By John Howell Sr.

A routine loan application to borrow money from the city’s economic development fund triggered discussion during the May 15 meeting of Batesville’s mayor and aldermen that opened a window into two bankruptcies in which the city has vested interest.

Batesville aldermen quickly voted to lend Pride Hyundai $150,000 to fund a building expansion at the auto dealership that is expected to create six new jobs. The loan will be made from the city’s revolving economic development fund. The application and its evaluation is managed for the city by the North Delta Planning and Development District (NDPDD). NDPDD Director James Curcio, who attended the May 15 city meeting, reported on the application and recommended approval.

The interest rate will be three percent annually for the ten-year life of the loan, Curcio said. The loan will be in addition to a 2009 loan, initially for $200,000, that has been paid down to $100,000.

“He pays really well,” City Clerk Laura Herron said.

“Mayor, can we do this today?” asked Alderman Stan Harrison. The mayor’s positive reply brought a motion followed by a 3-0 vote approving the loan. Alderman Eddie Nabors, who is a member of the NDPDD board, recused himself and left the room during the discussion and vote. Alderman Bill Dugger was not present. Aldermen Harrison, Ted Stewart and Teddy Morrow voted for the measure.

The presence of the NDPDD director at the meeting prompted Assistant City Attorney Colmon Mitchell to ask the mayor and aldermen to join with NDPDD to employ a bankruptcy attorney licensed in Tennessee to represent the city and NDPDD in the Art Horizons, LLC bankruptcy.

Art Horizons, LLC is a successor company to Framed Picture Enterprises, Mitchell said. It received a loan from the city’s economic development fund to help fund expansion. The city had sued the company for nonpayment prior to their May 8, 2012, filing of a voluntary petition for bankruptcy.

The petition states that Art Horizons owes the city $346,251.23 and NDPDD $73,173.74.

“We should be treated as fully secured,” Mitchell told the mayor and aldermen, “because our collateral should exceed the value of the amount of the debt.”

“We might as well work together on it,” Curcio said.

“Their collateral is completely different from ours,” Alderman-at-Large Teddy Morrow said.

The Art Horizons’ petition also lists Panola County Tax Collector David Garner as a secured creditor. The company owes $312,532.63 for city and county ad valorem taxes, school taxes and personal property taxes, said Garner, contacted after the city meeting.

LSP Energy

The assistant city attorney also updated the mayor and aldermen on the LSP Energy bankruptcy that has created a shortfall of approximately $4.5 million in city, county and school tax collections.
In addition to submitting the taxes due in a proof of claim, the city has also submitted certain contingent agreements that were established with the facility during negotiations for construction of the natural-gas-fueled electricity generating facility, Mitchell said.

“The value’s unknown on the city’s right to the excess capacity on the natural gas line, to use that gas line; nobody knows how to put a value on that,” Mitchell said.

The natural gas pipeline that was built to supply fuel to the LSP Energy generation facility in the W. M. Harmon Industrial Complex is also connected to the city’s gas pipeline system, the attorney said.

“So we have an access?” Nabors asked.

“We’ve got the right and the equipment is there in place to do what we need to do …,” Mitchell said. “Just like when we had the big explosion down here, if that had just cut us off,” the attorney continued, referring to the Tennessee Gas Pipeline explosion west of Batesville last November, “then we could have started taking steps to access our rights to that.”

Also listed in the city’s claim in bankruptcy court is the city’s right to benefit from the excess capacity of the water line that carries water from Enid Dam to LSP Power, Mitchell said.

“Sooner or later they open up for proposals for bids and start getting some proposals for bids in, and we’ll see what’s going to happen,” Mitchell said, describing the process that will likely lead to a sale of the facility.

The worst case scenario, Mitchell said, would be a buyer who wants to disassemble the facility to ship it to another location.

“They tell me they’re hot in the Third World,” the attorney said. “We’re doing everything we can to protect the city, and the county, and the school, the IDA (Industrial Development Authority), Panola Partnership,” he added, naming the local parties with claims in the LSP Power bankruptcy case.