Century rejects CTA offer on rate return

At a meeting last Thursday, the Century Town Council voted unanimously against a proposal to change the interlocal agreement with Capital Trust Agency (CTA) after a recommendation from Town Attorney Matt Dannheisser to reject it.

CTA was created in 1999 between the Town of Century and the city of Gulf Breeze as an agency to secure bonds to build, purchase, renovate facilities like schools, apartments, and other facilities that serve a public purpose to revitalize disadvantaged communities.

The latest proposal offered a locked-in rate of $525 per million borrowed and other provisions Dannheisser considered, leading to his recommendation to the council.

Dannheisser's noted the reasons for his recommendation to reject the proposal were: the town would give up all legislative authority; there has been no rate adjustment the town receives in 20 years; the fees are quite low in comparison to the benefits realized by Gulf Breeze; and signing would lock Century into a fee rate for 10 years. He recommended the town not negotiate further.

"I do not believe that the town of Century can do what CTA has asked," said Dannheisser. "CTA has asked the town to give them complete authority so they don't have to come to you for any decision over the next years to approve financings or other matters."

Discussion led to a possible fee increase using the Consumer Price index (CPI) of 2.77 percent annually or a certain percentage increase every year.

It was determined that the rate increase has been 0.1 percent over 22 years. Both former Mayor Henry Hawkins and current Mayor Ben Boutwell have suggested annual increases. CTA has suggested a rate of $525 per million dollars, which Dannheisser advised was too low. He thought the rate should range between $630 (the rate had CPI adjustments been applied annually) and $1,000 (which equates to a 4.88 percent annual increase over the last 22 years). He also recommended a built-in annual adjustment, either a percent or a figure that reflects increases in the CPI.

"The amount that Gulf Breeze gets is far in excess of what Century gets," said Dannheisser. "Over the years, it has been far, far more than Century has gotten."

There was disagreement between CTA and Dannheisser on who should do the majority of the work. Dannheisser said CTA had a reserve of $6 million but was corrected by a CTA representative, who said the company had $2 million.

Discussion led to the question of why Century has not insisted on or asked for rate increases over 22 years and Dannheisser said it was up to the town to do so.

"There's not many of us who are going to say in dealing with a counter part, 'I have a good deal here, I should give them more money', it's just not human nature to do that," said Dannheisser. "So I don't put fault on Gulf Breeze. I also don't put fault on CTA. Theoretically, they are the middle man. They are the ones who should be in between the town municipalities. Accordingly, the fault lies with the town of Century not having asked for it over the 22 years."

He said that because he was representing all parties, he could not ethically advise the town to do so, although he did advise separate council, but it did not happen.

CTA's Dennis McKinnon addressed the council and advised that CTA: does not adjust fee amounts, it remains constant; has competitors who charge lower fees, which makes CTA operate more efficiently; has inflation "baked" into every deal due to prices in labor, materials, etc. recently increasing: is contemplating increasing the minimum paid to the town from the current $3,500 to $12,500 (which had not yet been discussed).

"CTA paid Century $150,000 last year," said McKinnon. "If you take the $525 per million and the minimum increase from $3,500 to $12,500, you will see an additional almost $130,000. So almost $250,000 to the town of Century next year from the proposal that the city of Gulf Breeze had already acted on and sent to you."

Councilman Luis Gomez expressed concern that Century cannot continue to be on the lower receiving end of the deals anymore, describing what the town gets as 'scraps.'

"I appreciate your candor, but you are advocating for CTA and the city of Gulf Breeze and you said inflation has gone up, but you all did not raise your rates," said Gomez. "Inflation has effected the town of Century also, but we've been accepting the same fees for 22 years. Your argument doesn't help Century to say, 'well it's not our fault inflation is going up, but yall are going to have to continue to take less money."

Dannheiser advised discussion between the council and CTA was becoming adversarial and recommended cessation.

Gulf Breeze Mayor Cherry Fitch asked to address the council and expressed gratitude for the council's consideration and hope that there could be a resolution that would benefit both parties.

"I regret that Mr. Dannheisser is calling this adversarial," said Fitch. "It's complicated. I think when we had our joint meeting with CTA and the city council, it was a similar discussion that there were people who were fine with increasing, some who had concerns, questions. I would hate for this to end adversarially because we have been partners for years and I think on both sides, we are trying to do the right thing. We want it to work out. I appreciate the time and energy you all are putting in. Thank you for taking it so seriously and trying to look at it."

Interim City Manager Vernon Prather advised the council that while they did not have to make a decision at that meeting, but because there was a quorum, they could vote if they wanted to.

Dannheisser formulated a motion for the council: to reject the contract proposal put forth by CTA; to express no interest in delegating to CTA any of the authorities the council currently possesses that have not been delegated to CTA; to make the rate $775 per million; to make an annual indexing of 3 percent of that figure; and to have no interest in further negotiating this.

Councilwoman Sandra McMurray Jackson made the motion, which was seconded by Councilman Leonard White, the motion carried unanimously.