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Monday, September 14, 2020

You should always read to understand...

...BEFORE, you sign your "John Hancock" to the bottom line.

I recently sent a FOIL request to the town clerk's office:
"I would like to FOIL any and all documentation, whether signed or unsigned, for the “borrowing” from Adirondack Bank in connection with the five (5) bond anticipation note resolutions adopted by the town board on December 18, 2019."
In return, I received a lot of documentation in four (4) separate attachments.

After reviewing the documents, I found it interesting that there actually was no documentation that would lead one to believe that Fiscal Advisors had ever been made aware of the almost $3.3 million borrowing.

The only documentation between the town finance office and Fiscal Advisors was an email dated June 4, 2020 which referred to the February 2019 borrowing for the town hall, among other items; nothing referring to the February 2020 borrowing through Adirondack Bank.

Perhaps that would explain why Fiscal Advisors never included the information in their June 30, 2020 Financial Disclosure to the Municipal Securities Rulemaking Board (MSBR).

Why didn't the town inform Fiscal Advisors of the borrowing from Adirondack Bank since reporting to the MSRB is mandatory and Fiscal Advisors is the firm that handles all of the town's financial disclosures? Seems to me that should be a question that should be asked at the town board table.

I also noticed that a document titled "ARBITRAGE CERTIFICATE" ,which was signed and agreed to by Paul Miscione was included.  It states in part:
The Issuer (Town of New Hartford) hereby covenants with the owners of the Obligation that the Issuer will (i) take all actions on its part necessary to cause interest on the Obligation not to be includable in the gross income of the owners thereof for Federal income tax purposes, and (ii) refrain from taking any action which would cause interest on the Obligation to be includable in the gross income of the owners thereof for Federal income tax purposes. In this regard, and without limiting the applicability of the foregoing, unless an opinion is rendered by Orrick, Herrington & Sutcliffe LLP that the following actions are not required in order to maintain the exclusion of interest on the Obligation from the gross income of the owners thereof for Federal income tax purposes, the Issuer hereby covenants that it will:
(a) not use any of the original or investment proceeds of the Obligation to,
(i) make loans (including loans made pursuant to financing leases, installment sale agreements or other similar types of contractual arrangements),

(ii) finance facilities that will be sold or leased, or

(iii) finance facilities other than facilities that will be used exclusively by state or local governmental units or by members of the general public on an equal basis
Does Miscione understand what he signed?

Then there was also a document titled "Tax Compliance Guidelines", again agreed to and signed by Paul Miscione, which states in part:
"These guidelines (the "Guidelines") are adopted by the Town of New Hartford (the "Issuer") to ensure that interest on tax-exempt governmental bonds of the Issuer (the "Bonds") remains excludable from gross income under Section 103 of the Internal Revenue Code of 1986 (the "Code")."

"Bond Proceeds are subject to certain Private Business Use (as hereinafter defmed) and Private Loan (as hereinafter defmed) limitations as further provided in the Arbitrage Certificate."

Private Business Use will arise from the lease or sale of the Bond-fmanced Assets. Private Business Use will generally arise through a contract whereby a non-State or local government unit manages, operates or provides services with respect to Bond-financed Assets (a "Management Contract")

"B. Monitoring of Private Business Use For each Bond-fmanced Asset, the Designated Tax Compliance Official or his or her designee will determine the expected use of such asset and whether such Bond-fmanced Asset is or will be subject to any contracts that may give rise to Private Business Use or a Private Loan."

"No Bond-financed Asset will be sold, leased or transferred by the Asset Managers without prior approval by Bond Counsel and the Designated Tax Compliance Official."
Private business use...where have we heard that before? Maybe on this blog and in several emails sent to Miscione and more than likely scrutinized by the town attorney prior to my posting blogs on the subject.

I guess the question that should be asked is "Perchance, has the town recently sold or leased any assets that are still bond-financed without seeking approval of bond counsel?"

Why would anyone sign official documents that indebt the town for millions of dollars and either not comply or not understand what they are signing.

Where are the town board members and town attorney?   Perhaps, they should revisit having Miscione do the town's finances on his own!  

Just maybe, they should wake up and take part in the town's business transactions as if they were complicit in anything that Miscione does whether right or wrong...because they are!

Here is a pdf with all the documentation I received from my FOIL request for anyone who is interested.

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