What’s below the St. Joseph’s Glen street controversy?

COMMENTARY

With the recent passage of the resolution that will allow the Arkansas Highway and Transportation Department to rebuild six streets in the City of Alexander, there has been much controversy and many comments made without the knowledge or understanding of all of the facts. Perhaps some of you reading the recent article on the subject missed the significance of some of the information provided.

As in everything there’s what we know and what we don’t know. Let’s start with what we know.

In 2003 St. Joseph's Glen (SJG) developers Michele Baker, Darren Baker and Travis Baker brought an ordinance to the Alexander City Council written by their attorney. This is three years before Woodland Hills would be annexed into the city and the council was made up of six aldermen representing three wards. The ordinance established an improvement district, encompassing phases one through six.

After the completion of all six phases a second ordinance was presented to the council in 2008. The new ordinance established a second improvement district for what would become Phase-7. And, it’s Phase-7 that contains the two streets causing all the uproar, Magnolia Glen and Autumn Cove.

By now the city had also grown. Woodland Hills had been annexed in 2006, boosting the council to eight members representing four wards. I guess you can’t expand an improvement district the same way cities annex new areas.

Ordinance 2008-02, passed June 16, 2008, says the improvement district is being established, "[F]or the purpose of constructing and installing facilities for water works, recreation, drainage, gas pipelines, underground trenches and excavations necessary for the installation of electric and telephone distribution systems, sanitary sewers, streets, including curbs and gutters, sidewalks together with facilities related to any of the foregoing within said district."

After the completion of SJG, "[T]he improvement district shall continue to exist for the purpose of preserving, maintaining and operating the improvement(s), replacing equipment, paying salaries to employments (sic) and performing any other functions or services authorized by law," the ordinance states.

Up to this point this second ordinance mirrored the first ordinance that formed the original improvement district. However, when aldermen compared the first ordinance to the second they discovered language included Alexander taking over the maintenance of all utilities, including street repairs, if the Bakers decided to skip out.

Since water and sewer services, for the Saline County area of the city, are provided by Saline County Water and Sewer (SCWS) the council could not speak or make decisions for SCWS. Not to mention, if the Bakers would do the unthinkable and leave SJG high-and-dry, Phase-7 would be the only area covered by the city. The Bakers would still be responsible for the rest of the subdivision. With all that in mind the aldermen had the Bakers’ attorney amend the second ordinance.

It now stipulates, "The City of Alexander shall not have any obligation to assume the responsibilities for the continued existence, maintenance or control over the improvement(s)."

But, why does SJG need improvement districts when the newest subdivision under construction in Alexander, Meadow’s Edge, doesn’t? Perhaps financing is the answer.

We know the Bakers acquired a bond to fund construction of all utilities in the subdivision, including the streets and sidewalks. The bond is being paid for by a self-imposed property tax being paid by SJG residents. Self-imposed as-in imposed by the Bakers. It appears on the tax bill as “City Street Tax” but the City of Alexander doesn’t receive any of that revenue. It’s sent to the Bakers who then make payments on the bond.

In other words, the sale of the property and houses did not pay for the streets and underground utilities. It’s an on-going payment being made by the property owners.

An accusation being thrown around is that SJG residents are paying city taxes and getting no benefits. As far as property taxes go SJG residents pay the same city property tax paid by all property owners in the city; which is five-mils. The property tax, and a two-cent sales tax, provides revenue to the general fund, police fund and fire department fund. So they do get the same city services owed them.

Revenue to the street fund comes from the state’s fuel tax, which brings up another issue. The state disburses the share that goes to cities and counties based on population. You would think Alexander’s street fund revenue should be based on a population number minus the population of SJG. Whether it is or not is one of those facts we don’t know and someone will have to ask. I only mention this because when the city takes ownership of those two streets the population count used for the street fund revenue should be increased by the number of people living on those streets.

What we don’t know is a much shorter list than what we know. And, it’s a question I don’t believe anyone has asked. In order to qualify for the bond issue did the Bakers have to maintain ownership of the streets, sidewalks and other utilities?

It sounds as though the Bakers were able to qualify for what’s commonly known as a revenue bond. That type of bond is usually easier to get, at a lower interest rate, because payment is guaranteed either by a dedicated tax source or from fees such as a water and sewer system. To the best of my knowledge revenue bonds have always been made available to government entities; not private enterprises. That would explain both the need for an improvement district and the property tax.

Since government entities always own and maintain the beneficiary of a revenue bond, does that apply here as well? Must the improvement districts, operated by the Bakers, maintain ownership of all SJG utilities, both underground and above ground, until the bond is paid?

Before a subdivision’s utilities are taken over by the local city or county, after construction is completed, a set of standards and approval process is always established in the design stage. It appears the same construction standards used in building the streets in phases one through six were not used in Phase-7.

If taking over the streets by the city was going to be the end result from the beginning an engineer should have been monitoring construction to make sure all the streets were built to code. It does appear the plan for Phase-7 was to build streets as cheaply as possible and pass them off to the city with the attempted use of a couple of sentences in the second ordinance.

Finally, it’s not as simple as the city council just passing an ordinance. It would be like someone selling your car without you knowing about it. Even if all the streets and sidewalks were up to code there would have to be a legal agreement between the city, the Bakers and possibly the bond company.