A prominent minority contracting advocate on Wednesday criticized a controversial deal to fund construction at a city-owned landfill, arguing more details should be released before the work proceeds.
The deal, to fund construction on “cell six” of the city?s Quarantine Road landfill, is slated to be financed with a $4.5 million loan from the Industrial Development Authority, a shell corporation owned by the city that issues low-cost municipal bonds.
But advocates claimed the arrangement allows the city to effectively borrow money without adequate public scrutiny.
“This is business as usual,” said Arnold Jolivet, president of the American Minority Contractors and Business Association.
“Normally there is a requirement to conduct a public hearing if it is a bond issue, but it doesn?t always happen with these types of projects,” he said.
“If bond money is involved, the law requires it.”
But city officials said the IDA simply lends money to the city, using funds raised from a $100 million bond issue in 1986 ? eliminating the need for additional public vetting.
“There is a funding agreement between the IDA and the City for these types of transactions,” city Treasurer Stan Milesky, who heads the IDA, wrote in an e-mailed response to The Examiner.
Treasury officials said the IDA has lent the city $75 million to fund a variety of projects since its inception in 1978. The loans must be paid back by the city to redeem bondholders in 2016 when IDA?s special tax status expires.
“Debt service, including interest and principal on the IDA debt, is included in the Bureau of Treasury Management?s annual budget,” Milesky wrote.
The city has currently set aside $33 million in a special “sinking” fund to pay back IDA loans.
Still, despite assurances from city officials the IDA is an effective financing tool, even former board members said they knew little of how the IDA actually operated.
“I was on the board,” said former City Councilman Keiffer Mitchell. “But we never met, I don?t know much about it.”
City Clerk of the Court Frank Conaway thrust the IDA into the spotlight last week after he refused to certify that Sheila Dixon is Baltimore?s mayor. Conaway?s signature was needed to complete a so-called “master conditional purchase agreement” between the city and the IDA ? an arrangement city officials claim is actually a loan.
Conaway contends he cannot confirm Dixon?s status because he did not swear her into office; Gov. Martin O?Malley did.
