Bias deposition shines light on city's efforts to buy UE

In a deposition he gave last Monday in University Estates’ lawsuit against the city of Athens, City Council President Bill Bias revealed that the city wasn’t sure how it would purchase the property, and that the city was hoping to keep the property out of the hands of local developer Brent Hayes.

Asked about Bias’ long-awaited deposition, UE owner Dr. Richard Conard Friday criticized the city for never responding to communications he sent regarding the property, which he said led to the eventual lawsuit.

“It saddens me when I realize that the whole litigation problem between the city and UE did not have to occur,” Conard said. “I went from June 23, 2009 until Aug. 28, 2009, attempting to stop the city’s damaging actions and realized it was to no avail and I had to legally protect myself. Thus the litigation.”

UE sued the city after the latter signed a memorandum of understanding with Asset Resolution and its affiliate Silar Associates to purchase the note on more than 600 acres of the 826-acre UE mixed-use development site off of Ohio Rt. 682 and Armitage Road in northwest Athens. The city’s proposal was to purchase the note for $1.75 million if and when the property was foreclosed on. City officials said at the time that Silar and Asset Resolution had told them that the mortgage on the property was in default. University Estates has continued to deny that the mortgage was ever in default.

In the deposition, Bias acknowledged that while City Council had approved borrowing up to $2 million for the note, council did not have the property in question appraised, did no cost-benefit analysis with respect to the acquisition, and had no study done about the impact on city income tax revenue. Bias declined to answer questions with relation to what financial discussions did take place because City Council discussed the topic in closed-door executive session.

Bias said that Silar had given city officials the impression that they had to move quickly, or the note would be sold to another entity, which was later revealed to be developer Hayes.

After discussing the matter with city Law Director Pat Lang, Bias said in the deposition, city officials decided they didn’t want to hold the outstanding note. As a result, he said, they entered into an agreement where they would purchase the acreage from Silar only after the property was foreclosed on. He said that UE had represented to the city that the note was in default, and added that the primary purpose of the city’s negotiations involved its interest in protecting city water wellheads that are located on the property.

The deal that Hayes had pending with Silar was to purchase the note for $1.2 million, Bias said in the deposition. He said he was led to believe that this deal would go through quickly if the city did not act immediately.

“They led me to believe that they had a deal with… Mr. Hayes, and that if City Council could not produce an ordinance letter from the bank saying that, yes, we have the wherewithal to do and emergency clauses and everything else… that they were going to sell it to Mr. Hayes,” Bias said.

He acknowledged that Hayes had approached city Service-Safety Director Paula Horan Moseley to propose an offer for the city to purchase the well fields and 30 acres around it for around $1 million.

The conversation between Moseley and Hayes took place in early June, 2009. Phone records from the city show the administration office line placing a 28-minute call to Silar in New York on June 4. Because incoming call records are not available from Verizon Communications, it’s uncertain if this was a return call.

Bias was asked in the deposition why the city would authorize $2 million to protect the wellheads, instead of dealing with Hayes and potentially paying $1 million for the same protection.

Bias said city officials were worried that Hayes night clear-cut forest on the remaining acreage of UE property, potentially threatening the city’s water supply within the 30 well-field acres.

“There were concerns because Mr. Hayes had clear-cutted – clear-cut other areas around our city, whole hillsides, and we did not want that to happen,” Bias said. “There were concerns that Mr. Hayes and his operations – other places in the county had major EPA litigation going on – those concerns – you can’t take 30 acres here and with everything that flows into it totally protect it.”

When asked if Bias personally liked the proposal from Hayes, he said, “Probably not.” Further, Bias said that the Hayes option (buying 30 acres from Hayes) was never explored.

IN ANOTHER PORTION OF THE DEPO- SITION, Bias went over his understanding of how the city could afford to borrow up to $2 million to acquire the property.

“It was my understanding, and I believe stated by several in special session of council, that the $2 million we could do on an interest-only note for a number of years, and the payment would only be about $25,000 a year with the very favorable interest rate that the city was able to get,” he said, adding that other options included grant monies and/or an eventual ballot initiative. When shown the commitment document from Hocking Valley Bank, Bias acknowledged that it does not include the term “interest-only loan.” He said the city had no documentation from Hocking that that would be the case. Asked what protection the city had that the bank wouldn’t demand to be paid monthly, which would have run between $10,000 and $20,000 per month, Bias said none. He also acknowledged that the city could not have afforded such payments.

Later, Bias was presented with the fact that an interest-only loan to buy the property, at $25,000 per year, would bring in only $750,000 after 30 years, $1 million less than the supposed deal. Bias acknowledged that at some point the city would have to deal with the principal amount of the loan. When asked if the city had a plan, Bias said there was no one set concrete plan in place, but the city had various options. After being pressed on what the options were, he said they were discussed in executive session so he could not elaborate.

Bias also said that he received a letter from UE owner Dr. Conard saying that if the city is “interested in my land, you should immediately initiate discussions with me, not Silar, since University Estates, Inc., owns the land in question.” Asked why he didn’t pursue this course of action, Bias said it was out of his hands at that point and he was following the advice of legal counsel. Conard said he never received a response to this letter from any city official.

When asked about a potential for conflict of interest considering his dual roles as president of City Council and a project adviser for a local retirement development, with UE intending to build a retirement community of its own, Bias characterized this as “speculation.”

A RULING IN APRIL IN THE U.S. Bankruptcy Court District of Nevada secured the land in question for UE. Judge Robert C. Jones granted a motion on May 17 from Chapter 7 Trustee William A. Leonard, Jr., to sell the land in question to an entity called Acropolis of Athens, Ltd., for $1 million.

The sale to Acropolis was able to occur because Asset Resolution, LLC, which held the mortgage note for the property, filed for bankruptcy protection last year. University Estates, LLC, is represented by attorney Bret Adams, who also, according to documents in the case, acts as manager for Acropolis. In this transaction, University Estates, LLC, is not considered one of the sellers.