MINUTES OF THE SPECIAL MEETING
MASSILLON CITY COUNCIL
HELD, MONDAY, MAY 13, 2013
COUNCIL PRESIDENT TOWNSEND B I’ll call this special meeting to order for Monday, May 13, 2013 at 6:30pm. This meeting was called by three council members which is according to the rules of special meetings. The council members are members of the finance committee which is Councilman Manson, Councilman Peters and Councilman Slagle. You all have copies of the ordinance.
1. ROLL CALL
Roll call for the evening found the following Council Members present: Milan Chovan, Sarita Cunningham-Hedderly, Nancy Halter, Quenessa Hampton. Ed Lewis, Paul Manson, Donnie Peters, Andrea Scassa and Larry Slagle.
Thus giving a roll call vote of 9 present.
2. ACTION TAKEN WITH POSSIBLE PASSAGE ON THE FOLLOWING ORDINANCE:
ORDINANCE NO. 35 – 2013 BY: FINANCE COMMITTEE
AN ORDINANCE authorizing the Mayor of the City of Massillon, Ohio, to enter into an agreement between the City of Massillon, Downtown Massillon Hotel, Ltd., and Charles Street Ltd., which would permit, if certain conditions are met, canceling the promissory note associated with the loan for the Hampton Inn project and release the related mortgages and any other liens related to the financing of the project.
COUNCIL PRESIDENT TOWNSEND B Councilman Donnie Peters.
COUNCILMAN PETERS B Thank you, Mr. President. I’d like to call Mr. Stergios forward since he came I want to make it worth his wild. You want to come up…
LAW DIRECTOR STERGIOS – I will if you want me to the amendments that you did before or…?
COUNCILMAN PETERS B Well, that’s what I need to ask you. (Okay) I…we’ve never done this kind of thing since I’ve been on council I mean as far as its weird. Okay, my questions is Perry if I have the legislation here which says you know for the agreement as amended May 10th, 2013 with the Downtown Massillon Hotel. So that this is the ordinance that we’re going to bring forward but do I have to make a motion to amend the previous ordinance with this?
LAW DIRECTOR STERGIOS – I believe that you do because we ultimately ended up tabling the previous one until tonight. (Okay) And I don’t believe it has been amended yet. (Okay) Unless somebody remembers differently I wrote down that it was tabled ultimately I don’t think we ever did the amendments. So, yes.
COUNCILMAN PETERS B No, we didn’t because we were waiting for the contract which I also have here. And at the request of some other council members to put some teeth into this that’s why we didn’t amend. So, okay. Alright, I just wanted to make sure I knew what I was doing before I started. Thanks Perry.
LAW DIRECTOR STERGIOS – Okay, thank you.
COUNCILMAN PETERS B Okay, Mr. President, do I still have the floor? (Yes, sir) Alright, I’d like to make a motion that we amend Ordinance No. 35 – 2013 to as just what the council clerk just read that’s exactly what we amended it to. Do you want me to read for the record or not?
COUNCIL PRESIDENT TOWNSEND B Yes, please and do everyone have a copy of the amendments?
COUNCILMAN PETERS B I’m assuming they do I don’t know. No, that’s the contract the amendment is actually what I have in the ordinance form. Okay, I’ll read it real quick I’m just reading what Mary Beth just read but this is what I’m amending it to: “please prepare legislation authorizing the mayor to enter into an agreement as amended May 10th 2013 with the Downtown Massillon Hotel Ltd and Charles Street Associates Ltd which would cancel the promissory note in connection with the loan for the Hampton Inn project and release the related mortgages from the Downtown Massillon Hotel, Ltd and Charles Street Associates Ltd, and any other liens related to the financing of the project, see attached”. Which is the two page contract that was amended. So that’s my motion to amend.
COUNCIL PRESIDENT TOWNSEND B Any there any questions? Councilman Manson?
COUNCILMAN MANSON B Second.
COUNCIL PRESIDENT TOWNSEND B Oh, second. Okay.
COUNCILMAN PETERS B You got a roll call to amend?
COUNCIL PRESIDENT TOWNSEND B Roll call please for amendment of Ordinance No. 35.
Roll call vote of 9 yes to amend Ordinance No. 35 – 2013
ORDINANCE NO. 35 – 2013 WAS AMENDED BY A ROLL CALL VOTE OF 9 YES.
COUNCIL PRESIDENT TOWNSEND B For passage.
COUNCILMAN PETERS B No, it goes back to first reading, sir.
COUNCIL PRESIDENT TOWNSEND B Goes back to first reading. Your motion?
COUNCILMAN PETERS B Okay, it’s at first reading. After all the discussion we’ve had I’m going to make a motion that we waive the rule requiring three separate readings and bring ordinance the amended Ordinance No. 35 – 2013 forward for a vote.
COUNCIL PRESIDENT TOWNSEND B Seconded by Councilman Manson. Roll call.
COUNCILMAN MANSON B Any discussion? I’ve got a question I’d just like to have come comment on it and like I’ve been saying I’ve been leaning towards passing this. I’ve been listening but I haven’t heard anything for while we’ve had Mr. Gribble in and Mr. Helline and I’d like to have the administration the mayor come up and reiterate their…
COUNCIL PRESIDENT TOWNSEND B I think to my understanding once we make the motion you have to go up for a vote.
COUNCILMAN MANSON B Oh.
COUNCILMAN PETERS B Yeah, it’s got to come after we make the motion. He’s right so you’re just kind of little bit ahead but I agree with you.
COUNCILMAN MANSON B Okay.
COUNCILMAN SLAGLE BThis is just a motion amend.
COUNCILMAN PETERS B This is just a motion to waive the rule.
COUNCILMAN SLAGLE B Right.
The rules were suspended by a roll call vote of 9 yes.
COUNCIL PRESIDENT TOWNSEND B For passage.
COUNCILMAN SLAGLE B What a minute.
COUNCIL PRESIDENT TOWNSEND B Oh, Councilman Slagle, you have a question?
COUNCILMAN SLAGLE B Well, I wanted to I don’t think we, we should have some discussion on this before we pass it again.
COUNCILMAN PETERS B Well, we are point of order we just made the motion to waive the rule. The discussion will come now before the passage and that’s what Mr. Manson was eluding to. Did he just ask for something different?
COUNCIL PRESIDENT TOWNSEND B Yes, I asked for passage…
COUNCILMAN PETERS B Oh, no.
COUNCIL PRESIDENT TOWNSEND B Cause to my understanding once you…
COUNCILMAN PETERS B No, discussion before passage I totally disagree with you if you’re saying any different I think we need discussion before we take a vote to pass.
COUNCIL PRESIDENT TOWNSEND B Okay, go ahead and discuss Councilman Slagle. You have a question?
COUNCILMAN SLAGLE B Well, yeah, I it was brought up to me first of all I wasn’t going to vote for this legislation anyway for a number of reasons. Not the least of which is someone who pays my mortgage I find as a taxpayer I just can’t support anything on someone who doesn’t pay their mortgage. But in discussions with a one of our constituents recently he brought up an interesting point that we have to have bids when ever we sell any city assets. And yet in this particular thing we’re actually waiving a city asset which is the actual note without having any idea of whether it has any value, whether anyone else would perhaps purchase it or whether we can even do what we’re doing since it is a city asset and we haven’t put it out for bids. I happen to think that’s a very valid point. But more importantly I just I just don’t understand we’ve gone 13 years now biting the bullet on the fact that they haven’t paid this note. I don’t see what another 7 years is really going to make any impact to us one way or the other on the CDBG funds. I just in good conscious can not waive over a $3.3 million dollars for a $1.2 million payment without knowing… I was extremely upset that one of the principles said that it was not any of our business to know who the people were involved were because I think as public officials and dealing with public funds we have ever right to know who’s involved in these deals. If I want to know who the principles are I should be told who those principles are. I think it’s inexcusable that anyone would come before this chamber or respond to the clerk’s request for that information to say that’s its not relevant. I think it’s highly relevant. We need to know who these entities are. We need to know who would profit from this deal. We would need to have a fair market value of this asset which we don’t have. We have no idea what the ultimate outcome will be to those people who have been called investors but I haven’t seen from anything I saw that they were actually investors. Because an investor is someone who actually puts up money or capital in order to gain financial return. I just I for the life of me can’t imagine why anyone would have brought this deal to us. After 13 years of doing what’s happening after another 7 more years I can’t see what difference it makes at this point. It seems like a very lousy bargain for the city as an official of the city an elected official for the city but more importantly as someone who has paid my mortgage every month for 30 years I don’t understand it. So…
COUNCIL PRESIDENT TOWNSEND B Councilman Lewis?
COUNCILMAN LEWIS B The comment I’d like to make tonight is first off I want to thank Mr. Ted Herncane I know he worked hard on this piece as far as some of the requests that I had made in trying to get those extra pieces onto the legislation have some of the amendments we’ve made. So I do appreciate that Mr. Herncane. However, after last week’s session and hearing everyone talk about it and hearing some of the feedback and actually after my phone blowing up all week long with opinions of citizens of not one whose in the positive of this there’s no written anywhere there’s no comments there’s absolutely no stance in the community that I can see of anyone that’s favoring this deal. So after reevaluating it looking it over and hearing what some of my other council people have to say and looking at the deal I will also be changing my what was favorable to the negative and be voting no against this piece of legislation tonight.
COUNCIL PRESIDENT TOWNSEND B Councilman Peters?
COUNCILMAN PETERS B I don’t know why Mr. Manson didn’t raise his hand. You had a good point Mr. Manson and I think now is the time to call the mayor up.
COUNCILMAN MANSON B I was getting around to that.
COUNCILMAN PETERS B Go ahead.
COUNCILMAN MANSON B I wanted to do the same thing you know we haven’t we’ve heard from Mr. Gribble and we’ve heard from Mr. Helline a couple of times. We’ve had a lot of discussion amongst ourselves and we haven’t heard from the administration for awhile I’d like to know how the mayor feels on this. You proposed it in the beginning and I just want to hear from you again how you feel.
MAYOR CATAZARO-PERRY – Sure. This is a deal that we brought forward to city council because we’re concerned about our community block grant dollars for 2019 when there’s a large balloon payment. We’re trying to protect the city from having to give up their community block grant dollars for two years. Now this organization has only paid us since 1999 $850,000. If you think they’re going to pay more than that in the next six years before this balloon payment is due you’re dead wrong. This is the best deal that we’re going to get. We’ve worked very diligently and very hard on this deal. The $1.2 million dollars is a guarantee if they can execute it by next July it goes up a little bit higher. If you choose not to do this it’s absolutely your choice. But we negotiated it so the city could be in a win position. As much as we can be in a win position. They don’t have to pay another dime today not another dime. If they sell it and they don’t make the profit we’re still at 0. So we have negotiated this for the best interest of the city and once Mr. Lewis once they talked to me and Ted they’re right on the same page with us. They don’t understand it and that’s why you’re getting calls. Ms. Quenessa Hampton, today she gave us five names of people and we turned every single one around once we explained it completely to them. So you either can get a 0 amount, you can get $300,000 in the next six years or you can get $1.25 million. The choice is yours.
COUNCIL PRESIDENT TOWNSEND B Okay, any other questions? Councilman Manson?
COUNCILMAN MANSON B Yeah, I have a question for the law director.
COUNCIL PRESIDENT TOWNSEND B Perry?
COUNCILMAN MANSON B My question is based on what I just heard there I thought I heard the mayor say that if they sell this we may get nothing. Can they sell this lets just say we let this deal continue and can they sell this without satisfying us? I’m not saying paying it all is satisfying it this deal here may be to me this would be satisfying it if we approve it. But can they sell it without us supporting the sale?
LAW DIRECTOR STERGIOS – I do not believe so because we hold a second mortgage which we own the building also. But we have a mortgage on the leases and assignments and I wasn’t thinking that question coming but I don’t think who would buy it if we still have a second mortgage. I guess without but I don’t honestly know without going back there and reading it again.
COUNCILMAN MANSON B It’s your opinion though that they would have to satisfy us we would have to approve we would have to release them to sell it more or less. I may be speaking not properly legally but I mean the point I’m getting at is they have to they can’t sell it without satisfying our end of this thing.
LAW DIRECTOR STERGIOS – Well the question is what are you selling? The running of the hotel?
COUNCILMAN MANSON B The hotel.
LAW DIRECTOR STERGIOS – We still own the real estate. So and they have a first mortgage. So potentially we could be a kink in the wheel but I haven’t look at it from that prospective. No one’s ever brought up selling it right now. This…I think it would be difficult.
COUNCILMAN MANSON B Well the reason I bring it up is I mean there is a good chance that this thing will sell at some point in time. And I just wanted to get it clear whether or not they could sell it without our approval. If they still owe us.
LAW DIRECTOR STERGIOS – I don’t think they can and why do we have a second mortgage. I mean if we take the money if we make the deal and they’re able to perform then we release our mortgage and they can do whatever they want. There’s some reason back in ’99 that we have a mortgage on in the sale and lease back documents structured the way they are so that otherwise it’s worthless.
COUNCIL PRESIDENT TOWNSEND – That’s it? Councilman Peters?
COUNCILMAN PETERS B Mr. Manson, I’m not taking a side on this but I didn’t get that from what the mayor just said. I think and she can correct me if I’m wrong I don’t recall her saying that if they sold it we wouldn’t get a dime. She was saying to the fact which I’ve said from the start of this thing that you know if they walked away from this and didn’t pay another dime of what they owe this grant and you can correct me if I’m wrong Mr. Stergios there’s really basically nothing we can do except we could foreclose on them and we could sell it. Am I correct or not?
LAW DIRECTOR STERGIOS – We already own the property.
COUNCILMAN PETERS B But, but…
LAW DIRECTOR STERGIOS – We could foreclose the first mortgage still would have to be taken care of and we’re…
COUNCILMAN PETERS B That’s my point.
LAW DIRECTOR STERGIOS – Yeah.
COUNCILMAN PETERS B That’s my point. And what I’m saying is this isn’t…
LAW DIRECTOR STERGIOS – And we don’t get anywhere.
COUNCILMAN PETERS B You know yeah this is what I’ve said I’m voting for this I’m sorry if it offends anybody but I’m saying it’s the best deal that we have before us. You know the mayor and Mr. Manson will vow for me I mean she was adamantly against this every single year that she was on council. She became mayor and she did something about it as far as I’m concerned. I’m not tooting her horn or anything I think that I’ve said along the same thing applies to the Legends golf course. We owe $7.5 million dollars if we could sell that tomorrow for $3.5 I’d vote to sell it. Because we can not afford the debt and that’s exactly what we’re not going to be able to do in 2019 we’re not going to be able to afford the balloon payment. Without this we’re going to be somebody’s going to be in a world of hurt. And I know Mr. Slagle is going to argue whether we could sell it but why do we even want to sell it why do we want any part of that ever? And, and I’m sorry that’s just how I’m voting so unless nothings going to change my mind. I’m not a flip flopper.
COUNCIL PRESIDENT TOWNSEND – Councilman Chovan?
COUNCILMAN CHOVAN B Thank you. Mr. Stergios, could I impose on you again.
LAW DIRECTOR STERGIOS – That’s fine. That’s why I did stay over here.
COUNCILMAN CHOVAN B Would you explain what assignment of rents and leases is?
LAW DIRECTOR STERGIOS – It generally is a document that says if you’re not as a well that we could go in and take over us or the bank and collect all the rents and leases because the first mortgage isn’t getting satisfied or the second isn’t getting satisfied. And everybody not really you guys but everybody banners about all this assignment of rents and leases but you still have to run the place. So it’s the same thing as Massillon Senior the electric bill needs paid, the garbage bill needs paid, the employees need paid. Sure it all sounds great for a city but who’s going we can’t run a hotel. Well I won’t make other comments but I mean we’ve proven those things down the road. So yes, it exists but you know unless you bring in potential receivers or someone to take it over and run it it really doesn’t do us a whole heck of a lot of good. Plus the first mortgage still has to be paid whether we’re running it or the bank or you know Massillon Charles Street Associates or whoever it might be. So…
COUNCILMAN CHOVAN B Well the fist mortgage is being paid you know through the operation correct? I just bring that up because the mayor made it sound like if we don’t take this deal there’s no chance of getting any money. And there is. If we decided to exercise that we could in fact do that. So I don’t want it to be said that we couldn’t possibly get any other money out of this deal if they decided not to pay us another dime. In fact we could have been doing this along you know you can hire a management company to run something like that its not unheard of in a non-recourse lease for that to happen. The problem is most non-recourse leases I’ve ever been associated with the borrower has had to have somewhere between 40 and 60% of the money upfront before a lender would consider that. We just happen get we just happen years ago in ’99 not to understand that concept and didn’t insist on it then. And nobody ever questioned it then.
LAW DIRECTOR STERGIOS – Right.
COUNCILMAN CHOVAN B So you know be that as it may I mean there are ways to get out of this and there are ways to continue to get money whether its paid willingly or whether its not. And because I’m going to vote no. I mean I was going to along but I’m just explaining you know kind of my reasoning or my thought process.
LAW DIRECTOR STERGIOS – I’m sure there’s an assignment of rents and leases in favor of the first mortgage holder that its place from the original deal. Now it may have been assigned to a different bank or answering the question you know that exists I mean that’s a common practice in this type of development whether you’re a city or a bank. So…
COUNCILMAN CHOVAN B Thank you.
COUNCIL PRESIDENT TOWNSEND – Councilman Slagle, do you have a question?
COUNCILMAN SLAGLE B Do we have any idea what the fair market value of this asset is? Have you seen document that tells us whether it’s worth a $1 million or $5 million or $8 million dollars?
LAW DIRECTOR STERGIOS – The only thing I’ve ever seen is what the auditor the county auditor has it valued on tax duplicate but in this day and age that doesn’t really mean anything to me. Plus I’m not sure how it’s broken down so I no.
COUNCIL PRESIDENT TOWNSEND – Are there anymore questions? Okay, Madame Clerk, roll call please.
ORDINANCE NO. 35 – 2013 WAS DEFEATED BY A ROLL CALL VOTE OF 6 NO, 3 YES. CHOVAN, CUNNINGHAM-HEDDERLY, HALTER, LEWIS, SCASSA AND SLAGLE VOTED NO.
COUNCIL PRESIDENT TOWNSEND B Okay, Ordinance No. 35 has been defeated. Councilman Peters, what is your motion?
COUNCILMAN PETERS B I’d like to make a motion that we adjourn.
COUNCIL PRESIDENT TOWNSEND B This meeting is adjourned.
MARY BETH BAILEY, CLERK,
TONY M. TOWNSEND, PRESIDENT