Attorney Says Black Creek Group To Make Money Off TIF Bonds Interest; Chancellor Won't Let City, County Out Of Sharp Lawsuit

Thursday, July 10, 2014

Attorney John Konvalinka said Thursday that the purchasers of a controversial $9 million Tax Increment Financing (TIF) bond issue were the same group developing the project at Black Creek in Lookout Valley.

He also said that the developers stand to make money on interest on the bonds.

And he said the road project will be constructed by a member of the group. Those involved in the project to develop a large tract on the top of Aetna Mountain include businessman Gary Chazen as well as Doug Stein, who has Stein Construction Company.

Attorney Konvalinka said if the lawsuit brought by citizen Helen Burns Sharp goes to trial next Tuesday he will show that "it won't cost $9 million to build that road." But he said the way the deal is set up the road builder "can charge what he wants."

Chancellor Frank Brown, also expressing concerns about the way the TIF came about through the city's Industrial Development Board (IDB), declined to grant the city and county a summary judgment. He also declined to remand the case to the IDB and he declined to grant the city and county an immediate appeal.

He urged the parties to try to come to some sort of agreement.

But attorney Konvalinka said Ms. Sharp, a former planner who believes the first local TIF did not meet state requirements, wants a trial.

Assistant City Attorney Phil Noblett and County Attorney Rheubin Taylor denied that the city and county had acted illegally, as the plaintiffs charge. 

Attorney Noblett said the project benefited taxpayers who did not have to pay for a road and sewer line up Aetna Mountain to the planned "small city" .

He said the project was discussed and debated at five different public meetings. 

The bonds were issued, and attorney Konvalinka said "the first draw" included covering a $50,000 payment to attorney George Masterson, who issued an opinion that the TIF was valid. Chancellor Brown earlier this week declined to accept the letter, noting that the attorney was in the employ of the developers.

Attorney Konvalinka said over $162,000 went to the law firm of Miller and Martin for its work on the TIF. Attorney Mike Mallen appeared before the IDB in favor of the request. 

An attorney for the development group said it is the customary practice for bond counsel to be paid by the group seeking the bonds.

But Chancellor Brown said, "Something is fundamentally wrong with the appellant's lawyer being the decision maker."

Attorney Konvalinka said several people who approved the project, including Mayor Ron Littlefield and County Commission Chairman Larry Henry, said they believed the project could not go forward without the TIF.

But attorney Konvalinka said it wound up "that the same people doing the project were the ones buying the bonds. They had the money."

Of the major players on the project, he said, "It's just us girls."

He said documents for the TIF are vague in regard to the project and do not commit the developers to carrying out any of the commercial portion.

He said, when interviewed, attorney Masterson "did not know if the commercial would be on top of the mountain or at the bottom."

Former City Attorney Mike McMahan said when the judge threw out the Masterson opinion letter based on conflict of interest "that threw us a curve ball" and put himself "in a very touchy situation" since he handled the matter for the IDB.

He said the IDB has hired attorney Sam Elliott to advise him on what further steps he should take in the case since he may be called as a witness.

Attorney Konvalinka said of the $50,000 retainer for attorney Masterson that his hourly rate is $450 and he spent far less than the time to reach the $50,000 amount.

Pam Fleenor, who will be taking over the post held by Chancellor Brown soon, sat in on the hearing.

 

 


PHOTOS: Back The Blue Walk

A group of family and friends of law enforcement. along with active and retired police officers, showed their support for law enforcement Saturday afternoon. They took part in the Back the Blue Walk from Ross's Landing to Coolidge Park. (click for more)

Upcoming City Council Agenda For Tuesday

Here is the upcoming City Council agenda for Tuesday: I. Call to Order. II. Pledge of Allegiance/Invocation (Councilman Gilbert). III. Minute Approval. IV. Special Presentation. V. Ordinances – Final Reading: ECONOMIC AND COMMUNITY DEVELOPMENT a. An ordinance to amend Chattanooga City Code, Part II, Chapter 26, Section 26-33, Outdoor Fee Changes to ... (click for more)

Olympic Events On The Ocoee River Made History – But It Wasn’t Easy

It started with a simple “what if” question while Atlanta officials were working on a bid to host the 1996 Summer Olympic Games.  A group of amateur kayakers from the city began asking themselves: “What if Atlanta’s bid is successful? Then where would the Olympic whitewater canoe and kayak races be held?”  To some of the members of that group, the answer was obvious. ... (click for more)

Roy Exum: Today’s Offensive Word

A respected Knoxville business owner, Lois McGinnis, called the classifieds desk at the Knoxville News-Sentinel on Tuesday and politely asked to place an ad she wanted to appear on Thursday: “Store closing sale – Cedar Springs Christian Store –Clinton Highway location. All merchandise, fixtures, slat walls must go. Sale through August 13, phone 865-XXX-XXXX.” But on Thursday ... (click for more)

Chattanooga FC Shocked By Sonoma In NPSL National Semfinal

A Will Roberts goal in the sixth minute assisted by Juan Hernandez looked like it would be enough Saturday night in the NPSL National Semifinal match at Finley Stadium.   Unfortunately, the visiting Sonoma County Sol would score two late in the game to earn a 2-1 win.   Sonoma had very few chances in the 90 minutes of play before a crowd of 12,251 which is second to ... (click for more)

PHOTOS: Chattanooga FC Falls To Sonoma Sol In NPSL Semi

Chattanooga FC held on tightly to a 1-0 lead until late in their NPSL semi-final match against the Sonoma Sol (Calif.) Saturday night at Finley Stadium before falling 2-1 in front of 12,251 fans.   CFC striker Will Roberts scored the first goal of the match in the sixth minute off an assist by Juan Hernandez when he hit from the left side and drove ... (click for more)