JOPLIN, Mo. —
Decisions that would set financing in place to start property acquisitions for Joplin’s tornado redevelopment projects sustained at least a temporary setback Tuesday.
Members of the Joplin Redevelopment Corp., also known as the 353 Commission, agreed they would not take any official action after learning from the city attorney that the city has not been able to put in place public risk or liability insurance to cover the board.
The board had scheduled a meeting Tuesday. Items listed on the agenda included co-signing the city’s application for a $20 million grant from the federal Economic Development Administration and holding a closed session on property transactions.
The city’s contracted master developer, Wallace Bajjali Development Partners, intends for the corporation to buy and sell land for tornado redevelopment projects. To start that procedure, the board was expected to ratify a loan agreement with a consortium of local banks for $8 million in financing for purchases until bonds can be issued on future revenues from a new tax increment financing district.
The board was told that the city’s insurer had declined to cover the 353 Commission but that an insurer had been found that has covered other 353 boards in Missouri. Board member Michael Hagan, a banker, said, “That tenders a concern for me,” and another board member, Brian Shaw, concurred.
City Attorney Brian Head said that in addition to insurance covering the board for errors that could occur in the transactions, the board also needs liability insurance. He said he thinks the city’s application for insurance will be accepted soon, possibly within a week, but the insurer has not yet agreed to issue the policy.
Board Chairman Ron Darby asked, “If that company says ‘no,’ are we on hold?”
Head said that is a possibility because the city does not have enough money to insure the board.
City Councilman Benjamin Rosenberg, the council liaison to the board, asked if the board’s structure as a corporation was a shield from personal liability.
Head said that could provide some protection from lawsuits and judgments, but the board will be holding property for city projects that could be exposed.
David Wallace, CEO of the development firm, asked if the board could take a vote to offer direction on pending projects that could be ratified after insurance were in place. Head said he believed the board could do that as long as it did not take possession of any property. But board members balked.
“I will not be voting on anything until there is insurance coverage,” Hagan said. “There is too much liability.”
The board was asked to co-sign the city’s application with the Economic Development Administration. That $20 million grant is part of the financing for the proposed construction of a new Joplin Public Library and movie theater complex at 20th Street and Connecticut Avenue.
Head and the city’s finance director, Leslie Jones, said there is no liability involved in signing a grant application.
The board was told that members had previously agreed to co-sign the application. Shaw said that at the time the board agreed to that, members did not know they would not have insurance coverage in place.
Rosenberg advised the board members that they should protect themselves.
Head was asked if there is a deadline on submitting the grant application. City staff members told the board that the federal agency wants to complete authorization of the grant before March.
Board members indicated they would wait until the insurance is in effect to co-sign the application.
The board was briefed on the loan agreement. It was told that the local banks would provide an $8 million line of credit and that any property purchased would be collateral for the loans. The board will be asked in the future to approve the loan on behalf of the corporation.
Hagan asked when the money will be available from the sale of bonds related to the TIF district. Wallace said it would be the second quarter of the year. Jones said a request for bids on the bond issue will be issued soon.
Asked if the board had any concerns about the financing mechanisms, Hagan said the board will want to have money available in time to meet the debt repayment.
“We want to get some things going here,” Darby said. “We’re as anxious as anyone in the city” to get the redevelopment projects going.
Closed meeting
THE 353 COMMISSION conducted a closed session, citing discussion on acquiring real estate as the reason for closing the meeting.
May 2011 Joplin tornado
Joplin redevelopment projects hit temporary snag
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