Settlement talks underway in PTC lawsuit

Tue, 04/18/2006 - 5:06pm
By: John Munford

A lawsuit over $1.5 million in outstanding debt owed by the Development Authority of Peachtree City may be headed for a settlement, according to recently filed court papers.

This revelation was documented in a joint discovery motion filed by all parties in the case. The motion states that the parties “have been working together on a potential resolution” in addition to sorting out the discovery issues.

No other details of a possible settlement, including the cost to city taxpayers, have been made public. Peachtree City Mayor Harold Logsdon said during his campaign last year that he would like to see the issue resolved.

The suit was filed in August 2004 by Peachtree National Bank, which issued the loans to the DAPC for improvements to the tennis center and amphitheater. Named as defendants in the lawsuit are the city, the DAPC, which formerly operated both venues, and the Peachtree City Tourism Association, which currently operates both venues. Each agency is represented by separate legal counsel.

In 2003, the authority stopped making payments on the debt after it gave up operations of the tennis center and amphitheater, the facilities for which they incurred the debt. After that occurred, the city stopped payments to the authority from the hotel-motel tax, which equalled $180,000 a year.

The city has argued that the Development Authority of Peachtree City is a separate and legal entity from the city government itself, and thus the city should not be held liable for its debts. But use of the city’s hotel-motel tax money to fund the authority clouds the issue.

Bank attorneys have argued in filings that the City Council sanctioned the loans made by the development authority, and the tourism association is the “alter ego and successor” to the authority ... thus all are responsible for paying the authority’s loan obligations.”

The bank is seeking an order forbidding the transfer of assets, payment in full of the loans issued to the authority, with interest, and an order “compelling the defendants to use the authority’s assets to pay the legitimate debt to Peachtree National Bank.”

The bank is also seeking attorneys’ fees.

The discovery issue has been taxing for all parties in the suit, and several city employees have been going through “hundreds of thousands” of e-mails to find all that comply with the bank’s discovery request, attorneys said.

The motion to extend discovery, which was approved by Chief Superior Court Judge Paschal A. English Jr., was jointly filed by all parties in the suit.

“The documents are, and will become, more voluminous and review will be extremely time-consuming,” attorneys wrote in the motion.

According to Peachtree National Bank’s loan documents, the bank loaned the authority $879,000 on May 15, 2002 to combine two existing loans, which were initially made for improvements to the amphitheater and working capital. A year later, the bank issued a $200,000 line of credit to the authority also.

Peachtree National Bank has also assumed a $200,000 DAPC loan that was originally made by Regions Bank in 2002.

None of the current DAPC members were on the DAPC board in 2003 when the controversy began with the resignation of Vice Chairman Scott Bradshaw, who criticized the last-minute development of cash flow problems in September 2004, despite the receipt of “highly optimistic financial reports.”

Then DAPC Executive Director Virgil Christian resigned the week following Bradshaw’s blistering criticism.

The DAPC also had financial reporting difficulties that put a black eye on the city’s audit for the year ending Sept. 30, 2003. The city’s auditor determined that the DAPC failed to maintain subsidiary ledgers for all statements of net asset accounts, failed to reconcile subsidiary ledgers to the general ledgers and had “incomplete and inconsistent posting of transactions to the general ledger.”

“The failure of the Development Authority to effectively design and operate sound internal controls, as well as the failure to maintain an up-to-date general ledger leads to untimely and inaccurate information provided to the board of directors,” the auditing firm wrote. “Additionally, failure to design and operate effective internal controls could lead to undetected misappropriation of funds or delays in finding other potential errors or irregularities.”

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Submitted by RidemGolfCarts on Wed, 04/19/2006 - 3:29pm.

Where do I sign up to join the taxpaper lawsuit that this settlement will surely inspire? Is Harold going to pay for this out of his own pocket? Right! No, be sure that he'll be passing the settlement along to us. I'm missing Steve Brown.

Joey Jamokes's picture
Submitted by Joey Jamokes on Thu, 04/20/2006 - 9:44am.

Don't even waste your time thinking about a lawsuit to challenge the PTC Dev Auth case. It's a done deal and they're just waiting for things to settle down before they cut checks.

Me and the Twins are gonna work on something a little more important like setting up the TIVO.


Submitted by SandySue on Thu, 04/20/2006 - 1:07am.

That is right! Harold can have a couple of BBQ's to raise money to pay the dept! He seemed to raise more money during his campaign than he will get paid in all 4 years in office or maybe he can ask his campaign supporters to pay the debt they seem to have deep pockets. Just a thought….. Harold, what do you think? BBQ or Buddies? It is for a good cause, banks never write off dept, can you say cost of doing business - write off?

PTC Guy's picture
Submitted by PTC Guy on Wed, 04/19/2006 - 5:56pm.

This was a big issue at the election.

The 'moral obligation' was heard from certain candidates and obsurely from the good ole boy system.

Where are Hampster and McDonoughDawg now?

Am I still so wrong, you two? Is this how one increases home values and quality of life in PTC? Is it still so stupid to say private business does trump government in this type of things? Should I be the one moving?

There was plenty to be said before about how wrong I was? Where are you guys now?


Submitted by McDonoughDawg on Wed, 04/19/2006 - 6:51pm.

If we (the city) borrowed the money, I think it should be paid back. Simple as that. I didn't live here when they did, but I live here now, and I think we should honor our debts.

PTC Guy's picture
Submitted by PTC Guy on Wed, 04/19/2006 - 8:38pm.

PTC did not borrow the money. The Authority did. It is not part of PTC government.

The Authority legally refused to follow the city's wishes in mutliple legalities over these things.

So, before anyone starts talking about what we owe, how marvelous these things are, how great politicians are in these areas and such, they should have do some research.

Especially when they start telling others to move out of town who were here and have seen the numbers and stupidity rolling out year after year on this.

There is no profit, as some have claimed. There is 7 digit debt.

And it was stupid from the start as a public project. This is the turf of private enterprise.


Submitted by McDonoughDawg on Thu, 04/20/2006 - 8:35am.

As to the "move" comment. I apologized for it. You won't let it go. Your loss, in my opinion.

I recall an article in the Citizen within the last year that showed the Tourism Authority, (possibly not the exact name) that showed a profit overall. The Tennis Center showed a loss, the Amphitheater showed enough gain to cover it. So now you want to only count the tennis center numbers? Typical.

You deny the City borrowed the money. If not, who gave "the authority" the power to borrow? Seems you think the money went straight into someone's pocket. Were no improvements done with the borrowed money? Who holds the Security Deed, is there one?

PTC Guy's picture
Submitted by PTC Guy on Thu, 04/20/2006 - 2:38pm.

The apology was pretty off handed. But since you say it more clearly here, accepted, done and over with. Thank you.

But then you turn around and try to find a face saving way out.

Fact remains, The Fred could make more money if better controlled.

Fact remains, looking at one single year's financial statement does not put them into the black. One must look at overall profits and loss over time, including debt, before one can proclaim them soluble and profitable.

The losses and debt far, far outway any years of profit. Therefore they are in the hole financially speaking. Major big time.

No. The City did not borrow the money. Time for you to research the legal standing of Authorities in Georgia. You are just assuming they are city gorvernment. They are not.

http://www.dca.state.ga.us/development/research/programs/lga.asp

The city/cities, county/counties and so on create them for a special purpose. But then they function independently of the creating authority.

The idea is to get around the financing, beaurocratic and other problems inherent with government.

So, get over the idea they are under the direct control of PTC.

In example, on one court case, PTC urged them to settle. They refused and pursued it to finality in court, loosing.

And now you are finally starting to ask the right questions. And if you dig deeper, you will understand why this is now in court.

And maybe you will also learn that the authority had bank and former bank members on it that set up the deal with the bank. Can you say conflict of interest?

And you will find there are no records. How convenient/unbelievable, coming from people stemming from financial institutes.

You have assumed cut and dry facts that do not exist. And PTC responsibilites that are not there.

And that is why they Council voted to cut the funding to the Auth and not pay the debt. Not to mention legal barriers from them even assuming the debt.

Study and learn before you keep making these declarations of facts.

And research who was doing the pushing to assume the debt. Those who created the situation to begin with! The good ole boys!


Submitted by McDonoughDawg on Thu, 04/20/2006 - 4:18pm.

that a settlement has probably been reached. I've heard both ends of this story, as in two totally different versions. Frankly, I have not researched it. IF wrong doing was done, I would like it brought into the open If no wrong doing was done, I would like to see the debt paid. Let's hope they get to the bottom of it.

Are you implying that the money's did not go for what they were originally borrowed for? It seems your research would indicate that. I did realize that Bank Board Members were on the Authority. With all the banks in this town, would be hard for anybody not to be on one, or at least it seems that way. If you have some inside knowledge, come forth with it.

PTC Guy's picture
Submitted by PTC Guy on Thu, 04/20/2006 - 5:07pm.

A lot of vines out there. Never know which ones actually bear fruit.

Last I read, that was trustable, was there was some monies unaccounted for. And others accounted for that make one ask why it went there, or, why that cost?

There was wrong done. That is not debatable.

The bank is not innocent in this. Not at all.

And why should PTC assume bad debt created by the Authority?

Nope. The court needs to sort out fault, legitimate debt and so on. Just because the bank throws a certain number out does not mean that is just amount.

We don't know if this extended into price gouging on construction or anything else. But we do know they are still trying to fix stormwater and other problems from bad planning and construction.

This was a fiasco from the beginning. Don't just assume that PTC is trying to rip the bank off or that all is legit debt to anyone.

Let the court get to the bottom of it. But keep the correct perspective on who was involved when and was legally bound how.


H. Hamster's picture
Submitted by H. Hamster on Wed, 04/19/2006 - 6:49pm.

I edited myself since the word I wanted to use got my friend Scruffy banned forever. Nevertheless, the word(s) still apply.

Yes you are wrong, to answer your question.

Home values and quality of life are two different things, but since you have joined them - I will join them in the answer. Which is - Yes, Yes, Yes home values and quality of life is definitely increased when our elected officials don't have to spend their time and taxpayer's money on defending a lawsuit brought on by the previous administration (actually just the mayor).

I was thinking of using adjectives like "publicity-seeking, self-absorbed((((edited again)))), immature, unfocused, anti-development to describe the previous administration, but I did not. That makes a hamster more mature than the previous mayor.

And this will really ((((edited)))) you off - yes, to answer your question, private business should trump government - certainly in PTC where private business built the town, paid for most of the public amenities and to this day attracts tax-paying businesses. Get over it dude. You and 38,000 others live in a company town - a good company town.

No comment on your question about moving away. Others may.


Submitted by Joe Swanson on Thu, 04/20/2006 - 7:14am.

Either it is a city debt or it isn't. Let a jury decide it. Don't do some settlement that will feel like kissing your cousin. Find out who is right and get it done.

Ah yes....We owe our lives and our beings to the developers in PTC. They were so gracious to take our measly hundreds of thousands for houses. We should kneel and kiss the ring.

Simple economic fact--- they presented a product and the market responded. And then they were supposed to leave and the citizens would govern themselves. But it didn't happen that way. The local hangers-on became profiteers setting up the DAPC to run up big bills.

And yeah we need to be thankful. This "Company" is the same "Company" that bought a sewer system for $1 and sold it to the taxpayers for $24 million.

H. Hamster's picture
Submitted by H. Hamster on Fri, 04/21/2006 - 6:51pm.

You are actually correct about almost all of that. The developers presented a product and the market responded. Some of you did pay hundreds of thousands for your house - to the builders maybe, but not the developer. The developers and many of their minions stayed and became profiteers (starting with Joel and Floy - want to flog them with your horsecrap, Steve?).

The thing you are wrong about this time is the price paid for the sewer system. $13,000 per acre - just like the rest of the land. Jim Pace can tell you exactly how many acres that was, but obviously the cost is much less than the $19 million that was actually paid. So yes, they profited. Most people who have jobs with companies who are in business to make a profit understand that. Do you have a job yet Joe/Steve?

By the way, I paid $79,900 for my house and it is now worth in the "hundreds of thousands" thanks to the developer and fools like you who overpaid for a house in an industrial park near an airport.

So I profited as well.


PTC Guy's picture
Submitted by PTC Guy on Fri, 04/21/2006 - 7:42pm.

My home has well over doubles in value. Well over.

But, the major driving force was not developers. It was the cost of materials.

A bunch of consecutive years where concrete and lumber went up 25 to 50% every year does wonders for a homes value, without any developer or builder being involved.

And the climate, location relative to work and so on.

Developers, businesses and people in general make or break a community. No one entity is the key to success.


Submitted by McDonoughDawg on Thu, 04/20/2006 - 9:08am.

"Find out who is right and get it done".

PTC Guy's picture
Submitted by PTC Guy on Wed, 04/19/2006 - 8:59pm.

Hamster, this fiasco did not begin with Brown. The Amphitheater is 30 years old. The Tennis Center began under Lenox.

The legal issues began under Lenox. The DAPac in question began these things under Lenox.

Yep, home values and quality of life are two different issues. The claims I responded two were that that The Brown and Tennis Center added to both. Context, Hamster, context.

Review the history on the conduct of the DAPac and who was seated on it.

Also, get your facts straight. Brown did not do anything on his own. The Council voted unanimously on those issues.

In your obsession against Brown, you have blinded yourself to the fact all this was already in play under Lenox.

So, you admit private business should have done The Brown and Tennis Center. At least we agree on one thing.

If they had, this mess would not exist today.

There is a difference between a town with a good business base, which as input, and a town of good ole boy control.

I have seen both, and the good ole boy system is always trouble.

As for the moving, since you did not say it I don't blame you for not commenting.


Voice of Fayette Future's picture
Submitted by Voice of Fayett... on Thu, 04/20/2006 - 8:02am.

PTC Guy once again makes a good issue-based post. No name calling, just rational thought. And everyone else is free to disagree.

PTC Guy is right. Bob Lenox is the Mayor who Commandeered this whole project. Lenox arm twisted the lawyers after a meeting to change the contract between the City and DAPC to give DAPC full rights to 50 years of the hotel motel tax. The Independent Counsel Report put that Agreement in the trash where it belonged. Insider Scott Bradshaw blew the whistle on Lenox and Company. This is a problem that goes way, way back so the best bet is on the good ole boys waiting for a quiet moment when Harold can deliver.


Robert W. Morgan's picture
Submitted by Robert W. Morgan on Thu, 04/20/2006 - 7:17pm.

Yes, indeed. Everything started before those that have to fix it are in place to fix it.

The Ampitheater thing started when Herb Frady was Mayor. Not his fault, but it started then and progressed through several mayors.

The Tennis Center was envisioned under Fred Brown, built under Bob Lenox and run down under Steve Brown. Again, no fault, credit or blame.

Vietnam was started by Truman, escalated by Eisenhower and REALLY escalated by Kennedy and Johnson. Richard Nixon (of all people, solved it - sort of)

The DPAC thing started with Fred Brown and was moved along by Bob Lenox. Steve Brown tried to put the brakes on it and Harold Logsdon will have to solve it.

If you try hard enough and attend every public, private and secret (illegal) meeting that occured on any of the above, you could assign blame to hundreds of people. Is that worth it? Or would it be more productive to simply solve the problem and get on with whatever life we are destined to have in Peachtree City?


PTC Guy's picture
Submitted by PTC Guy on Thu, 04/20/2006 - 9:07pm.

Yea. Right. It was all just sweet and peachy before Brown.

And going back to the Good Ole Boys, that got it going to begin with, will fix it all.

Which, it seems to mean to you, to pick up where Lenox left off.

Be nice to solve the problems and move on. But I doubt that is what is going to happen. Unless you call caving in and letting the Ole Boys call the shots again is a solution.

Run down under Brown? Meaning it was just so right and perfect before. Nope, you are dreaming.


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