Monday, May 4, 2009

Have an extra $1.00? The cheap selling of Phoenixville taxpayer assets.

I've been mentally struggling with the news on Ken Buckwalter's blog, Watching Phoenixville, since last night when I read his post on the Parking Authority.

I am still astounded.

For the record, Ken Buckwalter, Jeff Senley, and Richard Kirker are the Council members who voted against the agreements with the Parking Authority. They clearly understood the fact that the taxpayers of Phoenixville are being asked to foot the bill to put the Parking Authority in business by selling the PA the 6 parcels collectively named the Prospect Street parking lot. I believe they also understand the ramifications of the associated risks undertaken by the borough and the taxpayers by this action.

On the other hand, Council members Dave Gill, Mike Handwerk, Mike Speck, and Henry Wagner approved the sale of the Prospect Street parking lot to the Parking Authority for $1.00.

Why the rush to vote?

Why was the Council only given 90+ hours to read and digest the agreement before the vote was taken?

Why was this agreement not discussed in committee in the public venue before the vote?

$1.00 goes far in Phoenixville, as we have recently seen the sale of a portion of Second Avenue to the Phoenixville Library Board for a controversial proposal.

As sweet as this deal is, because you and I are setting the Parking Authority up in business by this action, it gets better. If the PA receives an offer from a party wishing to buy a parcel of the property, the borough has the right to buy it first.

However, as Ken Buckwalter states on his blog, "In other words, the lot the Borough sold for a dollar can be repurchased for a portion or all of the amount owed on the mortgage. Again, the taxpayer is on the hook.

Council has an obligation to protect the interests of the taxpayer and residents of the Borough. Without a clue as to if this is a viable transaction or not, evidenced by a lack of any thought out and written plan, those interests have not been safeguarded."

Borough properties are owned by the taxpayers. When a buyer wants something of yours, let's say your home, you want the highest price for it possible. Not so, according to Gill, Handwerk, Speck, and Wagner. They are willing to sell our assets for $1.00.

Make sense to you?

It makes me angry.

We understood last year that our taxes were going to be increased due to severe economic situations, and we ante` uped the additional monies because we like our homes and love Phoenixville.

Last year we were also told to prepare for the tax increases in 2010.

Is it any wonder Council doesn't have the ability to give the taxpayers relief when they sell assets for $1.00?

Please remember, this is the Council which instituted an in-house trash pickup when an attractive 5 year contract was available with an outside hauler, and renewed the CDC contract for close to a million dollars with taxpayer funding.

Selling borough assets for $1.00 to special interest groups and increasing our taxes by 50% every couple of years flies in the face of commonsense, fiscal responsiblity, and begs the question, when do governmental actions rise to the level of misfeasance or malfeasance?

If a reader of this blog has the answer, please post it.

With Ken's permission, here is his article:

Sunday, May 03, 2009

The Great Land Sales Deal

Last Tuesday Borough Council passed three agreements concerning the Parking Authority on a vote of 4-3. Supporting the agreements were Councilmen Speck, Handwerk, Gill and Wagner. In opposition to the agreements were Councilmen Senley, Kirkner and Buckwalter.

Council Members received copies of the agreements, containing 23 pages, 7635 words, just 96 hours before voting to approve. Did those who approved these agreements even read them?

What makes approving these three agreements troubling is the fact that the Parking Authority has not and did not provide Council with any type of business plan. Lacking such a plan, the Authority has not disclosed how much of a loan they would require, what repayment terms would be, and how the loan proceeds would be used.

More importantly, the Authority has not presented any estimate of revenues or expenses so there is no way to evaluate whether the Authority will be able to repay whatever it may borrow against the Prospect Street lot.

Now What Happens?

Since the agreements have been approved, the Parking Authority must now promptly apply for and work diligently to obtain financing from a banking institution to provide operational funding for an amount not less than $100,000.00, using the Prospect Street parking lot as collateral.

How will the Authority repay this loan? Remember, no business plan of revenues and expenses was presented to Council so they surely don’t know. (Hint: the taxpayers) As a historical aside, when discussion to establish an Authority was being discussed, on numerous occasions it was asked if any taxpayer money would be needed; the answer was no.

OK, What if the Parking Authority defaults on the loan, what will happen to the Prospect Street lot?

According to the Cooperative Agreement:

“Upon receipt of notice by the Borough that Authority is in default under any Financing, Borough shall have one hundred and eighty (180) days to elect to exercise any or all of the following options without consent of the Authority:

To assume all rights, duties and obligations of Authority under this Agreement as if Borough were substituted for and succeeded Authority in all provisions of this Agreement; to cure such default on Authority’s behalf; to retake possession of the Purchased Property and assume the obligations under such Financing; to retake possession of the Purchased Property and refinance the loan or financing on terms acceptable to Borough.” (In other words the taxpayer stands good for the default)

What Happens if the Parking Authority Receives an Offer to Sell Any or All of the Prospect Street Lot?

Keep in mind there are six lots to the Prospect Street parking lot. Now if Authority receives a bona fide offer to purchase some or all of the lots, the Authority must notify the Borough of its intention to sell. The Borough may then elect to purchase all, or only that offered portion, of the Prospect Street lot.

If the Borough elects to exercise this right of first refusal, the purchase price for the Prospect Street parking lot shall be the greater of $1.00 (the price the Authority paid for the lot) or the balance of any mortgage then existing on the Prospect Street parking lot. For purposes of calculating the purchase price, if only a portion of the Prospect Street parking lot is being purchased by Borough, but more than that portion is encumbered by the mortgage, the balance of any mortgage shall be pro-rated for such portion thereof as Borough is purchasing.

*In other words, the lot the Borough sold for a dollar can be repurchased for a portion or all of the amount owed on the mortgage. Again, the taxpayer is on the hook.

Council has an obligation to protect the interests of the taxpayer and residents of the Borough. Without a clue as to if this is a viable transaction or not, evidenced by a lack of any thought out and written plan, those interests have not been safeguarded.

Next installment; a closer look at the lease agreement.



Karen said...

Please visit Ken Buckwalter's blog for the complete PDF of the Sales, Lease and Cooperative Agreements.

Anonymous said...

What is the real purpose of the Parking Authority if they are allowed to sell the parking lots they are supposed to be maintaining and keeping open for much needed parking downtown? They have no business plan! I thought banks require a business plan for a loan even with available collateral

So if someone, real or fictional, offers them a substantial amount of money for something they got for a buck from the Borough, they then can offer it back to the Borough for a hefty sum? And then what does the Borough do with the lot, sell it back to them for another buck? And start the process all over again? What goes on here? Smells rotten to me.

Anonymous said...

Karen, Who are the members of the Parking Authority?

Karen said...

Parking Authority members from the online e-code for Phoenixville.

Adam C. Deveney 1739 Quarry Lane, Phoenixville

James Lolli 1100 Gay Street

David Friday 325 North Street

Conner Cummins 929 St. Mathews Rd.
Chester Springs

Jeff Abbott 134 Bridge St. #205

Anonymous said...

Why are Deveney from Schuylkill Twp and Cummins from Chester Springs on a Phoenixville Parking Authority ? I know Cummins owns Molly Maguires and has a vested interest but Deveney? He is on the PA and behind the library expansion(fiasco).This guy is way to involved in Phoenixvilles future.Both of these land deals for a buck.Something isn't only rotten in Denmark,it also stinks in Boro Hall.