December 9, 2015
Because of the recent proposed land deal by the Joint Development Authority (JDA) to sell 536 acres of land at half the cost to a developer (Kippy Clarke) and his backer (Thomas Chandler), citizens have been finding out more and more details of the “deal.” What they see, they don’t like—a $4.7million loss to the taxpayers of the 4 counties involved. (If you have not read Part I and II of the Stanton Springs information, please go to www.taxdogs.wordpress.com and do so; a copy of the contract is included on the 11/28/15 blog post.)
At the Jasper County BOC meeting on 12/7/15, citizen watchdog, Mary Patrick, requested that each of the BOC members look into this deal and learn the facts. She questioned why we should lose 57% or 1/2 of our investment in the land. The first minute of the video below concerns the JDA sale of land.
Comm. Pennamon, who has served on and off on the JDA Board since its inception, and also sits on the Jasper County BOC, responded with his facts, leaving out some very important details.
We do appreciate Comm. Pennamon at least speaking out in public on this deal; he is the only JDA member to do so that we know of. However, we are going to pick apart what he said, which is probably the “official story,” and expose the nuts and bolts of the deal.
WHO IS TPA?
According to Comm. Pennamon, TPA is the consultant that handles the business of the JDA. What business do they handle? What have they ever done for the JDA besides buy land from them?
Pennamon said TPA is not in financial shape to buy land this year. You see, TPA (or one of the many LLC’s involved with TPA) is suppose to buy 379 acres of JDA land this month at cost plus 10%. This would bring the amount of land purchased by TPA to 800 acres. (As a note, TPA shows on their website under “investments” that they already have 1616 acres of land under development at Stanton Springs.)
The official reason for selling at a loss is because JDA needs cash flow and TPA, who is under obligation to buy 379 acres from JDA this month at 10% over the cost of the land, is “strapped” and won’t fulfill their commitment. The cost of the land is approximately $13,600 per acre according to the JDA’s records. TPA should be paying JDA over $5.1 million in 2015; instead JDA is going to share proceeds of our land and pay TPA almost $1/2 million in commissions!
Why is JDA giving TPA 1/2 of the proceeds? How does this make sense when TPA should be paying JDA? There is something very, very strange about this part of the deal. Something that has to be answered, and the answer examined for honesty.
If JDA needs money, why doesn’t TPA buy only 100 acres of land? This would bring in $1,360,000—which would be more than what is left of the proceeds after going through with “the deal.”
Maybe other commissioners in the other counties are more inquisitive, but it is doubtful that any questions are or have been asked of the JDA beyond what they are willing to say as their official line on the “deal.”
The “deal” at present is JDA sells the property for $3.7 million and loses $4.7 million—a 57% loss on our investment. This includes sharing the proceeds 50-50 with TPA (the real estate broker) who also gets a $458,000 commission on the deal. Additionally, from the proceeds that remain after commissions are paid, the JDA will contribute $1 million into an escrow account for construction of a new parkway to serve the proposed residential development, and will pay an additional $100,000 for the land acquisition for the parkway. And doesn’t TPA own the land that JDA will be buying for this parkway?
This deal is to “help their cash flow.” How much cash flow is left after JDA meets all these conditions? Very little! It seems that the only cash flow being helped is that of TPA.
The cash flow left is surely not “enough to pay off the land” as Comm. Pennamon said in his commentary to the Jasper County BOC. As of 12/31/14 JDA owes $3.7million on the bonds which financed that great land deal in 1999. It is strange how that land was such a good deal at twice the appraised value in 1999, but now 16 years later is worth half of the cost, according to JDA.
NO MORE TAXPAYER MONEY
Comm. Pennamon said he was, “Not willing to go to taxpayers for any more money” so he agreed that they should sell the land. We guess that makes a 57% loss on our investment OK. Folks, this is absolute hogwash!
The BOC’s of all 4 counties were told in 2012 that since Baxter was coming, the counties would not have to put in any more money. Paul Michaels from TPA stood up in a meeting and emphatically said this. However, in January 2013, the Jasper County BOC (and all 3 other counties) signed on to help pay another $5.9M loan from GEFA to the JDA and all during 2013, 2014, and 2015, each and every county has paid in to JDA to pay on notes, bonds, and for expenses, including the monthly bills by Tommy Craig who is the JDA attorney. The 4 counties have paid in every year since the year 2000 and will be continuing to do so for some time to come.
Comm. Pennamon says JDA will be out of debt by 2020. Time will tell. As of 12/31/14 JDA had $10.8 million of debt.
OTHER QUESTIONABLE INFORMATION
Comm. Pennamon says the land will be sold for about $6500 an acre, but adds that there is all kind of other land left to offset this loss. Is that true? Originally there was 1616 acres. TPA has bought 421 acres and JDA has agreed to sell 482 acres to developer Kippy Clarke. That leaves 713 acres of which Baxter/Baxalta has how many acres? And was Baxter given that land or did they buy it?
If by chance JDA has 400 acres of land left (after Baxter and after “the deal”), they would have to sell that 400 acres for approximately $25,500 per acre to recoup just our losses on this proposed deal and break even on the 400 acres.
Comm. Pennamon says the zoning is only for a special exception; he says the land was already zoned residential. Look at the maps and you can see that is not true. Much of the office and light industrial has been changed to residential. Counties make money on office, commercial, and industrial land. Counties lose money on residential land. So for the BOC to get excited about more residential land on the tax digest, shows a lack of understanding of how it all works.
Newton County BOC and residents understand it. It will cost them lots of money for schooling, public safety, road maintenance, etc. for all this new residential—as many as 2000 new homes, including the proposed town houses. This is why the Newton County P&Z board denied the rezoning and why the Newton County BOC tabled the rezoning until February 2, 2016. They are interested in getting all the facts about the deal.
JDA SAYS WE HAVE NO CHOICE
The JDA official position of “we have no choice,” is being challenged by citizens saying, “Well, actually, we do.” We just don’t have enough facts yet to assess what those choices might be and which ones are in the long-term best interest of the taxpayers.
The Newton County BOC tabled a request for rezoning by the JDA, and instead they proposed a meeting or work session that will include Commissioners from all 4 counties, JDA representatives, TPA representatives, and Economic Development representatives. Hopefully there will be an opportunity for citizens that attend this meeting to be able to speak and ask questions, and hopefully get honest answers.
JDA has hidden in the darkness for way too long and taken millions of our dollars with no accountability. The citizens have had enough and are tired of supporting something they know nothing about and have been told for over 15 years, “We can’t discuss it.” All the citizens of the 4 counties must demand that their Commissioners answer questions about why this JDA has been able to operate so secretly all these years, why they have never had an official audit—ever, and why they are now so willing to lose over half of the taxpayer’s investment.
The biggest question still remains, why would anyone take a 57% loss on an investment and give proceeds to a “consultant” (TPA) that has done nothing?
The JDA meets tonight at 7:30pm at the Moore House, which is on Hwy 278 near the Stanton Springs entrance. The public is encouraged to attend.
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Citizens, be informed and stay informed! Only by being informed can the citizens understand what is being done and talked about, and then press our officials to make good decisions for everyone in Jasper County. That is our goal with the Taxdogs blog.