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March 30, 1999

Where Is The Missing School Tax Money?

by Edmund Tsang

Dees Paper, which was identified by The Harbinger since 1993 as one of ten companies that promised but did not pay sum-in-lieu of property tax to the school system, made a payment of $2,827.63 on January 5, 1999. That leaves nine companies -- Greater Southern Wood Preserving, Belcher Company of Alabama, Robert Meadow Warehouse & Distributing, J. Williams Blevins, O'Neal Steel, Tonsmiere Construction, Pfizer Specialty Minerals, Gulf Lumber, and Big Bee Chemical -- that have yet to make a single promised payment to the public schools since Charles Ratcliff, the school system's former business manger, informed the school commissioners in a board meeting in March, 1993 that only 3 out of 17 such promised payments had actually reached the school system.

According to information provided by Charles Wilcox, current business manager of the school system, a total of $331,569.83 in sum-in-lieu payments were received from Kimberly- Clark, G&B Hillcrest, and Atlantic Marine in the 1998 calendar year. In January 1999, $56,887.72 in sum-in-lieu of property tax were paid by G. & B. Hillcrest, Dees Paper, and Atlantic Marine to the public schools. In addition, the Mobile Housing Board has paid $6,306.64 to the school system between October 1998 to February 1999.

[Prior to 1993, businesses financed by industrial development bonds were exempted from paying all property taxes, including property tax to the school system. But beginning in 1991, industrial development boards (IDB) in Mobile began requiring businesses financed by their bonds to make payments "in-lieu" of property tax to the school system. However, research carried out by The Harbinger shows that lease agreements signed as early as 1981 between the City of Mobile IDB and companies contain language alluding to payments in-lieu of school taxes.]

Efforts made to contact Clarence Ball, president of the City of Mobile IDB, to inquire what steps if any were taken in 1998-99 to collect the promised payments were unsuccessful by press time. The previous two presidents of the City of Mobile IDB, Walter Hovell, then CEO of Mobile Gas Service Corp and Mobilian of the Year in 1993, and Bruce Jones, an executive of Alabama Power Company, told The Harbinger in interviews that they would work to collect the promised school tax for the public schools. During Jonesí tenure as IDB president, two companies whose IDB contracts included sum-in-lieu of school property tax, sent their first payment to the school system.

On March 16, Jim Apple of the Economic Development division of the Mobile Area Chamber of Commerce said he would raise The Harbinger's inquiry with Mr. Ball when Apple returned to Mobile on March 23. However, several phone calls made to Apple's office since March 23 were not returned by press time. [In March 1998, several attempts over a three- week period to reach Mr. Ball for comments on the delinquent sum-in-lieu payments were also unsuccessful.]

John H. Holland, a school board member, told The Harbinger in a telephone interview last week that "I need to get an update from the central administration," when he was asked what he had done to collect the missing sum-in-lieu of property tax payments. In 1995, Holland, then school board president, told his fellow commissioners that "I can assure you that we are going to continue working on this issue [collecting delinquent sum-in-lieu of school property tax] until it gets resolved." Holland also told The Harbinger then: "I won't forget."

When asked to comment why everyone involved in issuing the IDB bonds were paid except the public schools, Holland said "it's a pitiful situation." Even though the IDB contracts said sum-in-lieu of property tax would be paid to the school system, Holland added that "nothing surprises" him. "Just look at the current effort to put a referendum before the public to raise property tax for public education," Holland said, referring to the current debacle in the Alabama Senate which held up legislation to put the referendum for a vote by Mobile County voters.

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