Fairhope Mayor Wilson Releases Timeline on Airport Authority Land Loan Refinancing

FAIRHOPE, Ala. — Fairhope Mayor Karin Wilson has released a public timeline of her involvement in the Fairhope Airport Authority’s refinancing of debt on land surrounding the city airport, saying she was excluded from the process and disputing claims that she was responsible for delays that cost the city money.

The airport land issue has come up at recent City Council meetings, where Council President Jack Burrell, who is involved with the Airport Authority, told residents in attendance that speaking during public participation is a privilege rather than a right and that the three-minute limit on public comment is at his discretion.

Background on the debt

According to Wilson, the Airport Authority bought property next to the airport in 2007 for $8,850,000 through Allied Irish Bank, with the City of Fairhope as guarantor. Wilson said the city has paid more than $3.6 million since 2007, averaging about $430,000 a year over the last four years, on a loan for land it does not own. In 2010 the bond was refinanced for $8,935,000 with RBC Bank, with a balloon payment due in March 2020. PNC Bank acquired the loan in 2013.

Wilson said the airport debt makes up 21 percent of the city’s overall debt. She said that over the last term, roughly half of the city’s debt can be attributed to an $8.75 million settlement of the Dyas Triangle lawsuit and a $7.7 million balance on the airport land, in addition to $3.3 million the city spent on airport operating costs over 10 years. She said no development has taken place on the land, which was intended for business development, and that the Airport Authority sold about 20 acres at a price well below the purchase price.

Fall 2016

Wilson said that in September 2016, before taking office, she asked Airport Authority Chairman Joe McEnerney for financial information and met with McEnerney and Burrell, telling them she wanted to be involved in refinancing the loan. She said McEnerney emailed the Airport Authority the next day proposing to refinance the $7,445,629 debt, without including her. On Sept. 21, 2016, McEnerney issued a request for proposals to banks specifying no prepayment penalty, with responses due Oct. 28 and closing on or about Nov. 16, 2016.

Wilson took office Nov. 7, 2016. She said the terms of the bank proposals expired Nov. 16 without an extension being negotiated, and that the City Council had not yet approved the refinancing at that time.

On Nov. 23, 2016, Wilson notified the Airport Authority board that the city was exercising its right under the appropriation agreement to pay $10 to take ownership of the remaining portion of the 265 acres bought in 2007. She proposed refinancing the debt at a fixed interest rate and cutting the $20,000 in the fiscal 2017 budget for Airport Authority operating expenses to zero.

On Dec. 22, the City Council voted unanimously to keep the land in the Airport Authority’s name and committed the city to paying $320,000 a year for seven more years. Wilson said McEnerney agreed in January that the city should stop subsidizing airport operating expenses and that the $320,000 appropriation would be used only for debt service.

January and February 2017

Wilson said a second request for proposals, issued Jan. 6, 2017, included language allowing banks to include a prepayment penalty, unlike the first. She said that at a Jan. 17 Airport Authority meeting she could not attend, McEnerney and some board members blamed her for delays that led to higher interest rates. Wilson disputed that account and said bond attorney Rod Kanter withdrew because he was not comfortable making a recommendation without her involvement.

Wilson said that at a Feb. 8 meeting with city attorneys and McEnerney, McEnerney agreed that banks would be asked to remove prepayment penalties. At a Feb. 9 special meeting, the Airport Authority voted unanimously to hire a new bond attorney. Board member Vince Booth said at that meeting that Wilson was responsible for costing the city $160,000 by delaying the loan, which Wilson disputed.

Wilson said she was not allowed into an executive session that followed. City Attorney Tut Wynn later advised that the mayor, as an ex officio member, may attend all meetings, including executive sessions. McEnerney also recommended hiring an attorney for a potential lawsuit from resident Paul Ripp concerning ethics complaints.

Bryant Bank selected

At a Feb. 21 meeting, the Airport Authority approved Bryant Bank to refinance the $7,445,629 debt, with closing costs of about $60,000 plus a prepayment penalty. Wilson said McEnerney told the board there were no prepayment penalties, but that a comparison spreadsheet he sent her before the meeting showed prepayment penalties in all of the proposals. The authority’s attorney, Josh Myrick, said after the vote that work remained, including meetings with bond counsel for both the authority and the city.

Wilson also noted that the city may issue up to $10 million in tax-exempt bonds each year and said the airport refinancing could leave the city with about $2.4 million available for its own infrastructure and capital needs.

A copy of an ethics complaint related to the Airport Authority has been filed with authorities. The complaint’s claims have not been ruled on, and the Airport Authority has not publicly responded to the questions it raises.