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Municipal complex validation hearing held

November 1, 2012


After more than seven hours of testimony, a decision on whether the city of Starkville’s approval of a 20-year lease-purchase plan to issue certificates of participation for funding of a new municipal complex now lies in the hands of 14th Chancery District Judge Jim Davidson Jr.

Davidson asked City Attorney Chris Latimer and attorney Charles Yoste, who represented objector William McGovern, to submit closing statements to him within 10 days, after which he said he will render a decision as soon as he can analyze all the evidence presented.

The project is designed to construct a new city hall at the former site of the Starkville Electric Department at a cost capped at $6.7 million and to refurbish the current city hall into an expanded police facility for $1.3 million. Under its contract with West Brothers Construction and architect Briar Jones, the city is to fund the project using money from a projected increase in future sales tax revenue, satisfied debt and general funds. In its February 7 regular meeting earlier this year, the board voted to accept West Brothers’ proposal to build the new city hall.

Though McGovern is listed as the sole objector to the city’s approval of the resolution, Davidson noted that several citizens in attendance joined in with his objection and offered the opportunity for them to come forward and participate in the hearing. Though no one chose to do so, several wrote down questions they wished to present throughout the duration of the hearing and handed them to Yoste’s secretary to give to him for his use.

The first witness to be called was state bond attorney Spence Flatgard, who said he signed an opinion stating that the plan prepared by the city to issue the certificates was valid and within the legal limits of state statute. Latimer questioned whether or not Flatgard had any concern with items left blank in the contract to be specified at a later date, such as the closing date of the project, the lessor and the name of the contract. Flatgard said he had no reservations as blanks in similar contracts he’s seen are common.

Yoste questioned Mayor Parker Wiseman on the city’s ability to pass payment of the lease on to taxpayers in the event that tax revenue does not reach what the city’s financial counsel has projected. Not only would that not happen, Wiseman said, but it cannot because of state statute. Wiseman said it is unlikely such an event would occur due to the city’s adequate financial state.

“Here’s the assurance you have that will never happen. It’s like taking out a mortgage for a house just like a bank is evaluating you prior to giving you that mortgage and if they don’t think you’re credit-worthy, you’re not going to get the mortgage,” he said. “The process the city has to go through after this is a probably even more thorough process than we go through individually in that context where investors that are going to decide whether to buy or not buy these certificates are going to analyze the city’s financial state, and they know because these are certificates of participation and not general obligation bonds … they are going to evaluate the city’s position and if they don’t think the city can make those payments, they’re not going to buy the certificates and you will never have the proceeds … to go forward with the project.”

As to whether city officials were holding meetings to develop the municipal complex plan in secret, Wiseman said the steering committee formed to recommend a construction company for the project was agreed upon by a vote in a regular board meeting, and no attempt was made to hide any committee session. The only reason no prior announcement was made was because steering committees can only make recommendations and not take action because they don’t have a quorum needed to do so.

Ward 2 Alderman Sandra Sistrunk, who made the motion to accept the public-private partnership resolution at the board’s June 5 meeting, was asked about items left blank in the resolution and said the city relied on counsel, which confirmed that doing so was acceptable.

As to what the city’s contingency plan is in case of a shortfall, Sistrunk said the city has added to its reserves over the years the current board has been active.

“We do have some monies in our general reserves, in our general fund balance that … would cover a few years … if necessary,” she said.
Yoste asked Ward 1 Alderman Ben Carver said he was unable due to time constraints and the size of the document to analyze any difference between the e-packet presented to him the Friday before the June 5 session and the document presented at the meeting itself.

Chief Administrative Officer Lynn Spruill acknowledged that there were marginal differences between the two but nothing affecting the intention of the resolution. The document was changed from having an agreement between the city and a named corporation to a corporation to be named at a later date, and there was a cut-and-paste error that was corrected, she said.

Yoste questioned the lack of detail in the board’s February 7 minutes when it approved West Brothers’ proposal without specifying what the proposal was or how much money was involved.

“It’s clear what the proposal was. What the board discussed was a matter of public record, and the board is on record as accepting that proposal,” he said. “You have a proposal on file as submitted. That’s just the way business is done. That is the standard practice of the city. There was no special practice developed from this process.”

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