My notes from last night’s City Council meeting are posted below…
– Residents from the Emerald Woods neighborhood visited council to remind us about the sad state of their roads. I appreciate them letting us know that. We must remember how badly we have underfunded our roads in the past four years. You don’t just strip $3 million of funding from the road-repair program without there being lasting consequences. I am a firm believer that we should balance our budget, but I’m an even firmer believer that we owe our residents the right to drive on adequately maintained roads.
– As I mentioned a couple weeks ago, Mike Weddle (our economic development coordinator) is retiring. We learned last night that Service Director Mike Miller will follow suit — based on the changes to the state pension statute, which passed in Columbus this week with bipartisan support. Many Stow employees will be incentivized to retire before Jan. 1, 2013. This will be the biggest challenge confronting the city in the next six months.
– This weekend, the city will begin patching repairs on State Route 8. It will be done in the evenings, with a police cruiser to slow down oncoming traffic. Work will also begin soon to replace the water line on Stow Road, near Bryn Mawr.
– Three councilmembers (Pribonic, Costello and Lowdermilk) abstained from legislation that involved their churches last night. I am quite positive there is no legal obligation to do that, but there is no great harm in erring on the side of ethics.
– The longest part of the meeting was spent to discuss the Enviroscience lease contract. My full-time job, as a business attorney, is to draft and negotiate deals like this. So I went through the contract and found specific changes that were necessary to protect the taxpayers. Two of my three amendments were not contested. One amendment, however, stirred a large debate. I’ll try to boil it down for you…
The Enviroscience deal is a purchase of the parks building, but it is structured as a lease. This is done because of complex tax regulations regarding the issuance of bonds that the city effected in order to finance the construction of the parks building about 11 years ago. From 2013 to 2020, Enviroscience will be leasing the building from us. In year 2020, there is a purchase option, whereby Enviroscience may pay about $2 million to outright own the property.
The problem with the deal was that the city was going to finance Enviroscience’s bulk payment in 2020. We would take a mortgage and a promissory note (payable from years 2021 to 2043), instead of Enviroscience giving us cash. Here is why that is problematic:
- If Enviroscience has a difficult quarter, and misses a payment, then what? Does the city put true pressure on the company, in an effort to recover the taxpayers’ money — perhaps severing a relationship with one of the city’s best employers? Does it evict and foreclose upon Enviroscience — causing the company to completely cease operations? This scenario would be a nightmare to a future administration. We would be doing the future leaders of this community a disservice by setting the stage for that conflict.
- The government, traditionally, has been an awful lender. The recent crashes of Solyndra and other energy companies are only recent examples. When the government acts as a bank, the taxpayers are generally the ones who lose.
- The loan extends until 2043. Who could predict whether this business, nor any business, will be around then? Stow needs to get the taxpayers’ money — and get out. Yes, we would be fully collateralized, but we do not have a use for that building. We would be right back where we started after a default.
My amendment was that Enviroscience, in making the purchase option, will make an effort to obtain private financing to make that bulk payment (thus, the city will get its cash in 2020). The purchase amount will be adjusted downward to account for the financing charges that Enviroscience incurs. Thus, the bottom line for this deal will not change, when considering the present-day value of money and the costs of interest payments.
This amendment passed by a 5-2 vote. The legislation, as a whole, passed by a 7-0 vote. Thus, the city has approved the contract, with my three amendments. Whether Enviroscience accepts it in that form (or makes a counteroffer) — we will soon find out.
– Council will meet next on the week of Oct. 8. Please join Matt Riehl and I for our monthly meeting with residents on Oct. 2 at 5:30 p.m. in the second-floor conference room at City Hall.