Parkway East board down to 1
Wednesday, July 9, 2014 1:00 PM
All but one member of the Parkway East Public Improvement District (PID) board has resigned recently, leaving the body unable to reach a quorum and conduct business, including receiving nearly $800,000 in special assessments.
Bradley Morris is the lone remaining board member after the recent resignation of St. Dominic CFO Deidra Bell. Bell resigned due to a pending federal lawsuit over the PID and potential conflict of interest in the case.
Anthony Fertitta, J.C. Burns and Make Martin all have resigned their positions as well.
Bob Montgomery, legal counsel for the PID, said the board members had served faithfully over the years but outside responsibilities led to those resignations.
He is now asking the county to help seek people to serve on the board to keep it operational.
"The PID has got to stay in place," he said. "We're lacking some people on that now. We're out seeking some people to volunteer to serve on the board.
"Historically, we had 2-3 members that were landowners but that dwindled down," he continued. "We're talking about a citizen board. It's been years since they received any compensation at all - per diem for mileage back and forth to meetings."
Madison County Board of Supervisors Attorney Mike Espy said members were aware of the situation and the county was looking at all its options at this point.
"We realize we have some responsibilities in the eventuality there is not a quorum," he said. "We have obligations under the relevant statutes to do something and we are considering our options in light of the litigation we are both co-defendants in."
The county and the PID are currently involved in a federal lawsuit by Radian Asset Assurance, a New York-based bond insurer, over payment defaults.
Included in the PID was a contribution agreement where the county would make payments on behalf of private landowners in the event they defaulted on payments to the $27.7 million worth of bonds, but that agreement would end after two years of non-reimbursements. The county ceased making payments on behalf of the PID on Oct. 25, 2013.
To date, Parkway East has cost taxpayers over $2 million.
Montgomery said the lawsuit is currently in the discovery portion and there are two main subjects Radian alleges.
The trial isn't scheduled until 2015.
"The essence of their lawsuit is that the contribution agreement between Parkway East and the county doesn't have a termination provision and the county shouldn't be relieved of the responsibility," he said.
Montgomery added that Radian wants the landowners who have continued to make payments to pay the totality of the assessments, even those for landowners who have defaulted.
"The Parkway East board has resisted that over time," he explained. "They continued to assess the annual payments to everybody."
The next payment due is an interest payment in the amount of around $500,000 on Nov. 1. A bigger debt service payment is due on May 1, 2015.
The bonds were issued in March 2005 for infrastructure development for the Parkway East district that parallels I-55 north of Madison to Gluckstadt. The 4.3-mile roadway connects Gluckstadt to Madison.
Montgomery said taxpayers got a $22 million road out of the deal and that although there have been some stumbling blocks along the way, the economic development potential out there remains promising.
"First was [Hurricane] Katrina, which raised prices on everything," he said of the obstacles. "Second thing is we had to realign the lower part of the road. We did that and had we not had some delays early on, which were no faults of ours, we would have finished soon enough to have that period there where everything was selling."
He said the road was finished just as the recession hit and nobody was making large investments.
"It's the right place - absolutely the wrong time with the recession after it hit, which stopped everything," Montgomery added.
There were initially 14 landowners and several of those properties have been acquired by the state in tax sales.
Several of the landowners who have defaulted on payments include:
891B Properties LLC
Madison Parkway LLC
MG Parkway LLC
YMCA of Metropolitan Jackson
In March, Standard & Poor's lowered the ratings on the special assessment bonds from "BBB" to "CCC" and labeled the outlook as "negative."
"The lowered ratings reflect our view that the lack shortfall of pledged revenues, combined with the county's lack of willingness to contribute toward deficiencies in revenues, could lead to a furthering downgrade of the rating, or a potential default, within the next year," S&P stated in its rationale.
However, the county's general obligation bond rating is maintained by Moody's and not S&P so it had no direct affect on the county.