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Hockey Prep School in Payson? Or Town funding boondoggle?
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January 11, 2018, 08:53:22 AM
#60
Just a quick update. 

It has been an interesting week. Will circle back on a few items.   

So for now, here you go.  We had a spot scheduled on KMOG.  KMOG, and the forum host, Randy,  have decided to pull the scheduled segment. (I was not part of the conversation) Essentially, they believe it to be “conjecture” and not worthy of air time is my understanding?  Somewhat disheartening.

I was out of town, but from what I understand on KRIM yesterday, the better part of an hour was spent discrediting any concerns that I have raised, even going so far as to say “the Mayor is the only source of information.”  Clearly any opposition will be discredited not on merits, but by any means required.   That is a bit more disheartening. 

I suspect this deal was done long before it was announced?  Signed sealed and delivered.  I also suspect that the town will not reply to me in any fashion.  I.e.: records request, email request to town clerk, etc.    I am soon to be the “crazy conspiracy guy.”  Unfortunate as I can document every statement I make, and connect virtually every dot, but no answers are given to very legitimate questions. 

Near as I can tell, a 30 million revenue bond with a combination feature for a city financed “back stop.”  Our money, but not our input.   No vote required.  Verifiable “revenue” also not required. 




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January 13, 2018, 08:45:14 AM
#61
Busy week. Two presentations by Mr. Chambless.  Working on a "jargon translator."   My take away?  They are willing to say whatever it takes to gain support.  Mr. Chambless indicated the prep school is now K-12, because everybody wants to send a kindergartner to "prep school." 

As an example, Mr. Chambless uses the phrase "Private bond placement" a lot.  A quick thought on “Private Capital” or "Private Bond Placement."  The issue is not the “placement.”  The issue is the guarantor.  All bonds are “placed privately” via underwriters, syndicates, etc.   The issue to zero in on is who is the guarantor?  I.e. – who is on the hook?  Not just first debtor, but second and third?  These guys are great with semantics.  Me, not so much.  ;)

It was great to see the Roundup give some voice to the dissent.  A good review of the Chamber Lunch was reported.

A snip from the Roundup




Subsequent to that article, KMOG has been in contact with us.  Currently, it appears we are "conjecture."  KMOG is requesting we wait for "facts."  Their station, their rules.  They have requested additional information via email.  Here is a snip. 




So, that got me to thinking. This is a really long read.  Time to circle back and list all the potential issues in one place. Here is our  email to KMOG, and a quick reference / recap of where we are at:

* * * *   

Hi KMOG,

There are a couple of elements that are not quite right. All of this you can find on our site, but I warn you, it is a long read.  So, I will give you some highlights.   All with appropriate reference / foot notes.  I encourage people to read it all, and make their own decision.  I would encourage the same for you. 

The full thread is here: http://www.260chat.com/town-government/hockey-in-payson/

THE START
The plan is 600 elite prep hockey students and new rec center at no cost to the town. 

THE PLAYERS
CCP is owned by Lee Polozaja, various dealings including the defunct ammo plant.  Formed in July 2017.
http://www.260chat.com/town-government/hockey-in-payson/
http://www.260chat.com/town-government/hockey-in-payson/msg2507/#msg2507

Varxity was crowd funded in 2014, has no assets I can find and no history of actually being more than a concept.  They also have no current legal standing in Arizona that I can find.  The sole employee is a school principal in Edmonton.

SOME DECEIT?
After the deal was announced, CCP invoiced the city for work from June 21st to Sept 21st.  Neat trick for a company that was not in business until July.  I have requested email support of that invoice, to date none has been received.  Also requested response from CFO of town, to date none.
http://www.260chat.com/town-government/hockey-in-payson/msg2510/#msg2510

CCP has repeatedly indicated a 10 month process with Gilbert?  Gilbert is unaware of that as is AZ Ice
http://www.260chat.com/town-government/hockey-in-payson/msg2332/#msg2332

MONEY
This deal, as most, revolves around financing.  So, it is important to have a basic understanding of a revenue bond.  That is a bond guaranteed via future revenue of a district.  Think Pine Strawberry water and their recent $8m.  Cool, straight up bond.  A general obligation bond requires a vote.  A revenue bond does not.  There is a hi-bred that requires no town vote.  Only approval by the council like a revenue bond.  CCP is on record as saying no vote. 

A Combination Bond is a municipal bond with the coupon and principal guaranteed both by the general revenue of the municipality issuing the bond and by the revenue of the project the bond finances. If the revenue from the project is less than expected and is not enough to make payments, the municipality will make them instead. This appears to be a “General Bond” work around.  There is no apparent requirement for a General Election vote for issuance of a “Revenue Bond” with a backstop of general revenue. 

The verbiage has transformed in the process, today's Roundup calls it a “Revenue Bond.” 

http://www.260chat.com/town-government/hockey-in-payson/msg2382/#msg2382
http://www.260chat.com/town-government/hockey-in-payson/msg2383/#msg2383

THE CONTRACT WITH VARXITY / CCP / PAYSON
In a nut shell, the contract ignores the Town’s procurement policy.  There is nothing that allows a $250k contract on a “tri party” basis.  There are lots of other issues with it.  Like what?  Dubious jurisdiction, significant concessions to Varxity on a no bid basis to include a concessionaire agreement, etc. 
http://www.260chat.com/town-government/hockey-in-payson/msg2652/#msg2652

Pay close attention to Exhibit “E” to see what the Town gave up
http://www.260chat.com/town-government/hockey-in-payson/msg2386/#msg2386

IS VARXITY VIABLE?
In a word – NO.  Not at the level they discuss.  There are various “Elite Prep Hockey Schools” in Canada.  Most are under 100 students, 35 to 50k in tuition.  None, not a one I can find, at 600 students.  Most have a ten year ramp up to the 80 student level.  That is important because it changes the stated revenue of $30m to $3.5m  (600 *50k vs 80*35k)

http://www.260chat.com/town-government/hockey-in-payson/msg2580/#msg2580
http://www.260chat.com/town-government/hockey-in-payson/msg2626/#msg2626
http://www.260chat.com/town-government/hockey-in-payson/msg2790/#msg2790

THE COST
The closest like scale project I can find, excluding pool, was $27m C.  That works out to $21.5m US, pool, etc., we are looking at $30m.
http://www.260chat.com/town-government/hockey-in-payson/msg2790/#msg2790

THE 26 ACRES
Currently in foreclosure, not escrow.  Does not preclude deal with Varxity, but cannot find any document that shows that. 
http://www.260chat.com/town-government/hockey-in-payson/msg2371/#msg2371
http://www.260chat.com/town-government/hockey-in-payson/msg2768/#msg2768

CURRENTLY
I currently have three open requests to the town for documents, and one open email.  I don’t suspect they will be forthcoming.  I may be surprised.  But yes, I am a pain.  Sometimes it is just best to ignore that pain?
http://www.260chat.com/town-government/hockey-in-payson/msg2563/#msg2563

AGAIN,
All of this can be found on the site, the whole thread is a long read, well documented, etc.  No sign in is required.  All out in the open.   After you read it all, you decide if there is more to this? As with anybody, draw your own conclusions. 

Thank you, 

* * * * 

We will periodically update the list?  Avoid the long read, just get to the highlights? 

Thanks for reading.

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January 13, 2018, 08:48:27 AM
#62
The above references an "open email" to the city.  Here it is, just for review - Transparency and all.   ;)


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January 15, 2018, 12:40:17 PM
#63
Thank you providing the facts i.e. the latest idiotic scheme. I and friends will be atth
meeting the 17th.

Dick

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January 16, 2018, 08:28:31 AM
#64
Thank you providing the facts i.e. the latest idiotic scheme. I and friends will be atth
meeting the 17th.

Dick

Hope to see you at  the meeting of the 17th. 

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January 16, 2018, 08:32:14 AM
#65
Quick shout out to community member Ms. Gig Still.  Thank you for publicly asking questions and being involved. 

Dont Chnage Rumsey Park



I agree, our money, our vote?  Yes, that sounds like a very good plan.





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January 16, 2018, 08:44:40 AM
#66
Rabble rouser Paul is back at it.....

Be Smart With Our Money

He had orginally posted the same letter here




Pay close attention to the editor's response above. 

Way back on December 16th the Roundup removed my comments regarding the deal.  This one appears to not tell the full tale?

So, again, comments posted.....




AND POOF



THEY ARE GONE......

Sure does seem as though anything other than the official has a hard time getting out there? Naw, just me being silly....  ;)



Edit and update 11:21am 01/16/18:


I STAND CORRECTED!  I AM THE FIRST TO NOTE WHEN I HAVE IT WRONG. 

So, look the Roundup did allow the comment.   Thank you Roundup.  It appears I may have jumped the gun.  I apologize. 




Thank you




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January 16, 2018, 10:44:56 AM
#67
Well, keeping up with transparency and all, another email to the Town. 

Sure hope I get a response......





Go go "Transparency!"
   ;) 



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January 16, 2018, 04:23:03 PM
#68
Thank you to community member Ms. Lucy Briggs for taking the time to express her concerns to the Roundup in her well thought out letter to the editor

Some of the highlights are below.  Well worth the read.

Quote
• The lovely trees that make Rumsey Park such an enjoyable cool place to enjoy will be gone and replaced with buildings and paved parking.

• The ramadas where groups and families enjoy gathering will be gone.

• The free children’s playground will be gone.

• The free dog park will be gone.

• The skate park, one of the only places in Payson where teens can go at no cost, will be gone. (The batting cages and miniature golf facilities did not get enough support to survive.)

• The shady walking paths where many people walk to improve their health and the health of their dogs will be gone.

• The pickleball courts, tennis courts, basketball area and horseshoe pits will be gone.

• The use of the soccer field and the baseball fields by the Payson schools will be gone.

Now, I confess, that has not been a focus of my research.  Clearly it is an issue?  Worthy of discussion?  I think so.  But, that sort of discussion seems to be lacking in this plan? 

When exactly do the Town residents get to be part of the process with all the voices heard? 

Time will tell....


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January 16, 2018, 04:34:23 PM
#69
Why is this issue important? Why is voting important?  We can likely all answer this similarly.  We can each do so without reading The Federalist Papers, or a single book by Alexis de Tocqueville.  Having a say, an opinion, having our thoughts taken into account for how our community, our state, our country operates is an integral part of this country. 

Those in the position of leadership may not always like that we have thoughts or opinions that do not agree with theirs, however when they accepted to serve in their position they agreed to listen to what we the people have to say.  Voting also keeps our leadership honest, well as honest as possible.  Politics is dirty business.  I have no doubt that it is not easy at any level.  When those that you serve are questioning your actions you should respond.  Not as a politician but as the trusted leader of those that elected you into office. Questions and concerns should be answered to the public.  It should be done so with honest answers that can be backed up, proven, so as to keep the trust of those you serve. 

It is disheartening that most people do not trust government/politicians any longer.  Not surprising mind you, just disheartening.  Saddest of all is that could easily be changed, simply by addressing the concerns of the people.

At the local level, the issue of voting is twofold.  First we elect people to serve on the Town Council, as Mayor, etc.  Second, we act as an appropriation committee by authorizing expenditures that come from general revenues.  This is not some abstract thought or idea.  This is the essence of local government.  The citizens should always control the check book. 

Voting at the local level is much more than just “who gets elected.”  It is “what gets spent.”  Are you willing to let that choice be made by others? 

Let’s go back to de Tocqueville.  He stated:

The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.

Your money requires your vote.

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January 17, 2018, 07:16:31 AM
#70
If you spend enough time reading contracts you quickly learn that a good one refrains from extraneous stuff. Real Estate, Insurance, Finance, the goal is get in, get out and get the job done.  Most people have a glazed look when reviewing them.  Once you get into it, it is sort of fun.  You can learn to appreciate the placement of a comma, avoid the use of the virgule, and realize that if your English teacher complains about your run on sentences, you may be well suited to work with contracts.  In general, not too much verbiage, not too much fluff, but enough to get the job done.  Now, the flip side of that is that you can assume two things.  If it is not in the contract, it is not important. IF IT IS IN THE CONTRACT IT IS IMPORTANT. You can repeat that.  IF IT IS IN THE CONTRACT IT IS IMPORTANT.

When I first reviewed the CCP / Varxity / Payson contract a name jumped out at me.  It seemed out of place, somewhat random.  Like a lot of stuff I stuck it in the back of my mind to come back to later.  (Like my Zumba! and exercise in general  ;) )  That name?  Larry Allen.  That name is only there once.  Really random.  But lets go back to  IF IT IS IN THE CONTRACT IT IS IMPORTANT.  Now, also somewhat important is the context in a contract.  That is you tend to put like ideas, players, concepts in the same area.  Apples with apples.  Oranges with oranges. 

Where is that name found?  Right here, only once. 





Mr. Allen and Mr. Ploszaj, you have my full attention. 



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January 17, 2018, 07:51:15 AM
#71
Having a unique name is both a blessing and a curse. I know this from first hand experience.  A name like "Larry Allen" is pretty common.  Right up there with John Smith and Jose Rodriguez.  Honestly, if that is all I have, I have nothing.  But back to apples and apples, we do have Mr. Ploszaj.  Lets try to narrow down Larry Allen via a nexus between Allen and Ploszaj.  That requires we revisit Mr. Ploszaj. 

So, a little bit of zoom info, and here we go.  (1)
 


So, is that the right guy?  Hmm, looks like it.   President of DCK Capital Solutions and presenting at a "Public Private Partnership" conference? (2)  Yes, right guy.  Good thing the Town secured his services, he looks like an expert on a PPP?



DCK?  Lets see what they do?   

Looks like an array of stuff, to include Bond Financing.  (3)



Something tells me we are going to come back to DCK?  Right now the project is "Larry Allen."  FOCUS JEFF!  FOCUS

* * *

(1)  https://www.zoominfo.com/p/Lee-Ploszaj/553268015
(2) https://thep3conference.com/speakers/lee-ploszaj/
(3)  http://www.dckww.com/building-solutions/capital-solutions/#capital-solution-project

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January 17, 2018, 08:09:00 AM
#72
Maybe DCK can give us some insight on the correct Mr. Allen?  Well, when DCK was formed, there was a great article in the Pittsburgh Business Times. (1)   Looks like the kind of firm a Town like Payson could use.  Here you go:



But not closer to Larry Allen.   :( 


Wait, scroll down! 





Yes, here is Mr. Allen. 




Outstanding!  We found Mr. Allen.  Looks like Mr. Ploszaj and Mr. Allen have worked together at Winners?  I think we can see what sort of track record they had there?  At least look some more for Mr. Allen?  But what is winners?  Hmmmm.....  Zoom info above shows Mr. Ploszaj as president of Winners and also with Paragon Gaming LLC? 



Gaming?  Well, that explains how I ran across this......  A spectacular property I must say. (2)





* * * * *

(1) https://www.bizjournals.com/pittsburgh/blog/the-next-move/2013/09/dck-launches-a-financing-arm.html
(2) http://www.pressofatlanticcity.com/classified_box/real_estate/executive-decision/article_5ead9e6f-2525-5024-8aae-b70dd9996599.html

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January 17, 2018, 08:44:46 AM
#73
Enough dreaming of the good life.  Back to Winners and see what Mr. Allen and Mr. Ploszaj were up to there?

First up Winners Development Corp.  Not much in the way of a website.  (1)  But, large scale projects are done right. 



So, any Payson connection?  Lets see what is behind the Arizona Corporation Commission curtain?  These names may look familiar to Payson residents? 



OK, we know who, but what sort of success have Mr. Allen and Mr. Ploszaj had at Winners? 

Well, I hate to be the negative nelly in the room, the bearer of bad news, the wet blanket, but something tells me this wild ride has just gotten started?  Success at Winners?  Depends on how you define "success." 

I bring to you:


Mortensen v. Gust Rosenfeld, 1 CA-CV 14-0262 (Ariz. Ct. App. 2015)


So how does that work into this deal? Well, let me explain.  Actually, I will let the court docket explain..... (2)

Quote
FACTS AND PROCEDURAL HISTORY

¶2            For several years, the City has considered pursuing a
commercial development project known as the Avondale City Center
(“City Center”). Among other things, the project would require the City
to obtain financing and acquire several parcels of real property.

¶3           The City began discussing City Center with developer
Winners Development (“Winners”). In July 2011, the City and Winners
signed a Memorandum of Understanding (“MOU”). The City and
Winners later signed a Letter of Intent and Understanding (“LOI”) in
October 2011.

¶4             Winners arranged for a form of financing through National
Standard Finance (“NSF”) and worked with Tiffany Construction
(“Tiffany”) to obtain construction cost estimates. Winners also obtained
contracts to purchase necessary parcels of real property from the
Mortensen Trusts, the Allison Trust, Byrd, and Avondale Boulevard
(collectively, “the Landowners”).

1      Our recitation of the facts is based on the first and second amended
complaints. See Logan v. Forever Living Products Int’l, Inc.,

203 Ariz. 191

,
192, ¶ 2 (2002) (when reviewing dismissal under Rule 12(b)(6), we assume
truth of well-pleaded facts).
2      McGuire’s spouse is also named as a defendant. References to
“McGuire” in the singular are to Andrew McGuire. Gust Rosenfeld and
the McGuires are referred to collectively as “the Lawyer Defendants.”



                                     3
               MORTENSEN v. GUST ROSENFELD, et al.
                      Decision of the Court

City’s Economic Development Director advised Winners that the City had
obtained appraisals of the properties and that the appraised values “were
below what the City was to pay for them.” According to Appellants,
McGuire provided these appraisals to the City Council, which thereafter
rejected the purchases of the Landowners’ properties. Appellants allege
that the City-obtained appraisals were “knowingly based on false
premises and did not remotely state the fair value of the assembled
parcels.”

¶7           On January 23, 2012, Winners filed a notice of claim against
the City pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-821.01,
demanding $62,793,824.
On February 1, 2012, the City Manager sent
correspondence to Winners stating that the City had determined the City
Center project was “not feasible as contemplated in either the MOU or the
LOI” and that the City wished “to terminate the MOU and the LOI.”

¶8          Winners filed the original complaint in this matter in May
2012. An amended complaint was subsequently filed that added the
remaining plaintiffs and several causes of action (“amended complaint”).
With leave of court, Appellants later filed a first amended complaint
(“FAC”).


Yes, you read that right.  A development deal with the City of Avondale, same players, different corporate name, had this as a step along the way. 

On January 23, 2012, Winners filed a notice of claim against the City pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-821.01, demanding $62,793,824.



Curious this was all vetted by Town staff, Town Management, and the Council before we got into this deal?  We went into this with open eyes and a clear understanding of the track record for the players?  Right? 


Wait, I asked that question back in September and got crickets......


Buckle up my fair Town of Payson, this wild ride has just begun?  I also think we have a whole lot more digging to do?  There goes my weekend.   ;)

* * *

(1) http://www.winnerscompanies.com/
(2) https://www.courtlistener.com/opinion/3149703/mortensen-v-gust-rosenfeld/

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January 17, 2018, 12:09:58 PM
#74
There were a couple of open emails to the Town.  We can consider them closed now.  Mr. Garrett was kind enough to respond.  I will do them in chronological order for ease of reading.  Transparency and all. 


Quote
Dear Mr. Garrett,

It is my understanding that the Town maintains financing for the Rec Center / Rumsey Park is using “private financing.”   All revenue bonds are “privately financed.”  I am not concerned about the “placement.”  I am concerned about the debtor and guarantor of the debt. 

Will you, as the town manager, provide a concise, unequivocal, statement that any bond issued will NOT contain a backstop or combination feature in the indenture agreement that would draw on general funds in the event the private entity is unable to make the payments? 

While I have your attention, can you explain how the town can honor an invoice for work completed 06/21/17 to 09/21/17 in the amount of $25,000.00 when the project was not authorized until 09/21/17 and the invoicing party was not in existence until 07/27/17?  I had requested input from Ms. Barber, but to date I have not received the courtesy of a response. 

Thank you in advance,


Jeffrey S. Aal
Payson, AZ



Quote
Mr. Aal,

From the beginning this was envisioned to be a Public-Private partnership with private financing.  The planning team has never considered using revenue bonds or any other bond that would be backed by the Town.  The final decision on how we proceed will be made by the Town Council but I would not recommend moving forward if there is undue financial risk to the Town.  Any project the Town undertakes has a certain amount of financial risk but this project is to be revenue neutral to the Town.

Concerning the contract, any contract must be negotiated prior to recommending it to the Town Council for approval.  The Scope of Work for this contract was negotiated between June and September.  The items paid for on the 1st invoice were items included in the approved Scope of Services.  The Scope of Work items completed by CCP prior to September 21st were done at their risk.  If the contract was not approved, they would not have been paid for the work they had completed.

LaRon G. Garrett, P.E.
Town Manager
Town of Payson
928-472-5041


Quote

Mr. Garrett,

Thank you for the response. 

Assuming no bond, and assuming a PPP, the most logical would be a DBFOM arrangement.  As a practical matter that will require that Varxity have significant control over a public asset (Rumsey Park)  via lease, typically long term in nature.   That scenario has been implied by Mr. Chambless, however not explicitly stated.    Will you be addressing that at the meeting tonight?

As a long term lease has significant risk, will the full financials of the proposed partner, Varxity, be made public for review?

Again assuming a DBFOM, (Or any variation of the DB, DBOM etc.) the town will be a “revenue stream” for Varxity, and that stream will have a significant value.  Will the PPP partner be subject to the Town Procurement policy of RFP / RFQ?  If so, why was that not done?

Again assuming a DBFOM, and assuming the private partner defaults, will that change the “risk /revenue neutral” equation and if so, how will the DBFOM contract be resolved?  Assumption? Via what mechanism?

Thank you in advance for the clarification. 


Quote

Mr. Aal,

The meeting tonight is to discuss the Rumsey Park Master Plan and to get input from those in attendance on their ideas for the master plan.  This meeting is not to discuss the potential financing of this project. 

The project financing options will be available to the public once they have been determined.  Until then, there is nothing to discuss.

LaRon G. Garrett, P.E.
Town Manager
Town of Payson
928-472-5041

First off, there is some jargon up there.  Lets clear that up.  A DBFOM is a Design-Build-Finance-Operate-Maintain (DBFOM) found in a PPP - Private Public Partnership. 

Second, you will note, tonight has no discussion on finances.  Seems like April Fool's day is coming early this year?

I wonder if they will feed us again?   ;)


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