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November 23, 1993

Missing In Action

by Edmund Tsang

Eight months after school board commissioner "Sugar" Warren exclaimed "This makes the front page," the Mobile County Public School System is no closer to collecting the sum-in-lieu-of-tax payments promised it by industries financed by industrial development boards (IDB). Prior to the March 15, 1993 meeting, the issue of the missing IDB funds had never been discussed in an open school board meeting, although former school superintendent Dr. Doug Magann told The Harbinger in June 1992 that less than one-half percent of the money due the school system had arrived at the school treasury. ["The Check's In The Mail," The Harbinger, Vol. X, No. 18, June 23, 1992.]

All property financed with money from industrial revenue bonds before January 1993 is exempt under Alabama law from ad valorem tax until the bonds are retired. But three years ago the City of Mobile and the Mobile County IDBs began requiring companies financed by them to pay "sums-in-lieu" of school taxes.

The School Board decided at the March meeting to send a letter to the City of Mobile IDB asking for action on the sum-in-lieu payments.

Talk Is Cheap

Charles Ratcliffe, business manager for the school system, told The Harbinger two weeks ago that the last time he discussed the issue with Walter Hovell, president of the City of Mobile IDB, was "at least six months ago." Although he has also sent letters of inquiry, Ratcliffe said "nothing new" had happened because the letters generated "no response." He added that the school system has no legal standing to claim those funds. "It has to be enforced by the IDB," Ratcliffe said.

At the August 12 meeting of the City of Mobile IDB, Hovell said, in response to a question raised by a board director, that he was in the process of "tying up the loose end" concerning sum-in-lieu payments and expects to make a report "in 30 to 45 days." Hovell also said that industries with sum-in-lieu language in their contracts will send payment to the school system directly.

The directors of the City of Mobile IDB had talked about requiring companies financed by its bonds to send payments directly to the school system as early as November, 1991, yet payments have been delinquent. The minutes of the November 1, 1991 meeting stated: "After a discussion on the collection and disbursement of service payments made in lieu of taxes, motion was made by Mr. [Frank] McRight, seconded by Mr. [Frank] Schmidt, that pending advise [sic] from the Mobile County Revenue Commissioner that Board Counsel look into where the service payments are going and the feasibility of future payments being made directly to the Mobile County School System. Motion passed unanimously." Present at the November, 1991 meeting were Hovell and N.Q. Adams, school board commissioner and chairman of the school board's finance committee since 1989.

Through his secretary, Hovell declined The Harbinger's request for an interview on sum-in-lieu until the matter is resolved. On November 18, his secretary said they are "still working on it" and that Hovell had met with Mack Binion, legal counsel for the City of Mobile IDB "last Thursday."

Sum-In-Lieu Update

At the March, 1993 school board meeting, Ratcliffe presented the school commissioners a list containing 21 sum-in-lieu payments, which together worth about $280,000 to Mobile County schools, that have not arrived at the school treasury. Ratcliffe said only two companies, Atlantic Marine and Georgia Crown Distributor, have since sent tax payments to the school system.

Based on the minutes of the City of Mobile IDB from November 1988 to November, 1992, The Harbinger found another two contracts with sum-in-lieu language in addition to those on Ratcliffe's list that are worth, according to a recent report of the State Department of Revenue, $1.19 million to the Mobile County schools. The City of Mobile IDB minutes also showed another three contracts with sum-in-lieu language, but these three companies are not listed in the State Department of Revenue report. The value of these three bond issues is about $88 million, which means approximately $300,000 sum-in-lieu payments is due the schools in Mobile County.

What Can A School Commissioner Do?

"I haven't got back to revisit that issue yet," said Dr. Joseph Mitchell, school board commissioner. "I've heard that there's good faith effort to pay." Mitchell said there is a need to set up "some kind of accountability."

"One thing we can do is to go to the legislature and ask them what the law means," said Mitchell. "If the intent of the legislation is that sum-in-lieu payments are binding, we need to know if it's unlawful if the money is not coming in. And if the law is circumvented, some enforcement of the law needs to be there."

Hazel Fournier, vice president of the school board, said on November 19 that she had just spoken to Hovell of the City of Mobile IDB that morning. Fournier said Hovell told her that "letters have gone out to companies two weeks ago," and that Hovell is "working with counsel trying to move on it." She thanks The Harbinger for inquirying about the sum-in-lieu matter.

Mitchell understands the limit of what he can do as a school commissioner, in view of recent disputes in the school board in which the majority consisting of the three white board members has lined up against the two minority members -- Fournier and Mitchell -- in a number of important decisions concerning the schools, including the termination of former school superintendent Dr. Doug Magann and the hiring of current superintendent Paul Sousa. "If you don't have any power," said Mitchell, "sometimes you have to harangue and harangue publicly."

-- November 23, 1993

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