city council at baileys

Athens City Council President Chris Knisely leads fellow council members down a steep hill on part of the Baileys Trail System near Chauncey on Dec. 4.

An official with the Athens County Port Authority last month informed Athens City Council that the agency probably cannot take out a bond on behalf of the city for construction of the Baileys Trail System because of how the city’s funding is structured for the project.

In a Dec. 18 email, Sara Marrs-Maxfield, secretary of the county Port Authority, said that the city’s financial contributions to the 88-mile Baileys Trail System, under construction north of Chauncey on the Wayne National Forest, “must be a binding contractual commitment at least as long as the term of the bonds” (which would likely be a 20-year-term bond).

Athens City Council voted unanimously in early November to enter into a contract with the Outdoor Recreation Council of Appalachia (ORCA) to pay $90,000 or more annually over the next 20 years to fund the trail system. However, City Council included several provisions in the ordinance to reduce the financial risk on the city. One clause would allow the city to pull out of the agreement at any time, so long as it finished the current year of funding.

Marrs-Maxfield suggested in her email that that clause would make it difficult for the Port Authority to obtain a bond for the project (which would be needed to start construction of the rest of the trail system as money rolls in from the city and potentially the county). The county Port Authority is an economic development agency created by the Athens County Commissioners in the 1990s.

The Commissioners are currently considering whether to provide a similar amount of funding for the trail system. However, Commissioners Chris Chmiel and Charlie Adkins have said they are concerned about the county’s ability to commit a similar level of financial support to the project.

Marrs-Maxfield in her email explained that during the Port Authority meeting on Dec. 18, the Authority’s board discussed a request from the “city and county to consider issuing bonds” for the Baileys project.

“After careful consideration, discussion and advice from legal counsel, the board voted to table the issue until more complete information is available,” she said. “Our bond counsel advised that the financing plan is not yet complete and does not have sufficient definition to allow the Port to issue the bonds at this time.”

Marrs-Maxfield said that further consideration of the Port Authority taking on the bond would require the following:

• “City and County contributions must be a binding contractual commitment at least as long as the Term of the bonds,” she wrote.

• “Demonstration that the city and county contributions are of a sufficient size to support the debt service of the bonds. If the contribution is made as a percentage of an identified tax revenue, that tax revenue must be sufficient (and not otherwise committed), without any growth from the ‘project’ to pay debt service and administrative costs on the bonds.”

• “This is a very complex transaction and the time and effort to execute it would be significant, and therefore the issuance fee would be minimum (depending on final financing plan) $50,000 with $25,000 payable upon initial application and the balance due at issuance,” Marrs-Maxfield said. “While this may seem high as a percentage of borrowings, counsel believes this fee is low compared to the effort that will be required of staff to close the issue, due again to the complex and layered structure of the deal and the time that it will take to finalize the financing plan.”

Marrs-Maxfield confirmed in an email this week that the fee mentioned above would be a one-time cost.

She also made it clear that, in order for the Port Authority to consider the bond application, the “payers” (the city and county) would need to enter into a “binding agreement” for at least the length of the bond term.

“The current language allows the city to pull out at any time with 90 days notice,” Marrs-Maxfield said. “If the city or other payers can pull out at anytime, there would be no money to pay debt service on the bonds. 

If the Port Authority is ruled out as a bond application source, the only other potential source to take on a bond that has been floated so far by Baileys project officials has been the state government.

Athens Mayor Steve Patterson in his role as a member of ORCA (Outdoor Recreation Council of Appalachia) said Friday last week that he’s hopeful that the state could provide an avenue to obtain the bond for the project. Ohio Treasurer Robert Sprague last year announced a new initiative that aims to provide funds to support “pay for success” initiatives, which is the model being pursued for the Baileys Trail System.

“I’m still exploring the best path forward given that City Council has voted on and approved our continuance with being a payor for the Baileys Project,” Patterson said.

Athens City Council first meeting of the year was on Monday, Jan. 6, but they did not have time carved out during that meeting to discuss the email from Marrs-Maxfield (it was mostly a procedural meeting devoted to appointing positions to council).

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