July 6, 2017 10:41:39 AM
East Mississippi Community College may have issued bonds for local funding for the Communiversity without the proper authorization resolutions in place.
Golden Triangle Development LINK CEO Joe Max Higgins told Lowndes County supervisors at their regular meeting on Wednesday that he found out late last week the community college issued bonds for the project in May. The LINK -- the contracted economic development firm for Lowndes, Oktibbeha and Clay counties -- was in the process of gathering resolutions from each county to move forward with the issuance of the $13.5 million in local funding for the project.
EMCC will operate the Communiversity, which is currently under construction on Highway 82 just west of PACCAR, as a advanced manufacturing training hub tailored specifically toward area industries. Lowndes County is contributing $10 million to the project, Oktibbeha County is contributing $2.5 million and Clay County has committed $1 million.
By issuing the bond, EMCC essentially took out a loan with the expectation the three counties would pay their shares of the combined $13.5 million, plus interest. But when the bonds were issued, none of the three counties had approved corrected resolutions for their authorization.
Clay and Oktibbeha approved the resolutions in late June. Lowndes County tabled approval to determine if the county could repay its share of the funding in 10 years, rather than 20 as the other two counties will.
Higgins said bond attorney Chris Pace learned that the bonds had already been issued while looking into options to allow Lowndes County to repay its bond money on a shorter term.
"What changed it is the fact that the bonds were already issued," Higgins said. "And they weren't issued like two weeks ago -- they were issued back in May. We didn't know it."
Costs of correction
Higgins said the resolutions the LINK originally received from the three counties did not specify they were responsible for the interest, so they had to be redone. The LINK was gathering corrected resolutions from the counties, with the expectation that EMCC wouldn't need the local funding on the project until later this year.
Now, Higgins said there could be tens of thousands of dollars of legal fees incurred figuring out how to deal with the issue. Plus, the counties are presumably locked into an interest rate they didn't expressly agree to.
"There's going to be considerable legal cost associated with figuring all this out," Higgins said. "I told (EMCC President Thomas Huebner), 'Doc, Lowndes County ain't paying this. Clay and Oktibbeha ain't paying this. Somebody else is gonna have to pay the cost of figuring out how to put the s*** back in the horse.'"
Huebner will likely go before supervisors with Higgins at the next board of supervisors meeting to discuss what happened, Higgins said. He said they may also have to revisit Clay and Oktibbeha.
Higgins, speaking to supervisors, said the LINK hadn't expected to need the resolutions sooner because EMCC wasn't expected to issue the bonds until later in the year. The Communiversity is drawing from about $30 million in state and federal funding before tapping into local funds.
"We quite frankly didn't see the sense of urgency, with them having $24-to-25 million or more that they could spend out there, that we wouldn't need your money until late this fall or early this spring," Higgins said. "...The problem is the communication wasn't there."
Huebner acknowledged the communication breakdown and, in an issued statement, said the project is continuing to move forward.
"With local, state and federal dollars being used to fund this project, there are a number of complicated moving parts," he said. "All parties involved have worked hard to communicate with all the others regarding each important detail and have operated very much on the same page as we've moved forward."
Board President Harry Sanders, speaking to The Dispatch after the meeting, said the incident won't hinder the county's long-term working relationship with EMCC. Still, he said he was disappointed it happened.
"It's real disrespectful for the EMCC people to not include us in something (like that)," Sanders said. "We're spending the money and we don't even know what the interest rate was on the bond. We don't know when the first bond payment is due. We don't know how much it is. We haven't been in any of that and it's just not -- it's not proper."
Split issue hits snag
The error has also thrown a wrench into what would have otherwise been an easy solution to allow Lowndes County to repay its portion of the funding in 10 years, instead of 20. District 2 Supervisor Bill Brigham requested the LINK to explore options to allow Lowndes County pay on a faster schedule, which could save about $2 million in interest.
The LINK was considering a split issue, which would allow Lowndes County to repay its debt in years, while Clay and Oktibbeha counties repay theirs in 20. Higgins said some options are still available, but they may rely on the county voluntarily paying the debt back faster, instead of a binding agreement.
Brigham said he still hopes for a solution that will allow the county to repay the bond in less than 20 years.
"The savings are too great not to take that advantage," he said. "I am disappointed that the college issued the bonds before talking to us. That's significant. I don't know why they would do that."
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