January 12, 2009

Bunnell begs FDOT to forgive loan

By HEATHER SCOFIELD
Staff Writer

BUNNELL -- City officials say they can't afford to repay a half-million dollar loan
from the state and now they're hoping for a miracle.

When Bunnell accepted the $529,000 loan from the Florida Department of Transportation
in 2005, "we didn't know that Amendment 1 and an economic downturn was coming,"
said City Manager Armando Martinez. "We didn't know the future would be so gray."

The funds were accepted years before Martinez took over as city manager but now he
must find a solution to the small city's inability to repay the debt.

The money was used to move utility lines along State Road 100 when state officials
decided to widen the road. County Adminstrator Craig Coffey, who also wasn't around in
2005, said he doesn't know if city officials had much say in whether they even wanted to
move the lines. It was something that had to be done for the state road project, Coffey
said.

A spokeswoman at FDOT conceded Bunnell officials never signed the loan documents
that dictate an obligation to repay. But she said it doesn't matter, state laws obligate the
city of a few thousand residents to repay the loan even without a signature on the
promissory note.

Martinez has sent a letter to FDOT officials requesting forgiveness of the loan. Flagler
County Commission Chairwoman Milissa Holland and several other Flagler officials also
sent letters of support for the request to FDOT as well.

Holland's letter begs state officials to understand that the tax rate freezes, voter-imposed
tax cuts and economic slump which have marked the last few years have affected Bunnell
more than most other Florida cities. She said skyrocketing unemployment and a small,
rural population has put the city into a bad situation that will likely only "worsen for the
foreseeable future."

"Bunnell is definitely less financially stout than other cities," Coffey said. "If there's a
criteria for a hardship exemption, I'd think Bunnell would fit."

But there's no program that allows for anything like this, said FDOT spokeswoman Pam
Griffis. The only way for Bunnell to get some relief, either through a total forgiveness of
the debt or a restructuring of the payment plan, is with an order from state legislators.

And that's happened only twice before, Griffis said.

She said the most recent case was in 1999 when Milton-- a small city in the Florida
panhandle -- had a utility loan forgiven through legislation. The other was granted during
an economic downturn in the 1980s when Opalocka, a South Florida city, was allowed to
delay making payments on a loan until the economy improved, Griffis said.

Martinez and Coffey said they weren't aware it would take legislation to handle the debt
problem. Coffey said he plans to recommend that Martinez personally address Flagler's
legislative delegates on the matter when they visit later this month.

Griffis said FDOT also plans to send local officials a letter telling them they'll have to
take their request to legislators.

Martinez said if Bunnell is forced to repay the loan under current conditions, it will hurt
local residents. The city can't raise taxes to pay the bill, he said, because "the residents are
suffering financially, too."

Instead it will mean further cinching of a belt that's already painfully tight, Martinez said.