AKRON (TDB) -- A suburban community in Ohio has defaulted on a payment for its town hall, a $5.4 million structure financed by port authority bonds. That's certainly chilly news in a state still seeking some economic footing even as the national economy slides into recession. The report about Twinsburg Township's delinquency turned up today in this Fitch rating service analysis of a Summit County port authority bond fund. Fitch said the fund -- which is used for economic development projects -- remains stable. But it flagged the missed payment, which occurred in a NE Ohio community, a region of the state that has been increasingly troubled by manufacturing job losses. Here's what the bond rating firm noted:
"The (port) authority recently informed Fitch that Twinsburg Township, which makes up 12.3% of the bond fund's portfolio ($5.4 million), failed to make its Feb 1, 2008 lease payment. The associated bonds are secured by an annual appropriation leases, which is backed by a first mortgage lien and security interest on a 70,000 square foot town hall building. The building houses township offices and a county's sheriff's office.
"Although Twinsburg's payment remains delinquent, the (port) authority used its own funds from a supplemental reserve account to make up for the missed payment. The authority reports that it plans to use additional moneys from its supplemental reserves totaling $1 million, if necessary. The supplement reserve account is not pledged to bondholders; however, it is a restricted account set aside by the authority's board to supplement the bond fund. The bond fund's reserves remain adequate to absorb any permanent losses that may be incurred as a result of Twinsburg's lease payment default."
Twinsburg Township apparently is not explaining or sharing much information about the default with its estimated 2,100 residents, according to the community's Web site. It says there is no news to date in 2008.
[UPDATE: 9:16 AM 4/12/08 -- Today's Plain Dealer reports the port authority served notice it will evict the township. The government offices are now supposed to vacate the administrative building, which costs the township about $39,000 a month to lease from the port authority. Inquiring minds are left to ponder: Who -- or what -- moves in to the bond-financed building after the township gets booted out? Is the new building going to sit vacant without a tenant? Was more than $5 million spent without purpose by public agencies?]