Bulldozers Roll at Page County's Data Center
The contract signed by Lowell Baughn, for the Page County Economic Development Authority and Rebecca Hudson, landowner, can be downloaded from these links.
2. Exhibit A
3. Exhibit B
4. First Amendment to the Purchase Agreement This one is key. This was signed AFTER the Board approved it, and references the tax free nature of the payments, and the “treated as a municipal bond” for tax purposes. I don’t know if it IS a bond, or if it is just treated as one for tax purposes. This relates to Mrs. Strickler’s comments in the post titled “Ruin our Bond rating?”
Those are the five documents related to the contract. The financing agreement says we owe her our first interest payment on January 1, 2010. This is the payment that was not in the budget, because Mr. LaFrance said we were getting a USDA loan to pay her off before that would happen.
After reading these documents, you might want to consider downloading the petition that Jim Turner is circulating. Get some signatures and then call Jim on 778-2282 or Winnie Kerchoff and turn them in.
June 16, 2009 at 1:03 pm
A read of these five documents gives me this perspective:
1. A very cursory economic analysis of the value of this property as indicated by the purchase agreement is as follows:
value of the lease, house plus two acres, one year = $8400 (@700 per month)
value of 208 acres leased as farmland = $1000
one year cash flow = $9400
An investor happy with a 10% return would therefore be willing to pay $94,000 for this property as valued by this contract
There is NO description regarding future use of the land that would in any way, shape, or form entice an investor to pay $7.5MM for this property, though my background is in commercial and investment banking, not public finance, and the rules appear to be quite different. If it were my money I would have required signed letters of intent from future occupants and detailed business plans enumerating planned operations and cash flows from operations in order to ensure revenues were available to support the investment, with multiple economic scenarios (stress tests) including prolonged recession and depression plus plans for achieving presumed cash flows under each, to ensure ability to pay for the project. But I’m sure this analysis exists to support the $7.5MM purchase price. Make that $6.5MM as the million’s already gone. This is what the USDA or any other lender would require to make the loan. However there is the twist of issuing bonds.
2. In documents 1-4 it APPEARS that no taxes may be used to pay the note with face value $6.5MM, and that the note may only be paid through proceeds from the use of the property, which are not specified. Document #5 seems to negate all of the clauses in #s 1-4. RED ALERT RED ALERT
3. It APPEARS that Ms. Hudson is satisfied with ultimately being paid from proceeds from the sale of the land should the ’industrial’ projects envisioned fail to materialize, though nowhere in the documentation does it specify what will happen if the sale of the land fails to satisfy the full $6.5MM, which to me is the hole – gaping chasm – in the documentation.
4. Therefore it APPEARED that taxpayers were off the hook for the $6.5MM up until I got to the last document (‘Financing Agreement’)…since this is the first time the clause ‘or from any other source’ appeared…as in: the AUTHORITY can issue bonds and receive payment for them from the ‘leasing of facilities’ OR ANY OTHER SOURCE to pay those obligations…whereas the other four documents appeared to say that they would NOT use their taxing authority to pay for this deal.
Plus Ms. Hudson can ‘call’ the note in the event of a default. And if that means all $6.5MM is due at once…that could be a very big problem for the taxpayers of Page County Virginia. Though again I stress my expertise is NOT in public finance nor am I a lawyer and would appreciate others’ opinions in these arenas.
June 16, 2009 at 2:41 pm
It should be noted that the Purchase Agreement is significantly different from the First Amendment to the Agreement, and the subsequent Financing Arrangement. At the time that the Board approved the $1m down payment, this First Amendment and Financing was not spoken of in any public session. Its terms were not disclosed to the Board during open session. If they were disclosed during closed session — why? Or were they simply not disclosed?
June 16, 2009 at 2:46 pm
Yes, that final document appears to obligate taxpayers immediately if the property fails to produce as planned. And if that is the case, the taxpayers should be entitled to see this plan to pay Ms. Hudson $6.5MM more dollars – where will the money come from? And how much more money will be required to be able to ‘lease’ that land? I understand that the ’spur’ will be ‘donated’ and so will the ‘widening of 340′ but will other improvements be required and at what cost? Yes, how will the land that is now being leased for $1,000 per year generate the money to pay $6.5MM? Where’s that plan?
June 17, 2009 at 1:20 pm
Susan is onto something here! If “…the taxpayers should be entitled to see this plan to pay…” is there someway this document could be published in the Page News & Courier? This is news – big news – and the good Citizens need to know what the BOS has done. Now comes another question, Is this something the County Administrator and the Economic Authority Director devised, and what role does Premier play?
June 17, 2009 at 2:19 pm
Dr Dick, the Page News and Courier reads the Blog, and they can download the contracts. Reading the Page News and Courier today, you can see the Economic Authority Director with his arms crossed, quoted as saying he is “not opposed to talking to them” regarding those who are circulating this petition.
You also see that Tom LaFrance says he doesn’t see this petition as making any difference for the Board’s actions.
What role does Premier play? Well, Premier’s land is adjacent to this land. Paying an outrageous price for this land makes a real estate “comp” to increase the value of Premier’s land. For one.
June 17, 2009 at 3:20 pm
I read exhibit A. It appears to me that perhaps the members of the econonmic development authority should pay the bill. It is a deal between them and Mrs. Hudson. They are the ones who “promised to pay” not the taxpayers. I now know why they did not bring this to a public hearing………..
June 17, 2009 at 3:38 pm
Mr Gibbs is correct. This is an EDA matter now. The County gave them their start up money for this project (for good or bad its done) and it is now up to the EDA to sink or swim on its own with this and to not obligate the tax payers any further.
The Board needs to understand that they need to stop investing and let the public sector carry this pig or let if fumble.
June 17, 2009 at 10:29 pm
I remember a saying about weaving an evil web. This story is embodies that saying!
Is there a copy of the petition somewhere in town I can just walk in and sign?
June 18, 2009 at 2:04 am
Rick, I’ve heard there is one at Lancaster’s store. I’ll put more out in various stores next week. There is also a session at the VFW on Friday night from 5 – 8 p.m. where Jim Turner will be there with the petitions talking to people. If you download one from this post (where it says downloading the petition that Jim Turner is circulating), you can sign it and mail it to me at Alice Richmond, P O Box 725, Luray. I’ll get the rest of it filled up and turn it in.