Complications in Hillsboro/Paint Creek talks


District suspends offer to join after real estate snag

By David Wright - dwright@timesgazette.com



The Paint Creek Joint EMS/Fire District Board of Trustees recently suspended its offer for the City of Hillsboro to join it as a member after the city administration backed off from a real estate deal for the city’s fire station on North East Street currently occupied by Paint Creek.

The turn of events comes as Hillsboro City Council prepares to hear a final reading on a resolution to join the district at its November meeting next week, following more than a year of debate over whether or not the city should join the district as a member or continue utilizing its services on a contract basis.

As previously reported, the city pays Paint Creek roughly $570,000 per year out of its General Fund.

If Hillsboro joins the district, a property tax will automatically be put in place. It has been said that the levy would be 5.5 mills, but Council President Lee Koogler said last month that it would likely be closer to 5.1 mills.

In a letter to the city from the Paint Creek board dated Nov. 1, the board said the trustees suspended a standing offer for the city to join as a member because of “instability” in negotiations for the North East Street fire station, and Paint Creek board President Dan Mathews told The Times-Gazette on Tuesday that the offer will be withheld until the city and Paint Creek strike a deal for the building.

In a written statement, Hillsboro Mayor Drew Hastings said the letter represents a “very one-sided proposal,” and that the district is trying to boost its revenue by draining the City of Hillsboro in contract dollars.

“I will not allow the city to be held hostage for the financial advantage of the fire district,” Hastings said.

When asked to describe the “instability” in negotiations, Mathews’ first example was Hastings.

“He’ll give you one figure and you go back the next meeting and the figures are all changed around,” Mathews said. “Every time we talk with him, everything’s changed. That’s not a good way to do business.”

Hastings told The Times-Gazette that Mathews was “mistaken.”

“There has been some miscommunication on negotiation numbers between council members and the administration, I know at least once, but there’s never been numbers being changed,” he said. “The only one who’s ever changed numbers is Paint Creek.”

In Hastings’ statement, the mayor said while “there has never been a question” that Paint Creek “is an excellent fire and EMS organization and provides great service… We do… have serious concerns regarding the board’s decision making in this matter.”

As previously reported, Paint Creek currently occupies the station on North East Street, and has been negotiating with the city for more than a year to purchase the building.

Hillsboro Safety and Service Director Mel McKenzie said the city had a deal written with Paint Creek to have the district make rent-type payments for the fire station that would count toward the purchase price. Then, when bonds on the building are paid off in 2020, the district would make a balloon payment to cover the rest of its bill.

Recent hangups with the deed brought last week’s turn of events to a head, several officials said.

McKenzie said a title search of the property revealed a reversionary clause that states the property must be handed over to heirs of a family that donated the property to the city in the 1800s if it is not used for purposes related to the local school.

According to McKenzie, the reversionary clause only affects certain lots on the property, and not the fire station lot. But, he said, due to the way the property documents were filed with the county auditor’s office, the whole property was flagged in the title search as having a reversionary clause.

McKenzie said he had the property resurveyed to separate the parcel containing the fire station from the parcels affected by the reversionary clause, and a new deed will be created for just the fire station property.

“It takes care of any issues with the real estate deal with the fire station,” McKenzie said, adding that the city is waiting for legal advice on what to do with the lots affected by the reversionary clause.

Mathews said the Paint Creek board asked the city to provide a written document stating the deed was clear, but soon after, the property was taken off the market.

McKenzie said it was taken off the market “under direction from council” so the city could retain what McKenzie called “bargaining power” against the district.

“(Council does not) want to give up the right to the new fire station because that really is our only bargaining chip with the fire district,” McKenzie said. “If they take control of the fire station, it’s a name-your-price-type game from them.”

But Mathews said he suspects the real estate was taken off the market because issues remain with the deed.

“We have to be shown proof (that there are no issues) before we can go ahead and finalize the deal. That’s what we told them before the last meeting,” he said. “And that’s when they took the real estate off the market, which makes us believe they do not have a deed.”

McKenzie said the district suspending its offer to join amounts to “strong arming” in negotiations. The safety and service director said the real estate negotiations and the city joining the district, while admittedly separate issues, are closely related.

“They are very much intertwined,” he said, “maybe not from their perspective, because they don’t care, but from our’s, it’s very much our bargaining chip with them.”

The Paint Creek letter includes a proposal for both the sale of the fire station and a new contract for the city.

Under the proposal, the final purchase price for the station would be $720,000, and the district would pay $5,000 per month in rent that would be counted toward the purchase price “until such time as a marketable title could be conveyed.”

The city would take control of the former fire house on Governor Trimble Place in uptown Hillsboro, owned by Paint Creek, until the deed for the new station is conveyed. Paint Creek would maintain insurance on the Governor Trimble station and the city would maintain insurance on the new station, and both entities would be responsible for maintenance and upkeep of the others’ property.

The proposal goes on to say that after the real estate deals are closed, Paint Creek would agree to a three-year contract at a price of $650,000 per year. Under the proposal, all fire/rescue vehicles and equipment owned by the City of Hillsboro would be transferred to Paint Creek.

Hastings said the contract price is “a very large increase for no apparent reason,” and that it is well above the millage equivalent the city has been paying all along.

Hastings said the issue could be solved “easily” before the council meeting next week.

“If Paint Creek Fire District allows our city council the option to vote to join the district, the plan to close on the sale of the firehouse can immediately take place,” he said.

Hastings said he still hopes the city can join the district.

“Frankly, I’ve been hoping that we would join the district, which I think saves everybody money,” he said. “It’s a more cost-effective way to do it.”

When it comes to council’s decision, Koogler said he’s not sure at this point how he’ll proceed.

“I’ve debated going ahead and holding the vote, I’ve debated about suspending it,” he said. “I don’t know right now… I just want to do right by the City of Hillsboro, that’s all.”

Council will meet at 7 p.m. Tuesday, Nov. 13 in the municipal courtroom at the Highland County Justice Center.

Reach David Wright at 937-402-2570.

https://www.timesgazette.com/wp-content/uploads/sites/33/2018/11/web1_drew-hastings-mug.jpg
District suspends offer to join after real estate snag

By David Wright

dwright@timesgazette.com