Potential jobs deal sparks Commission fuss

Potential jobs deal sparks Commission fuss

By Deborah Nelson
April 11, 2008

Despite contentions it could bring 50 new jobs, Santa Rosa Commissioners recently denied an Industrial Park property’s 180-day mortgage extension request – saying the $1 million balloon payment is needed now for land and infrastructure recommended by a TEAM Santa Rosa economic development Master Plan.

Following a heated exchange with the parcel’s owner, commissioners did approve a 60-day mortgage extension on the property, which formerly housed the Mold-Ex company. MTI Specialty Silicones currently occupies the site as a tenant.

J. Herbert Ogden, Jr. wants to refinance the mortgage, issued to Southland Holdings in 1997 by Santa Rosa County. The balloon payment comes due May 31. Ogden told the Board he needs the extra time to process a new mortgage loan.

Southland Holdings has had no late mortgage payments to date, and the county’s collecting a mortgage interest rate above the current market level, Ogden pointed out.

Southland’s tenant, MTI, is planning to move some 50 jobs from their Virginia site to Milton, Ogden told the BOCC at the April 7 Commission hearing. MTI’s Milton office did not return two phone messages seeking confirmation.

Ogden said the extension would help his company secure a mortgage that will allow him to continue leasing to MTI at below market rates. He told the Board he had several mortgage proposals in hand.

“I have proposals that I can show you that I brought with me for the mortgage; so this is not a game that I’m playing. I need more than 30 days to get this finalized,” he noted.

Without the refinancing, said Ogden, it would be more profitable to clean the building up and put it on the market at a higher rent.

“The economics for me as landlord are, if I can get the proper mortgage I can let [MTI] stay at the lower rate, and I’m happy to do that,” he told the Board.

“So I would think the Commission would want to be aware of the fact that my alternatives are to kick them out and let the building sit empty, and get rid of the jobs and hope that I could bring new jobs in within a year.”

Ogden questioned the county’s economic development outlook.

“I’m just curious – a 180 to a 90 day extension [would] indicate that this county was business-friendly, and it doesn’t appear that way right now to me,” he noted.

Commissioner Don Salter appeared to take exception to Ogden’s remarks.

“Sir, those companies that come here and [are] successful, they will tell you it’s easier doing business in this county than anyplace I’ve ever been,” he said.

“And for you to stand there today and say that this is not a business-friendly county because somebody has not done their work on your side,”

“Excuse me? What work didn’t I do?” Ogden interjected.

“Well, you came to us several months ago and asked for an extension and we turned you down. So it would seem to me like, if you were a good landlord, arrangements would have been made during that timeframe,” Salter said.

“…For you to stand here today and say an option is to close the building and those employees lose their jobs, I think that’s arm-twisting. I don’t play those games, it’s your responsibility and the management group in there to make that business successful, not ours.”

Ogden says he formerly owned MoldEx and has been a business owner in Santa Rosa for ten years.

“You’re not making any progress today by threatening us,” Salter remarked.

Commissioners, Monday, initially moved for a 30-day extension with a ½ point interest penalty, as recommended by TEAM Santa Rosa Chair Ed Gray, III.

Ogden questioned that recommendation.

He told the BOCC he tried to contact TEAM Director Cindy Anderson ‘numerous times’ over a two-month period, but was unable to get a phone call or email returned.

“I found that quite curious, that the Commission adopted a proposal that was put forward by a group that never met with me,” he remarked.

An April 4 letter from Gray to the BOCC reads:

“It is the understanding of TEAM Santa Rosa an inquiry has been made by the current owners of [the property] for the county to extend the current note and mortgage…Due to the timeline of the Commissioners meeting and TEAM’s board meeting later this month, this communication has not received board action.”

In the letter, Gray recommends denying the 180-day extension request, noting “tying up capital in loans to a business over a long term is not in keeping with prioritized public needs.”

Officials said the county is not in the banking business, and that TEAM Santa Rosa has formulated a Master Plan to attract industry that includes buying new land, infrastructure, and additional marketing.

That Master Plan will need capital dollars.

“We can’t keep tying up our capital while you’re trying to reorganize your company,” Salter told Ogden. “We need to be moving forward with reinvesting that money, and it’s about a million dollars that’s owed.”

Officials wished Ogden good luck in finding a way to keep MTI jobs in the area.

“We hope you can pull all this off, we wish you luck, we hope you can stay here and keep those jobs in the county, but we can’t keep tying up capital as we need to be reinvesting in economic development for the citizens of the county,” Salter said.

Ogden pointed out that the reorganization involves the tenant, MTI, and not his company.

“I vehemently disagree,” he told Salter.

“I have no idea why TEAM Santa Rosa after four phone calls and five emails would not respond to me in any way, shape or form; if it’s the Commission and the County’s idea to attract new jobs, we’re bringing 50 new jobs to the site,” Ogden added.

“I frankly don’t understand why TEAM Santa Rosa or the Committee wouldn’t give me a little breathing room to entice 50 jobs and frankly a whole new company down here.”

Commissioner Bob Cole wondered the same thing.

“I don’t know of anything that we have that we’re going to be immediately reinvesting in, with the economy like it is,” Cole observed. “If we do, I’d like to know what it is.”

“We have been waiting on this payment,” Salter explained.

“Like I said earlier, there has been a Master Plan submitted to this Board from TEAM Santa Rosa that includes purchasing some additional Industrial Park land, to put in infrastructure so we can better recruit industry, hopefully.”

Officials have speculated that a recent $40 billion Northrop Grumman/EADS Air Force tanker aircraft contract, some of which will be assembled in Mobile, AL, may spur ripple effect industry as far east as Santa Rosa.

“Just a couple of weeks ago I talked about the new tanker company coming into Mobile, and how we will have opportunities to go after some of those suppliers,” Salter noted.

“Some of the land that would be purchased if the Board approves it would certainly be an ideal location for some of those suppliers coming into Santa Rosa County, so to answer Commissioner Cole’s question, yes sir, we do have immediate plans for more capital to go into economic development.”

Cole still wasn’t convinced.

“I just want to make sure I’m straight on this,” he remarked.

“Right now with the economy like it is, I think the gentleman’s made a pretty good argument for Southland Holdings about bringing jobs down here…

“I’d like to hear some better reason for not giving this extension, because I just don’t see us being ready to run right out and do something immediately with this money that we can’t start planning for or take options on for the next 180 days.”

Officials reiterated that money is needed immediately.

“Let’s don’t keep tying up taxpayers’ money for a company that had an agreement and now they can’t comply with that agreement,” said Salter. “Let’s take the taxpayers’ money and reinvest it, and bring in more jobs.”

Earlier this year, Santa Rosa Commissioners asked the state for $1.5 million for a proposed 269-acre aviation industrial park near Whiting Field. The Park would encompass 269 acres of title-transferrable property.

The $1.5 million would fund initial infrastructure, and the project as a whole is expected to cost $5 million.

In May 2006, Santa Rosa purchased an additional 160 acres adjacent to the Industrial Park, for about $1.6 million plus a 10 percent, $170,000 realtor fee.

After he spoke out at Monday’s meeting, said Ogden, TEAM Director Cindy Anderson contacted him to discuss the issue. On Thursday, Commissioners voted to approve a 60-day extension with no interest penalty.

TEAM Santa Rosa did not return two phone calls requesting comment for this article, and to ask whether currently empty Industrial Park property is expected to be inadequate for future tanker contract-related industry.