Salisbury News: 11/27/06

November 26, 2006

My positions on a number of issues facing the city and me, as an elected representative, are too complex to condense into a couple of sound bites. I hope that this written statement and the supporting documents will help the citizens of Salisbury to understand my position on the use of taxpayer funds and process.

At the beginning of the budget process this year, the Mayor described the city’s financial status as austere. Council was also advised that taxpayers face tax increases in the next 2 budget years (FY08 & FY09).

A few weeks ago, the council approved leasing authority in excess of $9,000,000.00 to finance the new fire headquarters. One of the reasons given for leasing was that the city could not afford to make an interest payment the first year if we used bonded debt to finance the building.

Tonight the city will consider Ordinance 2020, (Issuance of General Obligation Bonds). Included in the proposed amount of bonded debt is $2,760,000.00 for the purpose of paying developer reimbursements…taxpayer subsidies to developers by any other name. The amount for the reimbursement represents more than half of the amount that the city plans to borrow. I have been questioning various aspects of the methodology of the developer reimbursements since before I was elected to the council. Recently, I was searching the state code looking for pertinent language that I could vaguely recall, but hadn’t been able to locate elsewhere. That search led me to what I recalled:

(MD CODE: Article 31 § 3. Authority to make contracts) An officer or agent of any county, township or municipal corporation who is charged or entrusted with the construction, improvement or keeping in repair of any building or work of any kind, or with the management or providing for any public institution, shall not make any contract binding or purporting to bind the county, township or municipal corporation to pay any sum of money not previously appropriated for the purpose for which such contract is made, and remaining unexpended, and applicable to such purpose, such officer or agent who willfully or knowingly makes or participates in making a contract without such appropriation or authority, shall be personally liable thereon, and the county, township or municipal corporation in whose name or behalf the same was made shall be not liable thereon.

That language combined with the language in the City Charter:
(§ SC7-29. Overexpenditure forbidden)No office, department or agency shall during any budget year expend or contract to expend any money or incur any inability or enter into any contract which by its terms involves the expenditure of money, for any purpose, in excess of the amounts appropriated for that general classification of expenditure pursuant to this Charter. Any contract, verbal or written, made in violation of this Charter shall be null and void. Any officer or employee of the city who shall violate this section shall be guilty of a misdemeanor and upon conviction thereof shall cease to hold his office or employment. Nothing in this section, however, shall prevent the making of contracts or the spending of money for capital improvements to be financed in whole or in part by the issuance of bonds or the making of contracts of lease or for services for a period exceeding the budget year in which such contract is made, when such contract is permitted bylaw.)

The first response that the city attorney provided to address my concerns was marked “privileged and confidential.” However, in response to a separate question getting to the heart of the process as it relates to the State Code and City Charter, he has confirmed that to the best of his knowledge, no funds were budgeted in advance of executing the agreements (attached). These citations support my position that the payment obligations for the reimbursements are not legally binding. Some might argue that they should still be paid, even so, how could the argument be made that borrowing the money from the bond market is appropriate? Even the contracts, which seem to be illegal according to the citations above, indicate that the money will be repaid when the city has the funds. If the city is going to the bond market to borrow the money, we do not have the funds. Growth is still not paying for growth.

On November 1, 2006, I made a formal request to have the developer reimbursement matter placed on the upcoming work session agenda per the new protocol for having agenda items added (attached). The same memo requested placement of other important issues on the agenda. To date, I have received no response to my request.

On September 25, 2006, I had requested that another item be placed on the agenda after a series of e-mails with John Pick. The response from Council President Dunn was that I must make such requests by phone. Based upon past experience and my belief that the business of the city should be documented and conducted in the open, I asked to have the protocol for adding agenda items clarified when the Rules of Order were amended recently. I thought that the council had agreed to discuss that matter at an upcoming work session, however a few days later the council received a memo stating a new procedure. I am unaware of any discussion by council that led to this change. The items that are listed in my request and the explanation for my requests are outlined in the memo dated 11/1. I will not restate them here, but I encourage you to read the attachments for greater insight.

Tonight, the council is also scheduled to vote on Ordinance 2019 (Bond Ordinance for Northeast Collector, Phase 3 TIF) and Resolution 1457 (approving an agreement to reserve a portion of the capacity in the West Road sewer main for Westwood Commerce Park). The TIF for Phase 3 of the Northeast Collector is the trendy name for another way that the city will subsidize developers with tax dollars. Growth is still not paying for growth. Simply put, the TIF will divert the increased revenue that the city would otherwise benefit from when development occurs out of the general fund (where it would be used to pay for essential services, infrastructure, etc.) and divert it to pay the bond debt associated with the TIF. In this case up to $10.900,000.00. The TIF will may used to pay for things like water and sewer systems, roads, sidewalks, and more. These are all things that the developer should be paying for.

When I was first elected, I was told by Council President Dunn and Vice-President Comegys that the developers were going to give us the road. That is hardly the case. The current taxpayers will be paying their own share of the cost of services as well as taking up the slack for the services that must be provided to the new development and are being diverted to pay the TIF. Furthermore, it stands to reason that a developer who gets a deal like this really makes out. They are paid for the infrastructure, the property becomes more valuable as reflected in the sales price, so they benefit twice and as a taxpayer, you pay for it. An extension of the TIF for the Old Mall, to the tune of nearly $14,000,000.00 is back on the agenda for December 11th.

Resolution 1457, the agreement to reserve a portion of the capacity in the West Road sewer main for Westwood Commerce Park seems quite odd. When you read the resolution carefully, it is not just Westwood, but Sassafras as well. Generally, I do not support providing such an agreement prior to annexation. There are many unanswered questions, such as what would otherwise happen if the pipestem annexation of Sassafras/Westwood is not passed. While I would still support additional sewer capacity for Westwood under that circumstance because of the potential positive economic impact to the city associated with bringing additional employers and higher paying jobs, I am categorically opposed to providing such an agreement for Sassafras.

The city and our citizens were promised 276 units of senior housing as a condition of providing water and sewer lines outside of the corporate limits. Once the property had municipal water and sewer the number of units that could be built on the site increased exponentially from a best-case scenario of 100 units under ideal circumstances (if well and septic had to be used) to the 395 currently planned. I do not believe that the city should provide a sewer capacity reservation, or even additional single-family building permits until the 276 units of senior housing that were originally promised are delivered. I am also concerned that approving such an agreement prior to adopting a formal policy could be construed as favoritism of some developers and developments over others.

In the previous 2 pages I have outlined planned expenditures that total over $27,000,000.00 and are supported by financing tools that place unfair burden on existing taxpayers. If you add in the lease for the new fire department headquarters, we’re at over $36,000,000.00. How can it be that we are giving serious consideration to these expenditures when we can’t adequately fund public safety and are talking about tax increases?

In a related matter, I have raised questions about the annexation of Sassafras/Westwood and whether the developers will be held to the same standard as the Faith Baptist Church development being built by Mr. Esham. The city’s consultant Mr. Jakubiak, was hired to develop guidelines for annexation agreements that would result in growth paying for growth and contributing to the general well being of the city. As a result the Faith Baptist Church development will pay $2,000 per unit into a fund earmarked for affordable housing and an additional $3,000 per unit into a fund for neighborhood restoration such as beautification, revitalization and restoration of existing city neighborhoods. At the current 149 proposed units, Faith Baptist’s development will pay $745,000.00. The council promised the citizens that there would be no more large annexations until these policies were in place, but will they be applied to Sassafras or will the citizens of the city lose yet another opportunity to have growth pay for growth?

There are questions that have not been answered to my satisfaction regarding the legality of the renamed developer reimbursements. There are questions regarding the appropriate use of TIFs, which were originally designed to rehabilitate blighted areas, not get developments built quicker or to revitalize a single property. There are questions as to why we would subsidize developers at the citizen’s expense when we can’t fund public safety at appropriate levels. There are questions regarding fair and transparent process. And there are questions as to why citizens of our city who I represent are being disenfranchised by having items refused from the agendas even as I strictly follow the questionably declared protocols.

Not one more penny of taxpayer’s money should be committed to these projects without satisfactory answers to these questions of law, process, and fiscal responsibility.

If you have questions regarding these matters I can be reached at debbiescampbell@comcast.net or by phone at 410-860-0893. If I am not available by phone, please leave a message and I will return your call.

Respectfully,

Deborah Campbell