Third lawsuit filed over down-zoning

By Fawn Porter/The Mustang News

A third lawsuit was filed last week against the city of Mustang in the continuing debate over down-zoning.

Last week, Dale and Gary Owens filed a lawsuit against the city saying the City Council, over their protests, down-zoned their property from I-3 to I-1.  The Owens operate Superior Ready Mix Concrete, Inc. and Elite Construction.

According to the suit, the Owens said the down-zoning was “the proximate cause of an immediate and substantial decline in value” of the             property.

The brothers are asking the court to block the city from enforcing the new zoning regulations.

The Owens are just the latest property owner to take their dispute over down-zoning with the city to court.

In March, Curt and Renee Callahan, owners of Callahan Steel Buildings, filed suit against the city also saying the down-zoning was caused “serious, grievous and permanent damage to the fair market value” of their property and has caused “substantial and sufficient interference with Plaintiffs’ peace and enjoyment.”

Johnny Manos, the first of the property owners to file suit, also cited in his suit a reduced market value and asked the Court to grant an injunction.

In March, a sweep of down-zoning rezoned I-3, heavy industrial land, to I-1, light industrial.  The rezoning was in line with the city’s recently adopted long-range comprehensive plan that touts Mustang as a “bedroom community” and a “residential satellite to Oklahoma City.”

Council shelves master plan in decision

By Fawn Porter/The Mustang News

Mustang City Council members turned away from the city’s master plan Tuesday and voted to rezone land along state Highway 152 for intensive commercial development.

The property at 1711 E. state Highway 152 is owned by Harry Weatherford, and the Council approved his zoning request to move the land from from C-3, general commercial, to C-5, commercial intensive.  

The long-range comprehensive plan calls for the property to be zoned commercial office, C-1 or C-2.

Weatherford requested that the property be zoned so he could move his carpet business and his heating and air contracting business onto the property.  When Weatherford brought his request before the planning commission on June 8, they voted 4-3 to deny his request.

The Council, however, passed the zoning change by a vote of 4-1, with Mayor Chad McDowell not voting and Councilman Scott Gibson absent.

In addressing fellow Council members at the meeting, Councilwoman Kathleen Moon, the lone no-vote on the Weatherford zoning request, addressed a situation that she said “might not be known about.”

Moon said Superior Concrete continued selling sand, gravel and topsoil despite the company withdrawing its request for a special use permit about six weeks ago.

Without a special use permit, and the planning commission or Council being able to review the company’s procedures, the city is “allowing (Superior) to store and sell sand, gravel and topsoil without any permit to do so.”

Moon, who lives in a neighborhood  near the facility, said the company has no set hours of operation, sometimes operates six or seven days a week

In other business, the Council:

uApproved a final plat for Cedar Springs Industrial Park contingent upon the community development director’s “say-so;”

uApproved an agreement between the city and the Mustang Youth Soccer Association;

uApproved sanitation rates. The rates were lowered by a $1.50 for the average home owner. However, the Council approved an assessment fee of $1.50 to fund ambulance services. The assessment will appear on all city utility bills;

uRenewed an agreement with the Canadian County Sheriff’s Office to hold excess prisoners for fiscal year 2004-2005.

uApproved a firework’s stand license for Cheers Unlimited.

Advisers defend financing

By Pat Hammert/The Mustang News

Four county financial advisers and a former county commissioner on Monday defended a deal made in 2002 that auditors say cost taxpayers and that has the Canadian County Public Facilities Authority chairman wanting to sue to recover some of the loss.

Bond counsel Glenn Floyd of Norman, local attorney Mark “Beau” Cantrell, financial advisers John Truel and Marshall Hawkins and former commissioner Stanley Wallace had been asked to a CCPFA public meeting to clear the air on the controversy surrounding the refinancing and expansion of the county juvenile center.

District Attorney Cathy Stocker, who had earlier cleared trustees of public liability but advised them to consider recovering losses, also attended Monday’s meeting.

The CCPFA refinanced some 4-year-old bonds in late 2002 at a lower interest rate in an arrangement that advisers said would save taxpayers money, up to a half-million dollars. The county would at the same time be able to borrow more to expand the 4-year-old juvenile center.

However, audits have revealed an economic loss in the transaction when $5.765 million in bonds were sold.

Besides the cost to taxpayers, current trust chairman Commissioner Phil Carson has questioned the timing of the refinancing and is pushing for legal action to recover some of the money. Wallace and commissioners Don Young and Grant Hedrick served as trustees at the time.

The county was unable to pay off the old loan at Gold Bank without placing more than $320,000 in escrow. That money would be used for “prepaid premiums” on the loan until February 2005. Also, the county had to pay an additional $30,000 in call premiums as penalty for early payoff.

The four bond consultant/financial advisers earned $180,000 off the arrangement in consulting fees, or $45,000 apiece. Truel’s was placed into a hold account until the project is completed.

AN 11TH HOUR DOWNTURN

Cantrell said advisers found out at the last minute the bank that floated the initial loan – American Heritage Bank, now Gold Bank — refused to allow early payoff without a penalty.

“Seems to me the real problem is what happened with Gold Bank,” he said.

He said officers at Gold Bank told them “on several occasions that, yes, there would be no problem with refunding but the call premiums would have to be paid – about $30,000.” Advisers then proceeded to work out the details to sell the bonds.

Cantrell said they were then advised Christmas week that bank officers “were reneging, or backing out of the deal or welching on the deal or whatever you want to call it.”  

He said his first inclination was “to sue them. But other professionals didn’t want to do that.”

Nevertheless, trustees and advisers proceeded with the transaction, selling the bonds on Dec. 30. Cantrell and Truel said trustees had all the facts when they made the decision.

Tippens said last week the matter was a “classic misunderstanding.” About six months before the bonds were sold he was approached by Cantrell and Truel in a “casual” way about penalties if the loan was paid off early.

Tippens said his understanding of the conversation was  that they intended to pay the loan off in February 2005. In that case, little penalty would apply, he said.

“In their defense, there was just some miscommunication,” he said.

Wallace also defended the need to complete the transaction before the end of 2002 “before interest rates went up.” Wallace had been defeated at the polls in November, but he said  “... that didn’t mean I go home and not do anything else for the county.

“We were given verbal commitment that they (Gold Bank) would work with us on receiving advance payment on the bonds. Therefore, we proceeded rather than take a chance on an upturn (in interest),” he said.

The old bonds were sold to American Heritage Bank, now Gold Bank, at a 6.192 percent interest rate for 15 years. The new bonds were sold at an interest rate of 4.998 percent. Cantrell said the savings on the interest rate over the 25-year life of the loan would be between $400,000 and $600,000.

Also, Wallace said by arranging for the needed expansion of the juvenile center in 2003, the county has saved on steel prices, which increased this year.

He told commissioners, “You have the renowned professionals of finances sitting right here in this room.”

Hawkins, owner of Government Financing of Oklahoma, said he did the “quantitative analysis” on the project.

“This deal was a little tougher than most deals I do, but we got it done and I was proud of the work we did,” he said.

Floyd, a longtime Norman bond counsel who has written textbooks on governmental financing, said unfortunately advisers are required by law to work on contingency fees. If the deal isn’t completed and the bonds don’t sell, they don’t get paid.

“We feel comfortable with the work we did. The financing changed significantly in the last week and we had to change all the documents to reflect the advance refunding. I feel like we did not make any mistakes," he said.

COST TO COUNTY

State auditors claimed the bond deal cost the county $473,000 rather than save the county as financial consultants claimed. Haverns, Behrens and Heim, CCPFA’s yearly auditors, say the refunding had an “economic loss” of just more than $251,000.

In a written opinion released last month, Stocker said officials should consider suing advisers for the money.

“We’re going to think about it a bit,” Carson said this week. He said there is a definite difference of opinion about the penalties on the early payoff of the old debt.

“But when they found out it would cost more, why didn’t they just quit; why did they just forge ahead. If a bond deal goes bad, then you just need to admit it and not go through with it,” he said.

SURVIVING 1997

Cantrell and Truel have been working together since 1978 on county bond issues and public financing through the two trusts, CCPFA and Canadian County Home Finance Authority. They were fired early last year when questions arose about the 2002 deal.

From 1997 to 2000 the pair billed county trusts $199,000 in retainers, work on bond issues, audit consulting fees and county property acquisition.

Yearly retainers for each range from $3,500 to $4,500. Records from 1994 to the end of the 1997 fiscal year show those fees were split about equally between Cantrell and Truel with the majority being paid through the CCHFA that serves as a conduit for low-interest single family and multi-family housing bonds and can acquire property for the county.

Cantrell and Truel have been under fire before. Amid protests about consulting fees paid when the juvenile center was built in 1997, Cantrell and Truel publicly maintained their fees on the project were in line with the work involved.

For the $3.5 million project, $133,000 in financial consultant and loan origination fees were paid. Cantrell and Truel were paid $33,500 each and earned several thousand more before the project was finished.

Former county clerk Mark Mishoe protested the large fees, pointing to McClain County who completed a $2 million renovation and addition to its courthouse that cost only $18,000 in financial consultant fees.

However, Truel said he and Cantrell served as the county trusts “staff,” conducting the business of the juvenile center project. Cantrell has defended his and Truel’s fees as reasonable in light of the amount of work involved.  

Consulting fees paid out are at the discretion of the governing board, in this case — the              county commissioners.

Their services have not been competitively bid by the county as is required by the Oklahoma Housing Finance Authority when acquiring bond consultants and seeking private activity bond lenders.

State statutes provide oversight of issues done by state level issuers, unlike local trusts.  

Wallace, Young and former commissioner Charles Brandley have defended Truel and Cantrell, saying they are trusted advisers with good track records.

Cantrell and Truel arranged the financing to build the judicial building of the Canadian County Courthouse complex, the Yukon Health Department satellite office and later purchased a former bank building in El Reno for a new health department headquarters. They have also worked to bring several million in federal low-interest housing bonds into the county.