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Development authority pays member for Midway work

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POSTED: January 30, 2013 9:41 a.m.

The Liberty County Development Authority on Monday approved payment to one of its own for $16,825 for repairs to a wastewater-flow meter.  
The request to pay board member Paul Krebs, through Paul Krebs Construction Company, went before the board because the invoice amount exceeded the amount budgeted by $4,075.
LCDA CEO Ron Tolley said the situation came to be because Krebs completed repairs to a faulty waste-water-flow meter at the Interstate 95 and Islands Highway interchange. The city of Midway had engaged Krebs to complete the repairs.
“It basically comes down to, once the work got started, and everything was discovered that needed to be done … the original estimate for the work was, it couldn’t be done for that, given the amount of time that went into and the parts that had to be ordered …,” Tolley said. “Since we have that contractual obligation to pay on that water-flow meter per our agreement with the city of Midway, there’s no question that we’re responsible for paying. It’s a shame that things came in higher, but it’s a fact of life it did.”
The meter problems have existed for years, according to a memo from LCDA Director of Finance and Administration Carmen Cole. In March 2010, CH2MHill engineers estimated correcting the problem could cost $13,500, and after much deliberation, the development authority decided to use water readings for provision of usage data to the city of Midway to calculate wastewater payments rather than use the contested readings obtained from the flow meter.
Over time, however, Midway and the authority have disputed the accuracy and use of the flow meter, and in February 2012, engineering firm Thomas & Hutton provided an estimated repair cost of $12,750 for a meter and manhole treatment.
Board member Robert Stokes asked whether staff was notified when the scope of work changed.
Cole said she had heard through sitting in meetings between Krebs and the city of Midway.
“I’m not sure that, based on the contract, they were required to notify us,” Cole said. “It’s their job to fix it and then ours to pay for it. … I was aware only because I had been in other meetings with Mr. Krebs.”
Krebs said Midway was kept aware of what was going on, but that he was not aware of whether they communicated it further.
“For full disclosure, I think the staff wanted to go ahead and reimburse the city of Midway, but I talked to them and just said, ‘Let’s wait, let’s go before the board because this is one of us. … we can’t treat him or any payment going to him … we can’t give him treatment we wouldn’t give any contractor,’” board secretary Brian Smith said.
The real issue, he added, is not that a board member was contracted for the work, but that the agreement with Midway does not give the authority any autonomy.
Stokes asked if the flow is installed correctly and generating accurate readings.
Krebs said he read the meter for two or three months to ensure it is reading accurately.
“We’re probably using 30 percent of what they had estimated, of what they were charging for,” Krebs said.
The most recent bill was for 133,000 gallons, Cole said, which is less than what they billed their customers for water usage. The change should be favorable to the authority.
Brian Smith moved to approve the purchase and Donald Lovette seconded it. Krebs abstained.
The board also authorized a $160,178 budget adjustment to cover payment of $139,318 in back taxes for Bioagra equipment, lawn care to Midway Industrial Park near Hugo Boss and engineering at MidCoast Regional Airport for a prospective tenant.
To cover the increase in expenditures, $22,400 in revenue from the sale of land on Airport Road to the Georgia Department of Transportation was added, and $137,778 was taken from the entity’s fund balance.
Another measure approved was the transition of debt from SunTrust bonds to Starwood Capital Group supplemental bonds, a move that should not have any adverse affects on the authority. Their approval was contingent upon final approval from attorney Kelly Davis.
Cole said the bonds were sold a couple months ago and, until now, have not changed; however, the Ethan Bing, vice president of acquisitions for Starwood, recently asked the authority to modify how it pays on the bonds.
“Essentially, it’s at no cost to us, and it does alleviate some of our covenants which we’ve had in the past with SunTrust, which is favorable to us,” Cole said.
Bing wrote in an email to Cole that the move alleviates the board from continuing disclosure requirements previously required under SunTrust. It also removes the requirement that the board seek prior written consent from its bondholders before seeking further debt that exceeds $100,000.
Davis said that Starwood eventually intends to sell the previously private-held bonds to public institutional investors.


 

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