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October 10, 1995

Harbinger Update

School System Did Not Get Endorsement

Charles Wilcox, the Mobile County school system's business manager, confirmed for The Harbinger last week that the school system does not have the endorsement from local Industrial Development Board (IDB) officials to directly bill companies that are financed by their bonds and have promised to pay school taxes.

Charles Ratcliffe, former associate superintendent for business of the Mobile County Public School System (MCPSS), told The Harbinger in September, 1995 that he is not sure if the school system received the endorsement from local IDB officials, with whom Ratcliffe was negotiating when he retired in November, 1994.

Prior to 1990, industries financed by IDB bonds were exempted from paying property taxes to the state, county, city, and the public school system. In 1990, local IDBs began formally requiring industries financed by their bonds to pay a "sum-in-lieu" of property tax to the school system; state, city and county property taxes are still exempt.

In September, 1994, Ratcliffe and Robert Campbell, attorney for the Mobile County School Board, met with City of Mobile IDB legal counsel Mack Binion to discuss obtaining this endorsement from the Ciity of Mobile IDB. Before the meeting, Campbell was confident the endorsement would be forthcoming. He told The Harbinger then: "We will also get assignment from IDB to collect these payments, with the authority to directly file lawsuits against companies with IDB financing but have not paid up -- like a collection agency. With the assignment, I think they will make payments to the school system instead of facing a lawsuit." According to Campbell, the school system, because it was a "third party," has no legal standing under the terms of IDB contracts.

Charles Wilcox told The Harbinger last week that even though the school system has not received the endorsement, he has nonetheless sent letters to six to eight companies to collect the promised payments. Wilcox added that he attended some of the meetings with Ratcliffe.

Wilcox said one company has replied to say it is ready to make the payment, and another agreed but disputed the amount. Concerning the dispute on the amount of sum-in-lieu payment, Wilcox said he has asked the Revenue Director Freda Roberts to settle the dispute. "It just takes time to do the follow-up," Wilcox said, and he is "making the follow-up."

Wilcox also said he is interested in the number of companies with deliquent payments published in The Harbinger (see "A New School Year But The Same Foot Dragging," Vol. XIV, #1), since the number is greater than the number of letters he sent out recently to collect the payments. Wilcox said the difference is probably due to the vague language used in the IDB contracts. Unlike most business contracts where the amount, date and method of payment were expelled out, these IDB contracts only say the company "agreed to make a service payment equal to the local school ad valorem taxes."

Based on probate court records, minutes of the City of Mobile IDB and information presented by Ratcliffe to the school board in March, 1993, The Harbinger identified 15 companies which owe sum-in-lieu payments to the school system. Ratcliffe told The Harbinger when he was pursuing these payments that they amount to $700,000 a year. In his 20-month effort to collect these payments, Ratcliffe said seven additional companies have sent in payments when only two had done so in the beginning. -- Edmund Tsang

-- October 10, 1995

The Harbinger is a biweekly newspaper published through the effort of The Harbinger, which consists of area faculty, staff and students, and members of the Mobile community. The Harbinger is a non-profit education foundation. The views expressed here are the responsibility of The Harbinger. Contributions to The Harbinger are tax exempt to the full extent of the law and create no liability for the contributor.