RE: Killion LID Bond 2, 2009
The Yelm City Council voted a continuance last night awaiting an answer from the USDA as outlined in this Staff Report:
“Ordinance 910, authorizing the issuance and sale of a local improvement district No. 2 bond in the principal amount of $10,139,000, providing the form, terms, conditions and covenants of said bond, providing for the sale thereof, and providing for the disposition of the proceeds of the sale.
The proposed Ordinance and staff recommendation assumes that USDA Rural Development Agency has approved a loan guarantee and Thurston First Bank is therefore willing to make the loan. If either of these conditions does not come about prior to the City Council meeting on September 22nd, the Council should not adopt Ordinance 910.
The City Council created Local Improvement District No. 2 (Killion Road LID) by Ordinance No. 847 on June 14, 2006. The Council confirmed the assessment roll for the District in the manner required by law in the amount of $10,487,000 on May 12, 2009, by Ordinance No. 903. Of the total assessment roll, $347,383 was prepaid by property owners within the LID boundaries.
It is now necessary that the City issue its Local Improvement District No. 2 Bond in the amount of $10,139,000, which is the amount of assessments unpaid.
The bond underwriter for the City has attempted to market standard LID bonds, but has failed to place these bonds due to current economic conditions and the foreclosure of the Thurston Highlands property coupled with the pending bankruptcy proceeds by the developer of Thurston Highlands.
Thurston First Bank has offered to purchase the 17 year bond at an interest rate of 8.52% with a maturity date of September 1, 2026. Conditions of the purchase of the bond include maintaining a guarantee fund of 10% of the outstanding principal. A condition of this offer is that the loan be guaranteed in the amount of 90% by the USDA Rural Development Agency. The application to USDA has been made and approved at the State level and has been submitted to Washington D.C. for final approval….
The adoption of Ordinance 910 effectively accepts a loan from Thurston First Bank in the amount of $10,139,000, which will be used to repay the Bond Anticipation Notes used to finance the construction of the Killion Road LID, along with financing costs.”
The City of Yelm has not heard from the USDA and has continued the September 22nd Council meeting until 4pm Friday, September 25th to record whether the USA will guarantee the Thurston First Bank loan, or not.
UPDATE: THURSDAY, SEPTEMBER 24TH
The USDA Rural Development Dept. approved the federal government guaranteeing the Thurston First Bank loan to fund this LID.
The unsaleable city bonds had only one bank show any desire to loan the city money for this, and that was Thurston First Bank. Thurston First will purchase the bond at 8.52% for 17-years to pay it off.
The City Council will approve Ordinance 910 at 4pm on September 25th in their continued Council session.
This writer submitted this letter to the City Council for the official record of the September 22, 2009 Yelm City Council Meeting:
Dear Mayor Harding, Yelm City Council members, City Administrator Badger & Community Development Dir. Beck,
Regarding: Ordinance 910 Local Improvement District No. 2 Bond, 2009
on the agenda for your vote Tuesday, September 22, 2009
The public has not been privy to your Executive Session discussions about real estate acquisitions,
so I am writing without full knowledge of all that you know and which is not known by the public.
However, were I in your shoes, I would want a ‘due diligence’ performed on the following questions
before I considered a vote on ordinance 910 this Tuesday:
1. Yelm Community and Government Relations Coordinator Teixeira wrote me the following last Friday [9/18/09] in response to my questions:
Ordinance 903, as stated in the staff report, is the ordinance which directly affected the property owners was the one that formed the Local Improvement District. The city has been in communication with the property owners throughout the LID process. Final assessments were mailed out several months ago.
Ordinance 910 is a financing mechanism and allows for assessment payments from the LID property owners to be made over time. So to answer your question, no, the property owners were not personally notified about Ordinance 910.
As of Thursday, September 17, the Thurston Highlands parcels (associated with the L. I. D., parcels that will provide tax funding will be over 50% of the LID) were in default and have shown no owner change as of yet.
– While City Ordinance 903 (which formed the Local Improvement District) was attached to the affected Highlands parcels in May, 2009 along with the other lien holders, wouldn’t you want to know if the City of Yelm is entering into a conflict of interest in moving forward with this Bond, since the subsequent, new Highlands property owners were not involved in the Public Hearing on the LID held at the May 12, 2009 Council Meeting as recorded on the official Minutes?
– Wouldn’t you want to ask if the city is not being considerate of new property owners in moving ahead with this Bond without their input, all while these properties fates remain unknown?
After all, the City’s first obligation is to recoup the unpaid taxes & fees first in any transaction that resolves the properties default.
– To summarize:
Should the city be entering into & isn’t this a conflict of interest for the City of Yelm to be moving forward with a Bond, when the unpaid taxes have not been recouped, the fate of the property still remains undetermined and the new owners not consulted about the Bond (which assesses their LID payments), except for attaching Ordinance 903 to the parcels involved in the L. I. D.?
– Is moving forward on this Bond improper without notifying those L. I. D property owners about their payment assessments?
– How would you feel if YOU were one of these property owners and the city did not notify you about your L. I. D. payment assessments?
2. Mike Edwards spoke on-the-record at the May 24, 2006 Yelm City Council Meeting in support of the creation of the L. I. D.
According to the city’s official Minutes of that meeting, Mr. Edwards stated, “…he is part of a pioneer family in Yelm since 1852 and owner of 26 acres on the assessment list.”
– Wouldn’t you want to know if there is any conflict of interest on the part of Thurston First Bank in making the loan, since Edwards is on the Board of Directors of Thurston First and in particular, that would reflect poorly on the City of Yelm for not following through with proper due diligence in vetting this issue?
So, the key question would be:
– Is Mike Edwards still an investor, partner or owner of parcels/property in the Killion Rd. LID that would be a direct beneficiary of this Ordinance.
If so, Thurston First Bank should recuse themselves from making this loan?
UPDATE: FRIDAY, SEPTEMBER 25TH
The vote passes & the federal taxpayer is now guarantor to a project that was supposed to be over 50% Thurston Highlands/Tahoma Terra developer financed. Congratulations to all of you taxpayers!
UPDATE: MONDAY, OCTOBER 5, 2009
The 8 acre parcel fronting Yelm Ave West across and behind Rosemont in the LID is owned by Hallamer Investments, LLC. with an address of:
920 E BAY DR NE APT 3D301
OLYMPIA, WA, 98506
The phone number listed has been disconnected.
Care to take a guess at who owns the aforementioned Hallamer Investments, LLC. property for $64,000?
Thurston County Assessors data says none other than MICHAEL DWAINE EDWARDS!
Johnny, what do we have for today’s winner on who is benefiting from the Yelm LID?