The Butler County administrator says the Liberty Community Authority’s actions this week are a step in the right direction to try to ensure another $350,000 infrastructure bond repayment shortfall doesn’t happen.
Although the apparent problem with the recent $211,000 bond payment shortage was the management company’s failure to collect assessments from property owners this year, the issue might not end there.
Each month, LCA takes in revenue from two sources, a facilities charge from commercial activity and a property assessment charge. Those revenues are designed to provide the funding necessary to cover bond payments but the assessment bills were never sent out to property owners this year. County Administrator Judi Boyko said it is hard to know if the funding streams are adequate.
“We don’t know because they haven’t been collecting them,” she said. “I suggested to them they really need to build a system that looks at what their obligations are each year and at what time they have to pay it out and then reconcile that to how much are they collecting.”
RELATED: ‘Too many land mines’: Liberty Center payment shortfall explained, new fee coming
Both times there was a shortage the bond trustee dipped into the county’s TIF to cover bond repayment bill.
The change of management teams appears to have caused the issue. Apollo Commercial Real Estate Finance Inc., which provided a $165 million construction loan for the mega mixed use project, switched management of the retail side of the development from Steiner + Associates to JLL last fall. Steiner is continuing to develop about 60 acres adjacent to Liberty Center.
During a meeting on Thursday, Mall Manager John Taylor said officials have faced challenges gaining access to all the financial information they need from a “lock box” account of revenues coming in.
“We don’t have the online access to drill into it,” Taylor said. “We have the overall statement that we have a total amount each month that we have been getting via mail from Steiner.”
The LCA board passed a resolution Thursday to levy a “core retail valuation” charge on Liberty Center property owners to cover a $140,000 shortfall from December, about which board members said they did not receive notice.
When county-appointed members of the volunteer board said they were surprised by the shortfall, John Turner, a consultant for Apollo expressed disbelief.
“This is what I’m a little confused about is all the surprise, because there is amortization kicking in on the bonds that had nothing to do with the revenue stream,” Turner said.
Board member John Kirsch noted they are all volunteers and the whole structure of the massive development deal is extremely complex and they need others to help them keep track. He said the board had asked Steiner to help them understand the “waterfall” of funding mechanisms, but apparently that never occurred.
“We had requested from Steiner, help us understand the waterfall of the cash flow for all the bonds this authority is responsible for, we have a limited scope of authority here, it’s not universal,” Kirsch said. “We started in on the process and it’s pretty complicated. That bond waterfall, there’s a lot going on. To say I’ve got all that tucked away on sector B3 of my hard drive, it’s not there.”
That is why the board approved expanding the role of accounting firm Clark Schaefer Hackett, to keep a closer eye on the taxpayers’ interests.
“This has gone on for a while and we keep finding land mines,” Chairman Phil Morrical said. “I don’t know why we keep finding land mines, but they are hindering our operations as a board. Again I’ll say what I’ve said three times already, I’m uncomfortable with it, I think it will be more stabilizing for us to what we’re proposing here.”
The resolution passed but Turner and JLL Vice President Giorgio Karras voted against it.
Boyko said she was pleased the LCA board appreciates the gravity of the situation and has taken steps to rectify it.
“I believe the LCA acknowledges and understands the complexity of the financing structure and action it took at it’s regular meeting yesterday demonstrates their seriousness in addressing the matter,” she said.
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