.
Nov 7 2016 I take office.
November 16, 2016 Terms from the Bank’s RFPs expire. I have not been engaged at all in the RPF process or the response for proposals. I was not aware of these expirations until I started to research the details more when accusations surfaced that I was responsible for costing the city money with delays.
Joe failed to negotiated an extension of terms before this deadline. The cost to the city for not accomplishing this was a great deal of money. Council had not yet approved the refinance. This didn’t happen until Dec 22nd and because of this fact, the airport could not have closed the loan even if it had wanted.
Nov 23, 2016 Emailed the Airport Authority board: “I have carefully reviewed the Appropriation Agreement between the Airport Authority and the City of Fairhope.
This email serves as due notice that after conscientious consideration, and in accordance with the Agreement, and having had all reimbursements of the principal payments as provided for in the Agreement, the City of Fairhope is exercising its right to pay $10.00 to the Airport Authority to assume ownership of what is left of the 265 acres purchased in 2007.
I intend to move forward with a sound plan for this property so that it plays a key role in the overall economic impact of our city and comprehensive plan to meet the needs of our citizens and local industry.
I’ll be in touch after the holidays to draw up the proper documentation to facilitate this change of ownership as soon as possible.
I look forward to working together to make the airport the absolute best it can be.”
Dec 1, 2016 I post the following information to my FB page to make citizens aware of this debt and the city’s position on the loan.
BACKGROUND For approximately ten years, the City of Fairhope has used your tax dollars to make payments on a loan for land it does not own, located at the Fairhope Airport. In 2007, property adjacent to the airport was purchased for $8,850,000 through Allied Irish Bank by the Airport Authority with the City of Fairhope as the guarantor. By doing this, the City of Fairhope committed indefinitely for a very large appropriation to the airport authority. The city has paid $3.6+ million since 2007 with an average of $430,000 a year (last four years). Additionally, the City is on the hook for a $6.9 million balloon payment in 2020. We cannot continue to do business this way.
CONCERNS Currently, this debt makes up 21% of the city’s overall debt. The land was intended for business development but no development has occurred and some of the property has been sold at a price considerably lower than its purchase price. The airport sold two parcels of land - approximately 20 acres - at a price significantly lower than the purchase price. In 2010, the 2007 bond was refinanced for $8,935,000 with RBC Bank which will balloon in March 2020 (In 2013, PNC Bank acquired the loan from RBC Bank.) To date there is no written plan and no real progress on the best use of the land.
RECOMMENDATION I propose that the City of Fairhope exercise its right to transfer the property back for $10 which it has had the right to do since March 2012 since the principal has not been paid.
The debt should be refinanced at a fixed rate interest in order to pay down quicker. Currently the loan balloons in 2020 for $6.8 million. Reduce the $20,000 in FY17 budget for Authority operating expenses to zero (discretionary item). The city, of course, will support plans for the portion of land committed to the FAA for additional improvements. The city will work with the airport along with other economic development groups to put a plan in place that is in the best interest of our city and its citizens.”
From Dec 1-22, 2016 The airport refinance was discussed in airport authority meetings, council work sessions and between individuals and councilmen. It was stated that transferring the land would be a liability to the city. Not true. In fact, many cities own the land surrounding airports as part of its economic development. And if this was true, why would the covenant state the land reverts back to the city if principal is not paid in full by 2012? Others stated that it was easier to negotiate development plans with the airport authority rather than the city. I can assure you, no one is more motivated than me to retire this debt! If the city has paid the debt for 10 years (in spite of the fact the airport failed to successfully develop the land or come up with a plan to pay it off), then the city should lead this effort for development and the refinance of the debt.
Dec 22, 2017 During the City Council meeting councilmen unanimously approve to keep the land in the airport authority’s name, commits the city to $320k a year for 7 more years with no strings attached. I am still puzzled by this decision. Joe stated that $320k would cover the loan; however, he did not take into consideration that he failed to renegotiate the RFps before the deadline in November. Again, this was not my fault. Had I been brought to the table to help with the refinance process as requested early on, I would have absolutely followed up before the deadline to extend these terms.
Jan 4, 2017 Joe responds to my concern and agrees that city should discontinue the subsidy to the airport for its operating expenses now that it was profitable in an effort to make the airport more accountable. The $320k appropriation will only be used for debts service and no other money from the city would be required.
Jan 6, 2017 Joe sends out the second RFPs to banks with responses due Jan 24, Apparent Winning Bidder to be Notified by January 27, with a Closing Date of February 23, 2017.
The difference between this RFP and the original RFP? This clause: “Interest to begin accruing no earlier than the date of closing. The Borrower request that debt’s principal can be {paid} off after September 2020 without a pre-payment penalty.”
In other words, this allows the banks to include a prepayment penalty. The first RFP sent out stated no prepayment penalty. Including this clause is NOT in the best interest of the city. Is it possible that Jo M. realized the $320k appropriation originally requested from council was not going to be enough because he missed the deadline to renegotiate and the rates went up?
Jan 17, 2016 Airport Authority meeting to present the RFPs. I was not available to attend because I had a conflicting meeting. In my absence, Joe and some of the board members continued to blame me for the delay which resulted in interest rates increasing which cost the city more money.
FACTS: Joe failed to renegotiate new terms or extension before the deadline, failed to mention the new RFPs which allowed the banks now to charge repayment penalties, failed to disclose that a decision could not be made that night due to not having the details of the penalties and ‘make whole’ clauses and failed to reveal that without the council of bond attorney, Rod Kanter, the vote would have to be delayed. Rod quit due to not being comfortable making a recommendation without my involvement.
Feb 8, 2017 Meeting with Tut Wynn (city attorney), Matt McDonald (attorney for the city), Joe McEnerney and me to discuss a way to move forward without any more delays. I recapped what has happened to get us to this point. I advised Joe he did not include me in the process at all for the refinance as I requested back in Sept. That he and others need to stop blaming me for delays and costing the city money because that was 100% false. I stated again that I have always wanted to refinance to get better terms. My concern has always been the lack of communication, being shut out of the process, misrepresenting the facts of the land remaining in the airport’s name, the covenant remaining in place so the city can take back the land any time and the need for more accountability for the airport to pay-off the loan. In addition to all of this, now allowing prepayment penalties, not disclosing this information to the board members and misrepresenting the fact that it was the banks’ fault for sending in “sloppy” proposals. The proposals received from his RFP were compliant but the details needed to make a final decision were not in place. Poor planning? I do not know the answer to this. But I do know (and so does Joe) the fault is not mine.
The rest of the meeting was spent talking about working together to get the loan closed. I told Joe that I wanted the covenant to remain for the land to be transferred to the city and the prepayment penalties were not in the best interest of the city. Joe agreed and said it would not be a problem to have the banks remove all prepayment penalties.
Feb 9, 2017 Airport Authority special meeting. Joe said the authority needs to hire a new bond attorney; he found one willing to negotiate on behalf of the airport authority without the mayor’s involvement and the board members unanimously vote for his recommendation. Indeed, this happened 24 hours hours after Joe agreed to work with me.
Airport Authority Board member Vince Booth had phoned into the meeting because he was unable to attend. He stated that I was responsible for costing the city $160k by delaying the loan. I had to object as I refused to play the blame game or continue to stand by while being accused of something for which I was blameless. Joe was ultimately responsible for costing the city money by missing deadlines and not staying on top of the process.
Since no one could argue with the facts, the meeting continued and the authority unanimously voted for the new bond attorney. Then Joe requested the board go into executive session. I went to join them after consulting with Tut but was not allowed into the room. I stated, as ex officio, I should be able to attend the session. Jack, Joe and the airport’s attorney, Josh Myrick, stated that this was not correct and refused to let me in. After the executive session, the board came back into the public meeting. Tut advised that in the future, the mayor, as ex officio, can attend all meetings including executive session.
Joe recommended hiring an attorney for the potential lawsuit being filed from citizen Paul Ripp regarding ethical complaints. I said that the appropriation from the city should not be used for legal fees and asked how the airport intended to pay for it. Joe responded a decision would not be made at this time.
Feb 10, 2017 Joe emails final bank proposals. All still have prepayment penalties.
Feb 21 2017 The airport authority meeting was held and included the Approval of the bank to refinance the Airport’s Authority’s $7,445,629 existing debt. The total closing costs will be around $60k plus the prepayment penalty. About halfway into the meeting, Joe stated that he received 6 bank proposals that were not compliant with RFP and he then asked the banks to remove language that was not consistent with the RFP. I read his RFP and in all cases the banks were compliant. Was this another excuse for delays?
The details of the loans were not discussed and no bond attorney was present. Joe advised the board that “the magic” of this refi was a fixed rate and a change of amortization. He stated there were “no prepayment penalties” on any of these refinances. However, the spreadsheet comparison he forwarded to me less than an hour before this meeting all had prepayment penalties.
He acknowledged I was in the audience and stated that there were four or five terms that I requested in the loan and that he believed all could be done although there were still a couple of grey areas. However, there were only two critical terms I wanted: first, that the covenant remains intact allowing the city to take back the land and second, that there would be no prepayment penalty. So what are the “grey areas”? I will find out.
Disappointingly, Joe made no effort to contact me over the last few weeks to discuss the details of the loan or ask for my input as promised.
The board then voted for Bryant Bank. Josh clarified after the vote that there was still a lot of work to be done, including meeting with the bond council representative for both the airport authority and the city. So why was there a vote tonight in their absence?
Three of the six proposals have now expired. Again. According to the winning bank’s letter (Bryant), its deadline is Feb 23rd.
Also to discuss is the fact the city is allowed up to $10M in tax exempt bonds each year. As some of you know, our city has big infrastructure needs in all of our utilities as well as capital improvement needs. This refinance for the airport could dip into the city’s limit and leave us with only $2.4M available in tax exempt bonds for our critical needs. ($7,505,629 (amount of loan) + closing $60k)
I will continue to keep you posted. I thank you for your time and support!
Posted by Mayor Karin Wilson of Fairhope, Alabama on Thursday, February 23, 2017
then watch
How about this for transparency? A complete copy of the complaint filed with authorities:
All this information and the Fairhope Airport Authority has yet to answer any of the questions related to the complaint. They chose instead to investigate the Ripp Report with taxpayer money.
SHUT UP