A lawsuit filed Monday by Warren County and the Warren County Downtown Economic Development Authority contends Mills Family Realty misused $3.9 million in bond funds issued for Hitcents Park Plaza.
The plaza, which partially wraps around the parking structure in downtown Bowling Green, is home to Hitcents’ offices. Hitcents’ CEOs, twin brothers Chris and Clinton Mills and their father, Ed, founded the company in 1999.
Mills Family Realty, a separate company, manages the commercial wrap of the parking garage. The Daily News contacted Mills Family Realty for comment on this story and will meet with a representative of the company today.
The complaint, filed Monday in Warren Circuit Court, asks that mechanic’s liens filed for money unpaid in the construction of the plaza in the downtown Bowling Green TIF district be declared invalid.
A mechanic’s lien is a method used by those employed to improve properties to ensure payment for services and materials. Absent payments, workers can initiate a court proceeding to force a sale of the property to pay for the services andmaterials.
The complaint names Alliance Corp., D&M Electric Inc., Gunter Construction Roofing Inc., Kentucky Mirror & Plate Glass Co. Plant No. 2 Inc., Woosley Bros. Painting Co. Inc. and Mills Family Realty Inc. as defendants.
Hitcents Park Plaza has had financial problems for months. Liens were filed on the property for money allegedly owed to contractors in its construction beginning in late February.
Bowling Green Mayor Bruce Wilkerson has talked for months about funds he believes were used improperly in the project, and the lawsuit by the county raises the same issues.
The county and Warren County Downtown Economic Development Authority learned in 2014 that general contractor Alliance Corp. and some subcontractors were not being paid, according to the complaint.
“The county and authority then learned that all bond funds which should have been available for payment of the contractors, had in fact been spent by MFR in expenses other than the construction of the wrap,” the document said. “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.”
In a news release issued Sunday, Mills Family Realty disputed the amount of money owed for construction and said it is still owed TIF revenues from government entities.
The complaint asks for a judgment that “mechanic’s liens are not valid and enforceable and do not encumber the real estate of the county, the lease income and TIF revenue generated from the Block 6 Wrap.”
Alternatively, it asks for a finding that mechanic’s liens are subordinate to the lien and interest of the bond trustee for bonds financing the wrap.
County Attorney Amy Milliken said the complaint essentially asks a judge to determine whether liens were filed properly, according to statute.
She said she doesn’t believe liens should be placed on a county-owned building and that bond payments need to be paid before money goes to cover liens.
The complaint states that defendants “have each claimed a lien against all funds coming into the hands of the City, County, Authority and Bond Trustee, including rental payments used for payment of the industrial revenue bonds.”
“I need a court order directing me how to respond to these liens,” Milliken said.
She said one of her goals is to see that all the contractors who worked on the development are paid.
“I don’t think the county taxpayers did anything wrong, and I don’t think they should have to pay it,” Milliken said. “I think the responsible party should have to pay it, and that would be Mills Family Realty.”
Milliken she filed the complaint Monday because it was about 30 days after she issued a notice to Mills Family Realty that its lease agreement with the county was in default. The notice asked the company to correct issues, including the liens placed on the property, within 30 days.
On Sunday, Mills Family Realty responded to the authority, questioning the accuracy of lien amounts.
The lawsuit was filed after the Bowling Green City Commission met in special session for two hours Monday to give preliminary approval to a plan under which Warren County government would ultimately become the backstop for financing the project and issue $30 million in bonds to pay off existing bonds, settle claims with contractors, complete construction and cover other financing costs of the bond issue.
Warren County Judge-Executive Mike Buchanon said in a text message that the complaint was necessary to protect the county’s assets and the interest of the taxpayers.
He said the county needs the court to remove liens to make the property marketable and transferable.
“Our intentions to negotiate acceptable multi-party settlements is dependent on having a clean title,” Buchanon said in the text message. “Our intent is to get all legitimate creditors paid what they are owed, get the property, project and business back on track, to the benefit of the taxpayers, and to continue to grow our downtown redevelopment and build tourism and a stronger local business climate.”
Attempts to contact representatives from most of the defendants named in the suit were unsuccessful as of press time. The attorney for Alliance Corp. declined to comment because he had not yet seen the complaint.
Warren County Fiscal Court was meeting in closed session this morning to discuss pending and active litigation.
— See bgdailynews.com for updates.