Commenting on Mary’s post titled Campaign Favors Already?, reader “citizen” said, “I too would like to know more about the Chesrown parcels of land. Does anyone know the purchasing price. It should be part of the public record….right?”
Here is a link to the lease agreement between North Idaho College and the North Idaho College Foundation.
This morning’s Coeur d’Alene Press carried a letter to the editor by Larry Spencer. The letter is headlined ED CORRIDOR: Price Jacking?. It discusses the purchase price.
Addendum 08-09-2009: This morning’s Coeur d’Alene Press carried two letters to the editor. One letter by John Martin was titled RESPONSE: Figures on corridor wrong. It tried to refute Larry Spencer’s earlier letter.
The second letter in today’s newspaper was by Thomas R. Macy. It was titled CORRIDOR: An issue of zoning. Its writer took the position that the DeArmond Mill appraisal was based on inappropriate information and that the appraised value (approximately $13 M) was too high.
Wow! I get the full picture of your reaction to Idaho legal system and politicians.
The lease agreement is all rather confusing to me. The only thing I could understand was that if the Foundation cannot make payments to the bank then Kootenai County taxpayers are going to have to pay up. Considering the insider dealings and the feather bedding I could see this happening. What an interesting position for taxpayers who were denied a public vote on this purchase.
The question remains, did Chesrown purchase his acreage or was it given to him to make the selling price of the Mill Site look lower?
Comment by citizen — August 5, 2009 @ 9:43 pm
stebbijo,
We all get frustrated, but the dishonest behaviors by local officials won’t stop if we accept those behaviors as “normal” in every community. We can be more effective watching and listening than by turning our backs on illegal and deceptive conduct.
If you’ve been watching KREM news, you’ve seen that local attorney Larry Purviance has filed several federal civil rights lawsuits against the City of Coeur d’Alene. I don’t know how the lawsuits will turn out, but they have revealed some information that our City would have preferred to remain out of public view. Already the news coverage has forced City Attorney Mike Gridley to admit that police officers made sexually inappropriate comments in one case (Reighard) and illegally tried to seize property in another (Scott). If nothing else, Purviance’s lawsuits should persuade Idaho’s legislators they need to carefully examine and hopefully upgrade the training and standards for Idaho law enforcement officers. I won’t hold my breath on that. That was my hope-for outcome when I posted Theft, Gunfire, and Death in Hayden, Idaho: Part II in February 2005. I had hope that my post might encourage the Idaho State Police to publicly criticize the Kootenai County Sheriff’s Department’s and the Kootenai County Prosecuting Attorney’s handling of the Madonna-Kralicek shooting incident and the Sheriff’s and County Commissioners’ subsequent attempt to keep some sheriff’s department employees quiet. It is mildly interesting that the Idaho State Police Captain during that incident was Wayne Longo, the current Coeur d’Alene Police Chief. After Longo’s retirement, the ISP Captain in charge of investigations in this region during the Madonna-Kralicek investigation was promoted to be the ISP Regional Captain. He was reported by the Spokesman-Review to be an informant for Coeur d’Alene City Administrator Wendy Gabriel.
Eventually, people in the community begin to connect the dots and get a clearer picture. I think our responsibility is to help each other identify and connect those dots. Then we need to vote to replace the dishonest elected officials with honest ones. While we can’t vote out dishonest appointed officials, we can encourage honest elected officials to appoint honest ones.
Comment by Bill — August 6, 2009 @ 6:45 am
For starters every time I link to this PDF file it logs me off of the Open CdA website. I have never experienced that before and do not know if it is intentional or not.
1) The lease is set to renew annually on July 23. The 1st renewal is set for 7/23/2010 and is renewable for only 4 years. That would end the lease time frame on 7/22/2014 at midnight. The biannual payments are set for Feb 1, and Aug 1 and they commence on 2/1/2010 and continue. If I read this right the lease will expire about a week before the final lease payment is due.
2) If NIC defaults on a payment the Foundation is to provide them with a 60 day timeframe to make up those payments with an 8% annually compounded penalty applied. But, if the Foundation fails to pay on the note and receives a notice of default NIC has only 10 days to come up with the entire balance of the lease payments or lose the property.
3) Paragraph #17 places NIC in total liability for any additional environmental clean up costs if any are found. So if something is found NIC picks up the complete tag and has no recourse to the Foundation or the MIll.
4) NIC cannot sell any part of the land that would in anyway conflict with the mandated insurance coverage. That implies that it could sell off portions of the land that does not result in cancellation of the insurance. This is the only notation I could find regarding transfer of title by reselling the land. They cannot sublet the lease option. But they can build and encumber debt and I presume resell or lease bare property or buildings as long as the insurance for the balance of the property remains intact.
5) I cannot reproduce the number Spencer wrote in his editorial piece. The numbers I get roughly agree with what was proposed initially. In total about $12.5 million is going towards the purchase of the land. Still NIC is required to support all annual property taxes and insurance and no doubt some closing costs as well. It is not any sort of deal.
6) What is especially aggravating is that the contract clearly notes that the entire straw buyer, lease/option arrangement has been established because NIC cannot “legally” encumber such direct purchase debt. The whole transaction has been arranged and authorized by our public officials to skirt state law and they don’t care one whit who knows about it.
And still we know nothing about how Chesrown worked his part of the deal. He had to have put down earnest funds into his option agreement. How were they managed? How is the other property Chesrown acquired related to this transaction?
Comment by Wallypog — August 6, 2009 @ 6:45 am
Wallypog,
If you click on the link with your left mouse button, you may be telling your computer to close the current URL (OpenCdA.com) and open the link. Try using your mouse’s right button, if it has one, and click on “Open Link In New Window” or “Open Link in New Tab.” That should keep OpenCdA.com open even after you go to the link. Also, when you close the link, make sure to carefully choose to close only that link and not all the open windows or tabs.
Citizen and Wallypog,
You’ve both made good observations and asked good questions. We’re working to try and find the answers. Both NIC and the Foundation have been very careful to manage the information the public has received about this entire project they have euphemistically dubbed “The Education Corridor.” Wouldn’t you think that if this project was truly about improving educational and vocational training opportunities at North Idaho College, they would have been able to make that case persuasively to the people of Kootenai County? If this project was primarily about improving educational and vocational training opportunities at NIC, the people in the community would have supported either a bond or a judicial confirmation for the long-term debt this project will incur. This project is less about improving the services of NIC and more about using publicly-owned property to enrich some private investors. After all, if you’re a developer of commercial properties, your profit increases if you can get the taxpayers to pay for the land so you don’t have to buy it yourself.
Uncovering the facts and not just reporting what officials put out in press releases and self-serving interviews is the responsibility of the print and broadcast media. Unfortunately, the closest thing to an aggressive news medium in this region is KREM news in Spokane.
Comment by Bill — August 6, 2009 @ 7:01 am
Thanks Bill and Wallypog for interpreting the lease agreement.
I do not want to jump the gun on subjects, but how the heck will NIC come up with construction costs for buildings? I doubt the voters are in the mood to vote for the construction. Could it be that they will sell portions of the land to developers to raise the money and therefore evade the taxpayer voting yet again? Reaction from the peanut gallery please.
Comment by citizen — August 6, 2009 @ 8:25 am
Bill, I do see what you say about right and left click functions. Still, I have always used the left click for such links and never had my registration log in function manipulated by the site linked to. I have to wonder if, in this instance, this just happens for the Open CdA website or if it happens from any site that provides a link to the file. Spooky if you ask me.
Comment by Wallypog — August 6, 2009 @ 10:07 am
Wallypog, the first four million was paid down, and another $1,074,000 payment is due on 2-1-10, making the first year’s payment total $5,074,000. The lease states
“subject to the proceeding sections, this Lease may be renewed for a total of not more than four (4) consecutive one year terms commencing on July 23 and ending on July22 of the following year.”
A clear reading of this would indicate that after the first year, the lease can be renewed for up to four more years. They might have intended that it be for a total of four years including the first year, but then they should have written…
“subject to the proceeding sections, this Lease may be renewed for a total of not more than three (3) additional, consecutive one year terms commencing on July 23 and ending on July22 of the following year.”
Four more years at $2,148,000 per year plus the first year’s payments totals $13,667,206.18
NIC has said they are paying $10,000,000, and the sale was for that amount, but the payments are $3.67 million more. Who gets the rest?
Comment by Spencer — August 6, 2009 @ 12:33 pm
Citizen,
The very questions you asked and a lot of others would have been asked and answered by the proponents of the scam if they had been genuinely interested in honestly convincing people to vote for the bond the Constitution requires or convincing a District Court judge to approve it by judicial confirmation. That the proponents have carefully avoided the constitutionally and statutorily provided methods to get this funded strongly suggests they are intentionally circumventing the voters, hoping that no one will pay attention. This same method was used in Boise. There it was called University Place.
Comment by Bill — August 6, 2009 @ 12:43 pm
Wallypog,
If you use your left mouse button to go to the link, you should also be able to hit your “back” button and go back to OpenCdA. We’ve recently installed the most recent upgrade to WordPress, and that sometimes causes unpredicted things to happen. I’m sorry for the problems it’s causing.
Comment by Bill — August 6, 2009 @ 12:46 pm
Spencer,
Thank you for coming on and explaining how you calculated the figures you used.
Comment by Bill — August 6, 2009 @ 12:47 pm
I believe that if we can find out more about the land Chesrown received we might have greater insight into the back scratching. Perhaps it is all very innocent, but I really think an effort to find out the terms of his deal might be worthwhile.
Comment by citizen — August 6, 2009 @ 1:38 pm
Spencer I read the payment schedule differently. I see the 2/1/10 payment as the 1st of 8 biannual payments over the lease term of 4 years. Couple those with a $4 million down payment and my total is one payment less than yours. Insofar as I can determine there are no other payments due in 2009. The 1st starts in 2010 and proceeds for the term of the lease “appropriation” (their verbiage) which is 4 years time for a total of 8 payments.
The only thing puzzling me is that the date (8/1/14) of the last payment is beyond the final lease termination date (7/22/14). If the last payment is to be in Feb of that year then they would have to transfer title per the lease purchase agreement at that time.
As with most contracts it is not clearly spelled out. The documents needed are the 1st TD note between the foundation and the bank and the HUD-1 for the purchase of the property between the Foundation, Chesrown and Stimson. Can anyone get those? They would be most informative.
Comment by Wallypog — August 6, 2009 @ 1:38 pm
The lease does not come up for renewl until July 23, 2010, but a payment is required on 2-1-2010. You are correct that no other payents are due in 2009, but the first payment is due on 2-1-10, and is the only one other than the $4,000,000 down payment due for the first year of the lease. Look higher on the page.
It is a very poorly written document, and possibly so unclear as to be unenforcable in court.
Comment by Spencer — August 6, 2009 @ 5:36 pm
As I read the document there are 5 years of total lease time in the contract. Year one started this July 23rd and ends at midnight 0n July 22, 2010. Then it can be renewed for 4 more years, July to July. That would be 2011, 12, 13 and 2014. The final date would be July 22, 2014 ending at midnight.
The payments start in 2010 on Feb 1 and again on Aug 1. They continue for the 4 years of the lease. 2 each year for 4 years, for a grand total of 8 payments. Granted the 1st payment may occur during the term of the 1st lease year but that makes no difference because there are not 2 February’s in any year. There are only 2 payments for 2010, then 2 in 2011 and so on. There is not going to be 3 payments in 2010.
Still, as written the final payment does not jive with the ending of the lease. The lease will end and legally cannot be renewed prior to the last payment and the deal being finalized. I suspect it is just an error. I can’t imagine that it is intentional intending to capture nearly all of the payments and then ending in a foreclosure default. The bank would get all of the paid funds and the property too. It maybe possible to make the payment early but that note needs to be reviewed. There could well be a prepayment penalty structure in that mortgage contract. All of this needs to be addressed ASAP.
Comment by Wallypog — August 7, 2009 @ 5:41 am
Wallypog,
Thank you. The kind of informed analysis you and Spencer have provided as informed citizens is what should and would have happened if the NIC Board of Trustees and the NIC Foundation Board of Directors had not been so secretive with their information. Oh, the public was allowed to comment in informal meetings about this project, but the kind of insightful analysis you and Spencer have done can only come if you have access to the inside information. That the NIC Board of Trustees and the NIC Foundation, with the blessing and encouragement of the Corrupt d’Alene Mayor and City Council, have withheld this information until after the property was annexed, rezoned commercial C-17, and the purchase agreement signed strongly suggests some of our supposedly honorable citizens knew the details of this project would never stand up under close scrutiny.
Presumably this “lease” agreement can be terminated by either party at any time without penalty to NIC. I wonder if that is really true? Of course, when I say “without penalty to NIC,” I’m really saying without penalty to Kootenai County taxpayers, because NIC is a taxing entity (the NIC Trustees took foregone taxes to help fund this project).
It’s interesting to me that attorney Marc Lyons represented both the NIC Foundation and NIC in this arrangement. I wonder how the same attorney can represent both parties in this transaction, particularly if something goes sideways as it did in the University Place debacle.
Comment by Bill — August 7, 2009 @ 6:32 am
I am not so sure that the lease agreement can be terminated at will and without consequence by either party. Certainly the Foundation could not back out if NIC is performing. NIC could choose to not renew the lease or they could simply default on the contract as so many homeowners have done. But, if they do they will lose all of the funds already paid. There is no provision saying that NIC can back out of the deal and have all of its funds returned to them.
But, at this point, it might be possible that the lease contract itself is illegal because of the performance dates I have already alluded to. As written it cannot perform the title transfer even if all parties fully comply with its provisions. That is an unenforceable contract which I believe is an illegal instrument. I think that today NIC could back away from the deal and demand their funds be returned. Even so, the Foundation would still be on the hook for the purchase. That is a separate contract.
Comment by Wallypog — August 7, 2009 @ 7:59 am
Great information, Wallypog, thank you. What concerns me most about the backdoor method being used by NIC and the Foundation is that the NIC Trustees say they “can’t encumber future Boards”, yet they enter into a long term “lease” with the Foundation and risk all the money they’ve (we’ve) paid if future Boards can’t or won’t continue the payments.
Something smells very fishy.
Comment by mary — August 7, 2009 @ 11:08 am
Mary, that’s precisely the issue: What if something happens and this deal falls through? Is any of the public’s money in jeopardy if that happens?
Comment by Bill — August 7, 2009 @ 11:27 am
I have added an addendum to this post to include link to two letters in the Sunday, August 9, 2009, Coeur d’Alene Press. I also note that the NIC website does not include a copy of either the lease agreement (linked in our post) or the appraisal. I also have a copy of the appraisal, but it is quite long, and I am trying to find a way to scan and include the relevant pages without inadvertently excluding other relevant pages.
Comment by Bill — August 9, 2009 @ 11:59 am
A down payment that is disguised as pre-paid rent along with the term of the so called lease agreement we all know is their way around the law. Those who are willing to take such measures and leave the public out of it while spending public monies have trashed what could have been a good thing. Sad they can’t be far more ethical and open.
If Larry’s calculations are off by one payment still there is a significant discrepancy. Then there are the undisclosed connections and conflicts of interests a bunch of them. The appraisal and zoning matters are just another joke. Surely the boards obtained the views of independent counsel to rely on along the way.
Comment by Appalled — August 13, 2009 @ 10:06 am
Appalled,
Good for you. Alert, aware, and informed citizens that raise good questions are the best defense against dishonest public officials. One of our objectives on OpenCdA.com is to encourage people to go beyond the hyperbole of the proponents’ propaganda and look at the primary documents, the public record. When the information that should be public is withheld or is parsed out in dribs and drabs in hopes of discouraging honest inquiry, be suspicious, even skeptical. Public officials who have nothing to hide, hide nothing.
Comment by Bill — August 13, 2009 @ 12:22 pm