Aspects of the rail project at the Ardmore Airpark have been under review in the midst of litigation over a right of way. And since the project was put under a microscope, there has been a lingering question over a loan to Sovereign Development. Sovereign is the entity spearheading the project and the owner of the transloading facility at the airpark.
Minutes from an Ardmore Development Authority special meeting on Oct. 8, 2012, indicated the board of trustees voted to guarantee a loan to Marc Nuttle, the president of Sovereign, in an amount not to exceed $1.5 million. In order to guarantee a loan, the ADA, which was under the leadership of Wes Stucky, had to gain Ardmore City Commission approval.
City records indicate that action never took place and, until recently, the ADA was unable to verify whether or not the loan had been executed. Interim ADA President & CEO Brian Carter obtained a copy of the loan agreement, which was signed on Nov. 19, 2012 by Stucky, designating the ADA as the guarantor of the loan.
The action may have violated The Furtherance of Public Functions Act and the State of Oklahoma Constitution.
Title 60, Section 176A of the Furtherance of Public Functions Act, states "express trusts may be created to issue obligations and to provide public funds for the furtherance and accomplishment of any authorized and proper public function or purpose of the state or any county or municipality or any and all combinations thereof, in real or personal property, or either or both, or in any estate or interest or both, with the state or any county or municipality or any and all combinations thereof, as the beneficiary thereof by:" The beneficiary in this instance would be the city of Ardmore.
The Oklahoma Constitution Article 10, Section 17 says, "The legislature shall not authorize any county or subdivision thereof, city, town, or incorporated district to become a stockholder in any company, association, or corporation, or to obtain or appropriate money for, or levy any tax for, or to loan its credit to any corporation, association or individual." Stucky has not been a part of ADA functions since he resigned in February of 2013. When reached for comment, Stucky said he didn't really recall the loan because it had been over a year. He did say that the lease had been taken to the city for approval and he identified the loan in his presentation to the city. He also said the guarantee of a loan had been part of the lease. The city did approve the lease.
In a statement released by Ardmore City Manager J.D. Spohn, the city denied that it had been informed of the loan guarantee.
"Since this transaction, the ADA has engaged the Center for Economic Development Law Firm to review all transactions, including this one and make recommendations for future action," he said. "I think it would be appropriate for the ADA's legal counsel to respond to questions relating to this issue.
"The city clerk has reviewed the City of Ardmore's records and has not found anything to in dicate this issue was ever presented to the city commission for their consideration." The Center for Economic Development Law, which has been retained by the ADA, declined to comment specifically on the matter.
"We were engaged by the ADA to review and prepare recommendations for the airpark and its relationship with Sovereign," attorney Emily Pomeroy said. "We will make recommendation to the authority consistent with what we have been engaged to do, But until that time we will not be discussing financing arrangements or matters related to Sovereign." Complicating the matter for the ADA is discussion of a loan that was never presented on the agenda for the special meeting. The agenda item listed "Progress report and possible action on a potential amended lease agreement for the International Trade Center proposed rail and transload facility at the Ardmore Airpark." The sublease itself lists two loans in the amount of $10 million from Republic Bank. Carter confirmed that Bank7, the bank that issued the $1.5 million loan to Nuttle is a separate entity from Republic Bank.
An email from Stucky to Spohn dated Oct. 31, 2012 also fails to indicate the loan. The email, secured through a previous open record request, mentions a USDA loan, but not a l guaranteed loan.
When Stucky was asked about the email, he did not recall it.
"I don't know what email you are talking about," he said. "You are obviously trying to trap me into something. My presentation to the city included it.
"I don't really know what has happened since I have been gone. I have a consulting business and have been busy trying to help other communities set up something that Ar dmore had, not reliving history." Stucky contacted the Ardmoreite following the conversation to provide clarification in referring to $1 million the ADA put up for the project. The funds, he said, were used for the access rail and construction. It was pointed out that the loan was different from the $1 million and Stucky said the loan was also used for a similar purpose.
"We have monitored and approved each payment," he said.
The payment schedule has not called for any payments to this date however. The terms of the loan call for one principal payment of $1.5 million plus interest at 6.8 percent on May 19, 2014.