Kent County administrator explains sports complex bond

Earlier this week, Kent County Levy Court Administrator Michael Petit de Mange clarified circumstances regarding a proposed revision to the Bond Ordinance for the Kent County Regional Sports Complex in Frederica:

Before explaining questions regarding the bond, Mr. Petit de Mange conveyed that the Regional Sports Complex Corporation received an infrastructure grant from the Delaware Economic Development Agency.

Also, on May 3, the Levy Court Finance Committee reviewed a proposed revision to the previously approved ordinance submitted by M&T Bank on behalf of the KCRSC and forwarded the matter on for introduction and public hearing, Mr. Petit de Mange said.

Michael Petit de Mange

Michael Petit de Mange

“There was no recommendation to fund the debt obligation,” he said.

To clear up any questions regarding the bond, Mr. Petit de Mange first reviewed previous action and then explained the revision proposed by M&T Bank.

Mr. Petit de Mange cited a meeting on Nov. 24, 2015, when Levy Court unanimously approved Ordinance LC15-12 which authorized the issuance of Revenue Bonds in an amount not to exceed $21 million for the benefit of the Kent County Regional Sports Complex Corporation in order to finance the construction of the facility.

Since that time, Mr. Petit de Mange said, representatives of the Regional Sports Complex Corp. have been working with officials from M&T Bank on preparing for the bond offering.

A significant part of that effort has involved work with bond rating agencies on the eventual establishment of a rating for the proposed bond offering, according to Mr. Petit de Mange.

Before the proposed bonds will be rated, the rating agency and M & T Bank seek revisions to the adopted ordinance, he said.

The construction financing proposal involves the establishment of a Debt Service Reserve Fund in the amount of $1.4 million that would be established from bond proceeds, not county funds, for the purpose of creating a reserve account to support debt service payments in the event that revenues from the Regional Sports Complex are not sufficient to cover debt service payments at any given time during the bond period, Mr. Petit de Mange said.

Under the ordinance as approved on Nov. 24, 2015, if any portion of the Debt Service Reserve Fund is ever used, Levy Court would be required to consider issuing a loan in an equal amount to the Regional Sports Complex Corp. to replenish the Debt Service Reserve Fund, Mr. Petit de Mange said.

A loan could only be issued upon an affirmative discretionary vote of Levy Court, he said.

During the committee meeting of May 3, M&T Bank officials presented a proposed ordinance revision to Levy Court for consideration, Mr. Petit de Mange said. The proposed revision would eliminate the provision for county loan consideration to replenish the Debt Service Reserve Fund and in lieu thereof, proposes to have the county issue a grant, prior to the bond offering, up to an amount of $1.4 million dollars to be held in an escrow account for the expressed sole purpose of covering one year’s worth of post-bankruptcy debt service payments in the event that the Regional Sports Complex files for bankruptcy during the life of the bonded indebtedness.

Under the proposed revision the grant can only be used if there is a bankruptcy and cannot be used if there is never a bankruptcy, Mr. Petit de Mange said.

At the conclusion of the bond period, all grant funds remaining in the escrow account shall revert back to Kent County, Mr. Petit de Mange said. If the escrow account is never used, the full grant would revert back to the county along with all interest accrued, he said.

If Levy Court approves this revision, according to Mr. Petit de Mange, the source of funds for the grant would come from real estate transfer tax proceeds which can only be used for limited purposes including economic development purposes as set forth in Delaware Law.

The Kent County Regional Sports Complex is an economic development project, Mr. Petit de Mange said.

If the revised ordinance is approved, the requisite grant would not be funded from annual county property tax assessment proceeds, Mr. Petit de Mange said.

Under the ordinance, any further request for funding or loans from Kent County would be subject to a discretionary vote of Levy Court to approve or disapprove, he said.

The revised ordinance was scheduled to be introduced on Tuesday with a public hearing slated for May 24.

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