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July 23,  2008

Council admonishes Clark;
rejects Freebery's claim

After nearly two hours of acrimonious debate over the motivations of its presiding officer, a sharply divided County Council went into its customary summer recess with indications that it will face some more contentious issues when members return from vacation.

Council voted seven-to-five to approve a non-binding resolution "urging" Council president Paul Clark "to refrain from introducing and spearheading land-use legislation until steps are taken to restore public confidence in the impartiality of the [land-use] process."

Clark referred to the resolution as "a lynching" and said he is "not going to abide by it."

Stephanie McClellan, who drafted and introduced the measure, said it was not intended to censure or otherwise punish Clark and acknowledged that there is no mechanism for enforcing its provisions.

In other matters before Council on July 22, a busy final day before the month-long recess, it:

Voted, as expected, to deny claims by Sherry Freebery and Janet Smith for reimbursement of legal fees they paid to defend against federal corruption charges; (CLICK HERE to skip to that section of this article.)

Was told that county government's financial situation has, if anything, gotten worse and to expect problems at least as bad as it faced this year as the process for crafting a fiscal 2010 budget proceeds; (CLICK HERE to skip to that section of this article.)

Heard, in committee, an unusual pre-introduction explanation of a proposed ordinance to authorize a new financing arrangement to help the Commonwealth-Setting joint venture pay for  infrastructure for the Renaissance Village redevelopment project in Claymont; (CLICK HERE to skip to that section of this article.)

Was advised that the year-long dispute over the cost of having county sewage processed at Wilmington's treatment facility is going into mediation and probably will end up in binding arbitration (CLICK HERE to skip to that section of this article.); and

Received legislation to repeal the law providing for phasing in over 10 years additional property taxes on new or renovated commercial or manufacturing facilities in Wilmington. (CLICK HERE to skip to that section of this article.)

McClellan's resolution received the bare majority-of-Council vote necessary for approval of any measure. Robert Weiner -- the only member present who did not speak during discussion of the resolution at Council's plenary session or a previous  executive committee meeting -- joined its five co-sponsors in casting affirmative votes. The co-sponsors were John Cartier, Penrose Hollins, Jea Street, David Tackett and William Tansey. William Powers, who was out of town, did not attend the session.

McClellan decided to bring an updated version of her resolution to a vote after rejecting a proposal by Clark to instead conduct a series of public 'workshops' to consider improvements to the land-use process and significant modification of the Uniform Development Code.

She said the resolution was "not about" the code or the process, per se, but the "cumulative effect" on public confidence by what she charged was Clark's ties with and bias toward developers culminating in his having sent an e.mail "eliciting suggestions for the lessening of land-use restrictions" to just "one specific group that could benefit" from doing so.

Joseph Reda said it is common practice for Council members to discuss pending legislation and ideas for new legislation with business, civic and other groups that would be directly affected.

In particular, McClellan and other supporters of the resolution questioned the "appearance of a conflict of interest" inherent in Clark's being married to Pam Scott, a lawyer who specializes in representing developers in  land-use matters. The e.mail included a 'signature' of Scott's law firm.

During discussion at the executive committee meeting, William Bell characterized the e.mail as "a serious mistake, but a human error" which was magnified by the fact that Scott "is one of the, if not the, most prominent land-use attorneys in the state."

Clark blamed the inclusion of the 'signature' on his ineptitude using a home computer which is shared with his wife. "The only reason this resolution is here tonight is that I am clumsy with a computer," he said. "How many of you have never pressed 'send' and regretted it?"

In a letter to McClellan, which was circulated among all other Council members, asking her to withdraw the resolution, Clark said he was taking steps to avoid a repetition, including buying a new computer for his sole use.

Street noted that the e.mail contained different typefaces which, he said, indicated that it was prepared on different machines. Hollins said at the committee meeting that phraseology of the e.mail "sounds to me like Beverly Baxter."

Baxter, executive director of the Committee of 100, a development business trade organization, was present at both sessions. She spoke briefly during the public-comment period at the plenary session, in opposition to the resolution.

Clark said that, since coming on Council nearly four years ago, he has been careful to avoid any conflict of interest by recusing himself from debate about and votes on any rezoning or plan approval where Scott is representing the applicant. As it happened, he did so when record-plan approval involving a tract in Pencader Hundred came before Council earlier in the session. 'Recusing' is legal jargon which means disqualifying one's self  from participation in a decision on grounds such as prejudice or personal involvement.

Asked before the vote how she planned to restore public confidence if the resolution was approved, McClellan said one step will be to examine 'recusal' rules used by legislative bodies in other jurisdictions.

"I've broken no rules," Clark declared.

He added that land-use legislation he has sponsored has received approval from the Department of Land Use, the Planning Board, and, most significantly, a majority of Council or better. "We have a complete and open land-use process," he said.

"It's ironic that people who throw stones live in the same [kind of] glass house as me," he added. "If you want to throw rocks, throw them at me. I can take it."

During the day and evening several members referred to Clark as a person of demonstrated integrity.

McClellan said she was not out to impugn Clark's integrity. "My intention is solely to protect our ability to govern," she said.

At several points in the discussion, however, there were 'did-so-did-not' exchanges and some barbs thrown.

The most pointed was a charge by Hollins that a close friend of Clark's -- whom Hollins did not identify -- had gone to the state Department of Elections in Dover "looking for some dirt to smear me."

George Smiley bristled about radio talk-show comments relative to the issue to the effect that Clark's stances on land use not only favored developer interests but also organized labor's interests. Smiley is a retired former business manager of the Teamsters Union.

In his letter to McClellan, Clark characterized her resolution as "the work of political gamesmanship." During discussion he said it has generated "a thousand dollars worth of free publicity" for anyone seeking to unseat him during the coming elections.

The latest Department of Elections posting shows that Clark and five of the other incumbent Council members seeking re-election have no primary or general election challengers. Bell has a primary opponent. All seven incumbents are Democrats.

(CLICK HERE to read previous Delaforum article on this subject.)

The vote against honoring Freebery's $3.7 million claim was 10 to one with Hollins abstaining and Powers absent.

Tansey cast the sole affirmative vote, citing the government's having dropped all but one relatively minor charge against her. "Dropped charges presume innocence," he said. "If charges are unsubstantiated, they are meaningless."

He added that not indemnifying her sent a chilling message to police officers, code-enforcement officers and other employees that county government will back them up if they are charged with wrongdoing or sued as a result of performing their duties.

"Council should put aside politics, personalities and outside pressures," he said.

Among the charges the government dropped was an allegation that Freebery had used police officers and other county employees to make telephone calls in support of Tansey in his challenge to then-incumbent Councilman Richard Abbott in the 2002 Republican primary. At the time, she was chief administrative officer, the highest appointed official in the Gordon administration.

Tansey defeated Abbott and went on to win his first term on Council with no Democratic opposition. Freebery is a Democrat, but reportedly wanted Abbott off Council because of some his stances against the Gordon administration. Tansey won re-election in 2006.

Weiner, who, like Hollins, had been asked by Freebery's lawyers to refrain from participating in the discussion and vote, declined to do so. He denied that he would be unable to make an objective decision.

Council members were polled on the reason for their votes and all but Tansey said they were accepting the advice of Joel Rosen, a Cherry Hill, N.J., lawyer who formerly was a federal magistrate, hired as special counsel to independently advise Council on a course of action. According to Council's regular lawyer, Wendy Danner, he was paid approximately $38,000 for his services.

Some Council members also gave other reasons for their votes.

Street cautioned his colleagues not to think they have had the final word on the issue. "It's not going to stop here," he said.

As Delaforum previously reported, Freebery's lawyers -- who did not attend the July 22 Council session -- had indicated during a special meeting the previous evening that she might take the matter to court. Freebery herself did not attend either session.

Members of the public who spoke at the July 22 session split six-to-one in opposing the granting of the claim.

Denial of Janet Smith's claim for $25,000 came on an 11-to-one negative vote with Hollins also abstaining from it. The charge to which she pled guilty was attempting to obstruct a federal investigation by having relative documents destroyed. That, Council members were agreed, constituted a violation of here public trust, which county law specifically exempts from reimbursement.

(CLICK HERE to read previous Delaforum article on this subject.)

Council's finance committee was told that, with the fiscal year just a little over half a month old, the finance department has already reduced its estimate of revenue for the year by nearly $2 million, from $31.9 million to $39 million. And acting chief financial officer Ed Milowicki said it may end up even lower.

Although large-property transactions, including sale by Du Pont Co. of its Barley Mill office complex, resulted in revenue coming in from that source just about meeting expectations for the fiscal year that ended June 30, he cautioned that there is no guarantee that will reoccur. Also propping up the tax last fiscal year was the unprecedented sale of 13 apartment complexes. "We've had no more than three or four change hands in [each] recent years," he said.

Beyond that, he added, there is a possibility the number of residential transactions will increase as the housing slump bottoms out, but lower selling prices could more than offset that gain. A tightened mortgage market also is a threat. "If you can't get a mortgage, you can't buy a house," he said.

At the end of June, budget reserves, exclusive of the 'rainy day' emergency fund, stood at $61.9 million. The $14.2 million drop from the end of fiscal 2007 included $9 million set aside pending appeal of adverse court decisions. The current year's budget anticipates using $19.7 million of the reserve. It is expected to run out about midway during the 2010-11 fiscal year.

Overall, county government spent 96% of its budget in fiscal 2008 while taking in 99% of anticipated revenue.

Chief administrative officer Jeffrey Bullock told the committee there is little prospect of the General Assembly coming to the aid of the county. When legislators return in January they will be faced with the same state budget crisis they failed to resolve before adjourning at the end of June, he said.

(CLICK HERE to read previous Delaforum article on this subject.)

When Council members return from vacation and next meet on Aug. 26, they most likely will vote on a proposal to designate Renaissance Village as a special-tax district and to authorize county government of float up to $20 million of special obligation bonds carrying an interest rate of no more than 9%. Because they would be issued by a local-government entity, proceeds from the bonds would be tax-exempt for most purchasers.

The actual amount of the bonds-secured borrowing and the interest rate will be "something less than" the specified ceilings, according to Timothy Fry, county government's bond counsel, told the finance committee.

The proposed ordinance gives the county executive the authority to determine specific details of the bond offering -- a practice which Fry said is normal with any bond-sale authorization that Council enacts. The measure does specify that Bank of America will be underwriter for the issue under terms to be determined "in a private, negotiated deal."

Fry emphasized, however, that, as special-obligation bonds, the securities are not tied to the county's proverbial faith and credit. That means that they would affect neither its debt limit nor its vaunted triple-A bond ratings. In the event of repayment problems, bondholders will not be able to look beyond a special fund which the measure creates, he said.

County attorney Gregg Wilson agreed with that conclusion.

The fund will be fed with proceeds from a special tax levied annually on future property owners and a portion of the common property tax resulting from incremental increases in assessments as property values increase. The incremental increases would be included in the base for determining school tax and other levies included in the county's tax billing.

In no case, Fry added, will owners of properties outside the special-tax district be required to help pay off the debt. The district will be contiguous with the area covered by the approved development plan, he said.

Legislation enacted by the state General Assembly to enable the county to make use of incremental- and special-tax financing limits its ability to do so to the area included in the 'Claymont Hometown Overlay', which includes but is broader than the Renaissance Village property.

Cartier, who is sponsoring the proposed ordinance, said that he would not support any legislation "that would jeopardize in any way our (the county's) bond ratings or finances." He said later that he is going to spend time during the recess studying the ordinance -- which Fry drafted. Fry also agreed to respond, round-robin style, to any questions members of Council raise during that time. His services are being paid for by the developer.

The proposed measure would set a limit on the amount of the special tax that can be levied each year on a residential unit sold at market value at $1,026. The 10% of Renaissance Village units to be designated as 'affordable' or 'workforce housing' would have their tax capped at $502. Commercial property would be taxed at a rate not exceeding 72 a square foot.

In the event the fund falls short of being about to meet the debt-service requirements on the bonds in any year, there is a provision for also levying a backup tax up to $144, $71, and 10, respectively.

The limits would be ratcheted up by 2% a year beginning on July 1, 2010.

While county government will miss out on being able to collect property tax on most of the increases in assessment value during the life of the bonds which will likely be between 20 and 30 years -- Cartier said it stands to gain much more revenue from the realty transfer tax on the initial property sale and continuing turnover sales.

Smiley, who chairs the finance committee, said that the matter was brought before the committee prior to Cartier's actually introducing the proposed ordinance at the plenary session in order to provide additional time for all Council members to consider the complex legislation. Usually, a proposed ordinance goes to a committee during the two weeks between its introduction and its being brought to a vote.

Deviating from the normal arrangement, in effect, gives Council members a summer vacation homework assignment.

(CLICK HERE to read previous Delaforum article on this subject.)

Bullock told the finance committee that, after a year of negotiations, an increase of $500,000 in the fee that city government charges to process sewage from the county. That would bring the annual charge to $17.5 million.

But, he said, following a last-minute proposal to tack a 10% 'management fee' onto the charge and the deal fell apart. "I was not prepared to pay an extra $1.75 million," he said.

As a result, he said, he and the city's negotiator, William Montgomery, Mayor James Baker's chief of staff, agreed in May that the issue will go to independent mediation and, if that doesn't work, binding arbitration.

Bullock said he would not characterize the city's proposed charges "unreasonable or exorbitant," but would describe them as "rich."

"We're in a vulnerable position because we don't have our own facility," he said.

When Tackett asked how much it would cost for the county to build its own facility, Bullock laughed and replied, "a lot." In addition to being beyond present means, any attempt to do so would run up against a block when it came to trying to find an acceptable site, he explained.

Bullock said the city's cost of managing the existing plant, under a contract with an operating company, already is factored into the fee the county is charged. The proposed 'management fee', he said, was intended to be equivalent to a private utility company's 'rate of return' on its investment.

"They want to recoup their costs and get a little bit more," he said.

When Street cautioned against a breakdown in amicable relations between city and county governments, in light of such common problems as drug-related violence, Bullock said there is no desire by either party for that to happen and that the dispute over sewage treatment is not leading to a rupture.

City government also is a factor in the proposed ordinance Tansey introduced to repeal the property-tax break enacted several years ago to match the incentive Wilmington offers to promote economic development in the city. The measure's preamble calls the exemption "antiquated."

The existing arrangement calls for a qualifying property to be exempt during the first fiscal year from the portion of its county-tax obligation attributable to new construction. In each subsequent year, the exemption is decreased by 10 percentage points until it goes away a decade after the new construction is completed.

Any property benefitting from the arrangement prior to the start of the present fiscal year on July 1 would remain eligible.

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