Curmudgeon's Corner

Asset Development Group Follow-Up

Posted by Al Campbell on Oct. 19, 2007

Germantown, Village Board

There is an old saying:  Be careful what you ask for; you may get it.

I feel a bit that way today.  I asked for more information on the situation involving the village board and Asset Development Group (ADG) concerning the apparent approval of a bond issue for sanitary sewers in part of Germantown.

I received some additional information from one of our village trustees, and I've read the minutes of the October 1st and October 4th board meetings.  The minutes from the October 15th meeting have yet to be posted, although discussion and final approval was scheduled on that agenda. 

You may recall that I updated my October 15th Blog regarding the number of votes cast since I had seen two different versions reported.  That seems to have been part of the debate between our trustees and the village attorney based upon e-mails I've seen dated October 2nd through October 4th.

The question with which these e-mails deal is that of whether or not the first vote was a 4-4 tie, whether or not the village president was correct in placing the question back on the table later that evening, and just what the village board ought to be doing about all this.  The consensus seems to have been that, even if the president was incorrect in calling for a vote to add this subject back later in the meeting, the question was passed 7-0 without any discussion, and that ended the board's opportunity to question the action.  There is no indication that anyone thinks anybody else did anything wrong intentionally.

My original questions dealt with ADG, the advisability of Germantown using its borrowing power to help this company, and how Germantown would be repaid.  Beyond this was the general question of the protections afforded the village should a default occur, coupled with re-voting on issues.

A preliminary version of the Agreement proposed between Germantown and ADG shows that ADG is required to pay for the preliminary expenses incurred for an engineering study, and that it will be responsible for the annual payment of amounts due to retire the bonds issued, as well as any reasonable charges from the village.  These annual payments are to be guaranteed through a 'series' of irrevocable letters of credit issued by a local bank.  The first letter was to have become effective on October 15th but may have been delayed due to changes being made to the Agreement.  There are to be 'successive renewal or replacement' letters prior to each February 1st after the expiration of this initial letter.  The special assessments or installments would become a lien against the property assessed.  Obviously, banks issue letters of credit on behalf of financially-able companies; default is not off the table.

So, it appears that Germantown would be protected in the event of an ADG default although recovery of funds could be delayed by the almost certain legal actions that would follow such a default, and ultimate sale of the property.

ADG has received numerous extensions of time to a variance on the sanitary sewer requirements from Washington County until this year.  Those votes occurred in 2000, 2003, 2004, 2005 and 2006.  Supervisor Charlene Brady spoke in favor of the trustee's action stating that this would be a 'win win' situation for everyone.

Have we just begun our slide down a slippery slope?  Why cannot any other private entity expect the same treatment?  What implications has this for our credit rating?  Is this the proper use of Germantown's powers?  Where does this end?