Warren County Fiscal Court on Wednesday approved a conceptual agreement laying out terms for negotiations involving the commercial wrap of the parking garage in Block 6 of the Tax Increment Financing district.
The measure approves the term sheet Bowling Green City Commission approved Monday that lays out plans for financing the commercial wrap known as Hitcents Park Plaza.
The development has had financial problems for months, and liens were filed on the property for money allegedly owed to contractors in its construction.
Under the conceptual agreement, the city would provide a general obligation lease commitment for up to $30 million in new bonds for the project – about $3 million more than has already been approved in financing for the development. Bonds would be issued by the county, which would provide the city with a “legally enforceable agreement ... to backstop or guarantee 100 percent of the city’s annual debt requirements for the term of the new bonds under its G.O. lease commitment.”
The city would make contributions from its general fund to the debt on the
development by making changes to its TIF district base revenues.
Jeff Meisel, chief financial officer for the city, has said those changes would mean a loss of about $280,000 from the general fund annually for the city.
The city would also give up all interest in state TIF revenues to the county to be used within Block 6 of the TIF district. It would give up interest in local TIF revenues to be used for debt payment on new bonds for the Block 6 development. It would also convey the title for Block 4 of the TIF district to the authority, though it would receive 50 percent of any proceeds if the property is sold.
Judge-Executive Mike Buchanon and members of Fiscal Court didn’t attend the city open meeting, Buchanon said.
However, Buchanon did stop by the meeting during a break in proceedings.
Buchanon said Fiscal Court members weren’t active in that meeting because they were maintaining a policy of not openly discussing active or potential litigation.
“Although we may find them unnecessary or inappropriate to discuss publicly, they certainly did, and ... we’re not going to make that same mistake,” he said of city commissioners.
Fiscal Court approved the conceptual agreement after a closed session that lasted about an hour.
Buchanon said he and Mayor Bruce Wilkerson have a different approach to resolving financial issues surrounding the Block 6 development.
“It should come as no surprise to any of you all, and certainly is no surprise to Mayor Wilkerson, that he and I differ on our approach to solving the problem,” he said. “I think that his background in law enforcement tends to give him the approach of finding fault and prescribing punishment. My experience in business is that you find a problem and you look for solutions to that problem to best address the interests of all parties concerned, and if fault and punishment come in along the way, you actually take action on that.”
Buchanon said the agreement won’t be a bailout for the project.
“This is the farthest thing from a bailout,” he said. “This will be a negotiated settlement. No one bails out. We will just try to create and agree to terms that are achievable for the best interest of the people of Bowling Green and Warren County.”
The purpose of a lawsuit filed by the county and the Warren County Downtown Economic Development Authority is to have liens removed from the property in Block 6 so that it will have a clean and transferable title, he said.
Mills Family Realty representatives, meanwhile, are disputing claims by Warren County and the Warren County Downtown Economic Development Authority that the company used bond funds for the development illegally.
In an interview Wednesday, Clinton Mills, CEO of Hitcents and a president of Mills Family Realty, said he is confident Mills Family Realty didn’t spend money for the wrap project illegally.
“We were completely blindsided,” he said of the allegations in a complaint for declaratory judgment filed by Warren County and the Warren County Downtown Economic Development Authority.
The complaint, filed Monday, claims bond funds that should have been available for payment of contractors was spent by MFR for expenses other than construction of the wrap. It asks that liens on the property be declared invalid.
“MFR, in breach of its agreements and in violation of state law, used bond funds in the amount of approximately $3,900,000.00 on restaurant equipment, consultants and operations on its own behalf or on behalf of a related corporation, MR Group Inc.,” the complaint states.
Chris Mills, president of Hitcents and vice president of Mills Family Realty, said documents outlining the deal for the commercial wrap “completely support our decision to spend money the way it was spent.”
The Millses reiterated that they have requested documentation to support claims of money owed for work on the property but haven’t received any such documentation.
Chris Mills said the company isn’t responsible for any changes to operating agreements for the wrap development cited by Wilkerson in a statement he read Monday at the special called meeting of the Bowling Green City Commission. Wilkerson said those changes came without notice to the city between the time the agreement was presented to the commission and when it was signed by partners in the deal.
Wilkerson in his statement said money appeared to have been used illegally.
Clinton Mills said he’s still hopeful an agreement can be reached to address problems with the development.
“I guess we’re still hopeful for an agreement to be made; it’s just complicated because there are so many parties involved and everyone wants something different,” he said.
Clinton Mills said that, ultimately, he would like to see a deal negotiated that would allow another party manage the commercial wrap and allow him and his brother to focus on their business at technology company Hitcents. Hitcents, which is owned by Houchens Industries, is a separate company from Mills Family Realty and is a tenant in the wrap development.
Chris Mills said the two want to see the restaurants on the ground level of the wrap open again and be successful. Mariah’s and 6-4-3 closed March 2, while three fast-casual restaurants closed last year.
“The reason we did this deal is because we want downtown Bowling Green to be a destination,” he said.