The Ball is Back in Brian O’Neill’s Court! Uptown Worthington Developer Sues Citizens Bank for $8 Billion in Damages – You Read it Right, Billions!

If you recall, I have had several posts about Brian O’Neill of O’Neill Properties in regards to his Uptown Worthington project in Malvern (future site of Wegmans). Citizens Bank had secured a $61 million judgment against O’Neill in November for unpaid loans on the project.

Breaking news . . . Mr. O’Neill is taking back the ball to his side of the court.  He has filed a lawsuit against Citizens Bank for $8 billion in damages ($4 billion in compensatory damages and $4 billion in punitive damages), claiming that the bank wrongly called for loans before they were due and the bank did not follow through with their end of the agreement with construction financing.

The O’Neill lawsuit alleges that Citizens Bank judgment was “maliciously based upon sham defaults manufactured by the bank in bad faith — as part of a scheme to pressure”.  I am guessing that Citizens Bank tried to back O’Neill in to a corner with their demand to repay the loans.  O’Neill’s lawsuit points to a couple of major problems with Citizens Bank.  First, the bank was demanding repayment on the financing loans before the loans were scheduled to be due; and secondly, Citizens induced O’Neill to amend the initial loan agreements and increase the amount borrowed when they had no intention of doing so.

After Citizens Bank secured its judgment against O’Neill (in essence leaving the Worthington project without promised financing as the lead lender), O’Neill has been challenged in his efforts to find other financing.  Without Citizens Bank’s financing, O’Neill has faced great difficulty in restructuring the financing required for the Worthington project.  We are acutely aware that the economic climate is far different now than it was in 2002 when Brian O’Neill and O’Neill Properties began this major redevelopment project in Malvern, making this current financial situation all the more difficult for both sides.  Because of Citizens Banks actions, O’Neill alleges that he has lost not only tenants but also damages to his company far exceeding the $61 million loan amount.  As a result, O’Neill is seeking damages of $8 billion from Citizens Bank.

If you are keeping score, looks like the ball is in O’Neill’s court.  Citizens Bank, you are up next . . .

TESD Preliminary 2010-11 Budget . . . Main Line Suburban Newspaper Calls ‘Reaction Mixed on T/E Plan’

The following article by Blair Meadowcroft appears in today’s Main Line Suburban newspaper.  The article details the mixed reaction of the passing of the preliminary 2010-11 school budget at Monday night’s TESD School Board Meeting.  One item that Blair mentioned that caught my eye concerned the replacement of long time 3rd grade teacher Walter Thompson at New Eagle Elementary with a long-term substitute.  There seems to be a vagueness concerning this matter and that information was coming from the children to the parents rather than the administration.  Anyone have further information on that topic?

As to how the cuts are to be orchestrated to make up the school budget deficit, is my understanding that we will be given further information at the Finance Committe on February 8?  I wonder if the adminstration and School Board will equally distribute the cost-cutting measures throughout the district?  Or, will certain grades or programs be more vulnerable?  Someone mentioned the reduction of AP offerings at the high school as a possible source, although at this point, guess most of us are in a ‘wait and see’ mode.  I wonder how much students or parents can impact the decisions?

      Reaction Mixed on T/E Plan

By Blair Meadowcroft

Although passed unanimously, the preliminary budget that was approved at the Monday-night Tredyffrin/Easttown Board of School Directors meeting did not gain the same unanimous approval from residents. The proposed preliminary budget for the 2010-2011 school year is $101.9 million from revenue and $111.15 million in expenses, leaving a $9.25-million deficit. On the table at the School Board meeting was the decision of whether or not to raise taxes in order to combat the deficit. If the board approved raising taxes up to the 2.9-percent Act 1 index, the deficit would decrease to $6.85 million. If the board approved to apply for exceptions to the Act 1 index, it would be allowed to tax 3.73 percent on top of the index, which could bring the deficit down to $3.75 million.

While not a perfect fix towards creating a balanced budget, the board was asked to vote on the proposed preliminary budget with the authorization to apply for the Act 1 referendum exceptions. After comments from various board members, it appeared some favored and some opposed approving the Act 1 exceptions.

“I will be voting no against the proposed preliminary budget because we need to protect the program and we don’t want to negatively impact the school,” said Kevin Mahoney, chair of the Finance Committee. “Tredyffrin has a large population of elderly people as well as five percent living below the poverty line and these people may not be able to afford a large tax increase. We should find necessary funding from the fund balance. It has been a rainy-day fund and we should use it to help us bridge this hard time. I suggest a minimal tax increase within Act 1 and I suggest we make spending cuts and use the fund balance where necessary.”

In disagreement, board member Peter Motel stated he intended to vote yes for the budget as presented until the possible spending cuts are determined. “We need to keep the option of going above Act 1 open, and if we do decide to go above the cap, we need to ask for public approval,” said Motel.

After discussion, the board voted on the motion to approve the proposed preliminary budget, with the authorization to seek out the Act 1 referendum exceptions, and the motion did not pass. The board then voted on passing the preliminary budget with an adopted resolution limiting the tax increase to the Act 1 index of 2.9 percent or less. This motion was approved and the preliminary budget for the 2010-2011 school year was passed unanimously.

At the end of the budget discussions, many residents voiced their opinions both for and against the outcome. The most common point made was confusion as to why the budget was not passed with the Act 1 exceptions. “I’m disappointed the Act 1 exception wasn’t considered,” said one resident. “The School Board did not have to take the additional tax increase but applying for the exception could have been a starter and should have been considered. I want our children to have a great program and I’m willing to pay up to the 2.9 percent or more. Whatever it takes to continue to present the best program with the best teachers.”

In agreement another resident stated that by not passing the Act 1 exceptions, the board has closed doors. “I don’t understand the logic behind limiting your options; you would not have been obligated to raise the taxes by passing the budget and yet by not passing it you now have cut your options,” he said.

It may have been surprising to board members but many residents not only voiced their willingness to pay higher taxes but also explained their concern that by not approving the possibility of higher taxes, the board has limited the opportunities and may now have to cut in areas, thus hindering the program that residents find so above par.

However, the hard times brought on by the poor economy did have some residents concerned that higher taxes would be one more bill they would have to struggle to pay. “I urge you not to take the entire 2.9 percent as a lot of us are already underwater, unemployed or retired and elderly,” said one resident.

This was the sixth meeting during which the budget was a line item, and the board will continue to discuss and rework the budget through June. The final budget must be approved at the June 14 board meeting. Until then the board intends to work on ways of lowering expenses and ways to use the fund balance in an effort to fix the deficit. The hope is to end the year with a balanced budget. For more information and to view the budget online visit www.tesd.k12.pa.us/index.html

In other news, a topic on the minds of many of the residents at the Jan. 25 school-board meeting was the replacement of a third-grade teacher at New Eagle Elementary School. According to many parents, Walter Thompson, a longtime teacher at New Eagle, is being replaced by a long-term substitute after an extensive review period for reasons they are unaware. The parents went on to say that their children were the only ones communicating to them what was happening in Thompson’s class and that they were the ones informing them of his being extensively monitored and audited.

Many parents expressed concern that various teachers instructed their children since October and that their third-grade education may have been hindered from the experience. Additionally many parents explained that their children were upset, even anxious over the situation.

The major complaint made by parents at the meeting was that the district did not tell them what was going on in their children’s class. They expressed that they were not trying to find out why Thompson was being audited or what he may have done, but wanted an explanation as to why the situation was handled the way it was.

After many comments and concerns were made by parents, the board re-emphasized that it were unable to give information about the Thompson.

Based on PA Municipalities Planning Code (MPC) It Appears That the Board of Supervisors St. Davids Golf Club Decision May Not be Legal!

Community Matters had over 2,200 visitors yesterday setting a new single day total.  In review of the statistics, it seems that people’s interest was about evenly divided between Monday night’s Board of Supervisor Meeting and the School Board Meeting. Many readers were left with more questions than answers in their review of the Supervisor Meeting.  With that in mind, I am looking for help from a municipal attorney to review the Board of Supervisors recent decision to return St. Davids Golf Club $25,000 escrow. 

I received the following comment from a reader which includes an excerpt from the Pennsylvania Municipalities Planning Code (MPC).  Reading the reference, I completely agree with the reader’s analysis that the actions of Supervisors Lamina, Kampf, Olson and Richter violated Tredyffrin Township code (which is based on Pennsylvania Municipalities Planning Code).  At the Board of Supervisor meeting, I questioned the supervisors if there was a written request from St. Davids Golf Club; they clearly acknowledged that the township had received nothing in writing.  Based on the MPC, it would appear that the lack of a ‘written request’ should have been the end of the discussion . . . a written request for ‘return of escrow’ would have formed the basis for the process to begin. 

Based on the MPC, I do not understand how it is legally possible for Supervisor Olson to make a motion, Supervisor Lamina to second the motion and then take a Supervisor vote on a matter that may not be legal.  I am confused – was the vote legal or not?  Supervisor Kichline (an attorney and former Zoning Hearing Board chair) certainly questioned the motion and the possible legalities, asking for further review from the Township Solicitor.  But wouldn’t Supervisor Kampf (an attorney and partner in the law firm of White & Williams) understand muncipal law and not cast a deciding vote on a questionable matter?  Supervisor Kichline votes against the motion to return escrow to St. Davids GC but Supervisor Kampf casts the deciding vote in favor.  I just don’t get it . . . as an attorney, why in the world would Supervisor Kampf participate in this process if there was any question? 

At this point, I do not have a definitive answer on the legality of the St. Davids matter but I am going to continue to work on it.  I am sending this post and reader’s comment to Tom Hogan, Township Solicitor and Mimi Gleason, Township Manager.  If they are unable to provide a clear response, I will contact the PA Attorney General’s office.  If there is a municipal attorney reading Community Matters, please offer your opinion.

Roger, on January 26th, 2010 at 8:54 pm Said: 

I was unable to attend the meeting, but have read the multiple accounts of this issue. In my humble opinion, the Board of Supervisors is in violation of their own Township Code, which is enacted under the authority of the PA Municipalities Planning Code (MPC). Feel free to reference the code for yourself here: http://www.ecode360.com/?custId=TR1485.

I would assume that the escrow account would be classified as a “Performance Guaranty.” While I believe the BOS COULD delegate some of this authority to the Planning Commission, it has chosen not to (which is entirely permissible. HOWEVER, Tredyffrin’s code plainly states:

“As the work of installing the required improvements proceeds, the party posting the financial security may request the Board of Supervisors to release or authorize to be released, from time to time, such portions of the financial security necessary for payment to the contractor or contractors performing the work. Any such requests shall be in writing addressed to the Board of Supervisors, and the Board shall have 45 days from receipt of such request within which to allow the Township Engineer to certify, in writing, that such portion of the work upon the improvements has been completed in accordance with the approved plans. Upon such certification, the Board shall authorize release by the bonding company or lending institution of an amount as estimated by the Township Engineer fairly representing the value of the improvements completed. The Township Engineer, in certifying the completion of work for a partial release, shall not be bound to the amount requested by the applicant, but shall certify to the Board his independent evaluation of the proper amount of partial releases. The Board may, prior to final release at the time of completion and certification by the Township Engineer, require retention of 10% of the estimated cost of the aforesaid improvements as per § 181-34D of this chapter.” Tredyffrin Township Code Section 181-34(G).

What is important in this provision??? Well, first of all the request for release of the funds MUST BE IN WRITING. Second, the BOS is given 45 days to refer the matter to the Township Engineer. The Engineer must CERTIFY IN WRITING that the improvements have been completed and also determine the AMOUNT TO BE RELEASED.

I would ask this:
1) Where is the request from St. David’s (well actually the entities doing the work there) for release of these funds?

2) Where is the report in writing from the Township Engineer?

3) Where is the estimated return amount determined by the Township Engineer?

4) Why was the normal procedural aspects (as was mentioned by Ray) disregarded here?

I am not well versed in this area, but to me it seems simple – there is a process that MUST BE FOLLOWED. With all due respect, the Supervisors must be held accountable for failure to follow their own code. The Supervisors do not have the authority to simply make a motion and dispose of an issue as they see fit with no procedures followed.

PA State House 157 Race Adds Ken Buckwalter of Phoenixville

Ken Buckwalter of Phoenixville made his formal announcement in The Mercury that he is in race for the PA State House 157.  To read the full article, Phoenixville Councilman Seeks GOP nomination for State House click here.Besides the many other accomplishments of Mr. Buckwalter (volunteer firefighter, Phoenixville councilman, businessman) his background includes an interesting twist,which caught my eye.  Since 2006, Ken has been an active blogger; his blog Watching Phoenixville is dedicated to ‘Keeping an Eye on Phoenixville and the General Surrounds and Holding those in Leadership Positions Accountable’. 

Yesterday, Ken highlighted my Community Matters in a post on Watching Phoenixville, as he compared Tredyffrin Township’s recent Board of Supervisor meeting to some of the past Phoenixville Council meetings.  As a blogger, Ken has an interesting vantage point from which to launch his State House 157 campaign.  In reading his blog post, Ken makes an interesting point, ” . . . it is important for candidates of an office and those who have been elected to office to understand those who put us in office deserve transparency and accountability of our actions. Citizen journalists and their following are watching and taking notes.” 

From one blogger to another, I offer best wishes to Ken as he takes on this latest challenge.