County may buy $700,000 in bonds from fair
The dream was to build a barn for 4-Hers in the county. Now there are threats of lawsuits, a fair board president potentially at odds with decisions made by the board and the county poised to provide $700,000 to a project that has yet to get off the ground.
All the while the clock ticks away as the fair is only 38 days away.
In a special meeting Thursday the county’s financial advisory board approved the county’s purchase of $700,000 in bonds that the Lawrence County Fair Board hopes to issue.
The fair board bonds would be repaid over a 10-year period with the county receiving 2.15 annual rate. Issuing the bonds is contingent on an outside counsel evaluating the fair board’s compliance with the bond issuance requirements.
Recently, County Treasurer Stephen Burcham started the Neighborhood Investment Program where the county buys bonds from governmental entities at an interest rate greater than what the county can get from banks on certificates of deposit. The goal is to increase the county’s interest income. As an enticement, the interest rate offered is always less than what the governmental entity would get borrowing from a bank.
“I am looking at this as an investment,” Commission President Les Boggs said. “This way we will get 2.15 (interest rate) at least.”
Current county interest rates have stayed at 1 percent annually or less.
Earlier this year the county, acting as the fair board’s fiscal agent, borrowed $400,000 from PNC Bank at 2.99 percent a year interest rate over a 10-year period. That money was to pay for building a new livestock barn and arena at the fairgrounds. It was placed in a county account out of which the commission paid bills for the project at the instruction of the fair board.
The fair board will take $400,000 from the bond issuance to pay back the county’s entire obligation to PNC.
“That will improve the county’s credit rating,” Burcham said.
According to Randall Lambert, chairman of the fair board’s barn committee, there have been three draws made on the initial $400,000. The first was for approximately $100,000 mainly to pay for the steel material for the prefabricated barn. The next two totaled $198,000.
However, on Tuesday the fair board voted to terminate its contract with the barn project contractor, Structure Steel of Canton, because of project delays and its failure to return the $198,000 given the company that the fair board says was not earned.
“The main reason is the board did not feel that Structure Steel was going to have the barn built by the fair,” said Lambert, an Ironton attorney.
The barn project was begun last July when pledges totaling $400,000 were secured. The pledges are to be paid over a five-year period. The fair board’s goal was to have the barn ready by this summer’s fair in July. However as of Thursday, primarily the only work done at the fairgrounds is delivery of the metal sheeting of the prefabricated barn.
Construction was originally to have started on Feb. 1, but that date has been repeatedly pushed back after a spring groundbreaking. Now, the fair board has asked STI Construction from Powell to put up the structure.
However, Jeff Simmons, owner of Structure Steel, said the delays were caused by the fair board’s failure to get a permit for the project, which he said was not the contractor’s responsibility.
“I can’t proceed without a permit,” Simmons said. “There has been no permit issued. That is not in my contract to provide the permit.”
The Tribune has requested a copy of the contract from Lambert, who said he would provide it.
Simmons also said he plans to sue the fair board for breach of contract.
If the county buys the bonds, that money will be transferred entirely to the fair board.
At Thursday’s investment meeting there was no plan presented on how the fair board would pay back the $700,000 it would receive through the county from the bond issuance or an explanation on how the additional $300,000 would be used.”
“That would be up to the fair board,” County Commissioner Bill Pratt said at the meeting.
Lambert, who was not at the advisory board meeting, said the fair board had additional pledges over the $400,000 and would seek more. It also expects to recoup money from the contractor.
“We are seeking reimbursement of unearned funds,” he said. The additional $300,000 is needed “to get the building built until we get the money back from Structure Steel.”
Before the county would act as fiscal agent for the fair board, it required that the county be first creditor on the $1.1 million fairgrounds.
“If the revenues from the fair and pledges aren’t enough to pay, they always have property worth $1.1 million that is free and clear and they could always borrow money off of that to pay,” Boggs said. “If I thought they would not pay, I would not do it. The people I have worked with on the fair board, they have been willing to pay the bills.
“However, I would like to see a fair board vote on this matter prior to a final document signing.”
Fair board president Jim Gore was on vacation when the meeting was called to terminate Structure Steel’s contract.
“I can’t say a lot about it,” Gore said when reached by phone. “I wasn’t part of either action. Whether I support it or not, I don’t know what was said. I didn’t know about the money until you called.”
When asked what the fair board’s plan was to pay back the $700,000, Gore responded, “I have no idea. That is my question too.”
Gore said the fair board had planned to borrow another $100,000 to pay for a fence around the barn and pens.
“And extras in case we needed it,” he said.
Paying for the fence was to come from a $29,000 pledge from Bob Clyse.
Gore also said paying more than the first payment to Structure Steel should not have happened.
“It was a mistake,” he said. “The second draw wasn’t supposed to be released before the floor was poured and building was on the grounds. I assume it was done by mistake.”
However, Tami Meade, commission administrator, said she paid Structure Steel at Gore’s instructions.
“I was contacted by Jimmy Gore, president of the fair board on Tuesday, May 1, requesting a second draw when the floor was poured,” Meade said via an email. “Mr. Simmons of Structure Steel requested the payment be made the week of May 4, no later than May 11 to avoid delays. I forwarded the email to Mr. Gore informing him of the request. No objections were made and payment was sent as requested by the fair board president.”