Prospere: Hospital bond issuance valid period

By Chuck Bailey
The Choctaw Plaindealer

As she stated at the Choctaw County Supervisors meeting February 2, 2016, board attorney Kasey Young said, “The bond is certified by the Chancery Court period. I as an officer of the court follow a court order period and that is where I stand on that.”

Still the Choctaw County Board of Supervisors requested an audience with Watkins and Eager bond attorney Peyton Prospere at their regularly scheduled meeting February 16, 2016 in the boardroom of the Choctaw County Courthouse.

Actually, they requested any and everyone from Jackson involved in writing the $17.3 million bond issue from 2013 to come before the board.

However, all that made the trip from Jackson was Prospere and he was enough to convince Board President and District 1 Supervisor, Joey Stephenson that the hospital bond was valid.

Although when, District 5 Supervisor, Eric Chambers was in the middle of questioning Prospere; Stephenson interrupted and said he had heard enough.

As he looked around at the other supervisors and questioned them, “ Don’t y’all feel like this is a valid debt?”

The other four shook their heads in agreement.

Prospere started his Bond 101 presentation in front of a packed house saying he was going to address the email that Chambers had sent to Young on January 27, 2016. That email was printed in the February 10, 2016 Choctaw Plaindealer. However, he got off the email quickly and moved his presentation into citing Mississippi code 31-13-7.

If the chancellor shall enter a decree confirming and validating said bonds and there shall be no appeal by either party from said decree, or if on appeal the supreme court enters its decree confirming and validating said bonds or other written obligations, the validity of said bonds or other written obligations so issued shall be forever conclusive against the county, municipality, or district issuing same; and the validity of said bonds or other written obligations shall never be called in question in any court in this state.

On Thursday, January 31, 2013 at the Board of Supervisors meeting that morning. The board from the last four-year term approved a motion giving then Board President and District Three Supervisor, Chris McIntire along with Chancery Clerk, Steve Montgomery the authority to sign the necessary documents to begin the validation process of the bond.

However, there was one caveat, the motion was contingent on the bond purchase agreement being presented to the board. Prospere was supposed to get that back to the board, but under attachment A in the board minutes the bond purchase agreement is not listed.

On the afternoon of January 31, 2013, after the board meeting, Prospere obtained the signatures he needed for the bond resolution and on the morning of February 1, 2013 he presented the resolution and all the necessary paperwork to the state Bond Attorney, Bob Lazarus, for him to complete his paperwork so the resolution could be filed. Lazarus completed his paperwork that afternoon. Prospere then returned to Ackerman Monday, February 4, 2013 and filed the resolution at the Choctaw County Courthouse. He then went and presented the order to Judge Kilgore in Philadelphia that same day and Kilgore set a bond hearing for February 15. The hearing was held and the bond was validated.

According to Chambers his main reason for discontentment with the debt is the way all of it was handled.

Chambers said after the meeting, “It was rushed through. The I’s weren’t dotted and the T’s weren’t crossed. As I’ve said all along a board speaks to the public through their minutes. We can show the public where a motion was made contingent on a bond purchase agreement being accepted by the board, but we never got the chance to accept it or the public for that matter. You still have an attachment A that is suppose be where the bond purchase agreement is and three years later there is still no bond purchase agreement attached.”

It is as far as Prospere is concerned.

“The bond purchase agreement is in the validation paperwork I presented to the bond attorney and Judge Kilgore that day, along with all the other necessary paperwork needed for him to validate the bond, ” stated Prospere during his presentation.

He then plopped the file, about 2 inches think, in the middle of the boardroom table for the supervisors to view. He had no takers.

He continued “If not for this code (31-13-7) you’d have bond indebtedness all over this state. Entities could come back and say they never did this or that and try and get out of their debt, ” he continued.

“No the board may not have dotted all their I’s or crossed all its T’s, the meeting could have been in the morning or afternoon (referring to Chambers catching him on one of his questions asking whether the board of supervisors meeting was in the morning or afternoon) but as long as the necessary paperwork gets in front of a judge and he validates the debt, it is a valid debt period.”

The next issue was the fact that the reissuance or refinance of the original 2011 bond for 13.5 million was never advertised to the public. A bond of this nature refinanced doesn’t have to be advertised to the public as long as a savings is achieved. Two percent net present value of the bonds that are being refunded. The state Bond Attorneys’ policy makes it even higher and has it set at three percent. In this case the net value savings was around seven percent. Resulting in over a million dollars in savings over the life of the bond.

Pioneer was never obligated to pay any portion of the debt service on the initial bond. They merely had a lease agreement with Choctaw County and the intentions were to use those lease payments to make two-thirds of the payment on the bond. When they bailed, that caused the board to seek alternatives as how to make the bond payment. Refinancing the bond seemed to be the best available option at the time.

Chambers and Prospere went back and forth for the better part of thirty minutes. Chambers asking questions, but Stephenson had heard enough and put an end to the discussion.

“We need to put this thing to bed, I mean we owe for a hospital and that’s it,” said Stephenson.

In summary, Prospere made his case for the validation of the hospital bond. Chambers thanked Prospere for his time and making the appearance before the board. The two shook hands as the board needed a recess and Prospere was dismissed.