The Talladega City Board of Education debated whether or not to accept a parcel of property in Bemiston because of a lien, during a meeting Thursday night. The board ultimately agreed to accept the property, although not unanimously.The property is just over eight acres in the Bemiston community. It originally housed a wastewater treatment plant, but the plant was poorly designed and never worked properly. It became property of the city of Talladega when the Water and Sewer Board was dissolved.
The lien stems from a 1996 bond issue, which consolidated and refinanced two prior issues from 1993 and 1994. The bond issue was again refinanced in 2003 and is due to be paid off in 2027, according to Water and Sewer finance and personnel officer Cathy Fuller.
The original issues were handled by Compass Bank.
Fuller did not work for the board in 1996, but said the records indicate that the board had put up all of its property as collateral. Thus, similar liens are in place against all of the department’s property. She said she did not know why the 1996 bond was handled differently, but said subsequent bond issues have involved pledges of future revenue rather than property.
The board’s concerns may have been somewhat overstated. A partial release form on the Bemiston property was filed with the Talladega County Probate Office in July.
Board attorney Mark Rasco said he knew the city had requested a release, but did not think the bank, New York Mellon Trust Company, had agreed. “I think they consented to the conveyance, and while a foreclosure is unlikely, it is within the realm of possibility. It’s a comfortable risk. It’s not like they’ll be building a school there. It’s going to be a metal building and some gravel.”
Rasco said he did not want to comment on the release in detail until he had had a chance to read it, but when portions of it were read to him aloud over the telephone, he said the language was broader than what he had been expecting.
City attorney Michael O’Brien, who prepared the release, said, “The property has been released, but there is a right of reverter in the deed that was required by the lender. If there is a default on the payment, they still have their rights under the original mortgage and can exercise them. But I think Rasco was correct when he told the board that the city could refinance that and pay it off early. Then it would be gone.”
O’Brien confirmed that there were liens on all of the board’s property. “The bond holder has liens on everything the board owned at the time. There is even a provision in the code that allows them to pass a resolution pledging the assets of the board as sufficient. It doesn’t require a formal mortgage.”
Roy Wessinger, vice president of Bank of New York Mellon Trust in Birmingham, said Friday that he was not at liberty to discuss the issue.
