Thursday, October 8, 2009

ICE project deal dead: Emerald says it will offer facility to other cities after City Council fails to support public financing proposal

ICE project deal dead: Emerald says it will offer facility to other cities after City Council fails to support public financing proposal. Christin Coyneccoyne@mineralwellsindex.comA two and-a-half year effort to bring an illegal immigrant detention center to Mineral Wells ended Tuesday night with several long seconds of silence from city council members. A resolution to continue negotiations with Emerald Correctional Management to build a detention facility funded by non-recourse revenue bonds issued by the Mineral Wells Local Government Corporation failed when council members failed to second a motion in support. “That’s a pretty clear message that the city council has no interest in doing this project,” Steve Afeman, chief operating officer of Emerald, said Wednesday morning. “We’re not about to go back.” The failure to move ahead with negotiations seemed to come as a surprise to several. Afeman said Emerald met with mayor Mike Allen, Industrial Foundation representative Steve Butcher and city manager Lance Howerton and was told they believed council would support the public finance proposal. Allen told those attending the meeting there would be no public comments. “This is for the council to understand,” he said before a presentation from Hull Youngblood, Emerald’s attorney and representative. “[While switching sites earlier this year], we lost that window to get private financing that you could use,” Youngblood said. Initially the city offered Emerald land near Mineral Wells Municipal Airport, but 11th-hour public opposition to the site forced its move to Wolters Industrial Park, with the Industrial Foundation buying land to accommodate the switch.Youngblood told the council the city would not be obligated if they authorized the local government corporation to issue non-recourse revenue bonds.“The LGC will not have to pay anything on the debt except what is generated by project revenue,” Youngblood said. “[If the bonds were defaulted on] think of it like lenders and they’ve got a lien on the building. They could sell it or refinance it.”Because the local government corporation would own the title to the building, the facility would also be exempt from ad valorem taxes. “We would now take that pool of money [that would go to the city and Parker County] and give it to the city [as the per diem fee per inmate],” Youngblood said. Councilman Bill Terry wanted to know if the facility went defunct how much control the city would have.“[Once the facility is foreclosed on] they could do whatever they want,” Youngblood said, but added they would have to abide by applicable law. “What kind of black eye is it to the city or the LGC [if they are unable to pay off the bonds]?” council member Tommy Blissitte asked.Howerton said they talked with the city’s financial advisor and were told a default on the bonds would not technically affect the credit rating and would not likely impair the city. However, the city might have to explain the situation and that could raise a red flag with other possible underwriters, Howerton said. “What risk, if any, does Emerald have?” council member Deartis Nickerson asked.“[There is] not additional equity being paid to the lender beyond the significant development costs [already incurred],” Youngblood said. “I’ve been dealing with this for about a month and I’ve come to a conclusion our liability (would be) no different than private financing,” Allen said. Allen noted unemployment is over 8 percent in the county and said the project would generate jobs and bring in at least $6 million for the city over a 20-year period. Afeman said they’ve received about 30 job applications for the proposed Mineral Wells facility, which was supposed to have created 140 jobs, though many of the applications were from people in other parts of the state looking to return to Mineral Wells.Council member John Ritchie moved to approve the resolution authorizing the local government corporation to continue negotiations for the publicly financed proposal but did not receive a second. After several seconds of silence from the council, Allen requested a second to the motion but did not receive it from the other four council members present. Chris Crawford was absent.“It’s been a long, hard journey,” Allen said after the meeting. “I’ve put a lot of time into it.”Richard Ball, president of the Industrial Foundation, said afterward it was time to replace some city council members. “I don’t think it’s the right thing at the right time,” Terry said. “I want to see the Baker Hotel situation [succeed] and I don’t want anything to get in the way … I just think there are better deals out there and eventually they’ll come. I feel that Emerald is not being up front with us.” Terry was the lone dissenting vote when the council agreed to accept a lower impact fee than Emerald announced they would pay the city before the site was moved, asking whether it would be a sign of things to come. “I don’t like the idea of the city having to issue bonds,” councilman Tommy Blissitte told the Index Wednesday. “It would look bad on the city if they defaulted.”Blissitte said he also had concerns that Immigrations and Customs Enforcement would still be interested in an detention facility for illegal immigrants when it came time to write an agreement after several months of issuing bonds and then the 16-month building phase. “If they got their own financing, I don’t have a problem,” Blissitte said. “I voted my conscience.”“It’s a business decision that the city made and we respect that,” Afeman said. “There are two other sites that we’ve been in contact with this week.”

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