Johnston: It’s not a great offer; Recycling facility bid wouldn’t pay for half of debt
by Joshua Sharpe
February 12, 2014 04:00 AM | 2791 views | 4 4 comments | 12 12 recommendations | email to a friend | print
CANTON — Commissioner Harry Johnston says an offer on the table for Cherokee County to sell the Ball Ground Recycling facility wouldn’t even pay half the county’s debt on the property, and the taxpayers would have to foot the bill for the rest.

Details about the offer from Sugar Hill-based Cowart Mulch Products have been scarce since a closed-door meeting of the Cherokee Resource Recovery Development Authority on Friday, but Johnston talked about the proposal with residents during a town hall meeting Monday night.

“It won’t even come close to paying all the debt,” Johnston told about a dozen attendees at his town hall. “Under the best of circumstances that we see on the table today, I’m sorry to say that Cherokee County taxpayers are going to have to pick up a significant portion of that debt until it’s paid off. This would pay — I’m reluctant to put out a number — something south of half ...”

A man in the crowd Monday night asked Johnston if Cowart’s offer was another “ridiculous” one.

“It’s not a great offer,” Johnston said. “Is it possible that it will be negotiated into an offer that will be accepted? I don’t know. That’s still to be determined. I would say it’s definitely on the bubble whether it will be accepted or not.”

But Johnston added, if the county can’t get a “reasonable value” for what the land is worth and more, he would rather just keep the property and hold out for more money.

“To me, there’s kind of a floor that I wouldn’t go below,” he said. “You’ve got a prime piece of heavy industrial zoned and developed property. There’s value in that.”

Johnston said the county has heard from potential operators for the facility who have talked “better numbers,” though so far that’s all been just talk.

“There’s even still some who occasionally call up and say ‘I’d be willing to talk to you about a number a good bit better.’ None of them have made an offer,” he said. “So you kind of have that hard call: you’ve got an offer that’s not really acceptable but it’s the best you’ve got at the moment and you may end up taking it anyway.”

Cowart, which Johnston described as at the forefront of the mulch business in north Georgia, also made an offer on the Highway 5 property about a year ago, but it wasn’t accepted. The company has been considering expanding its operation with a piece of property less than a mile from the Highway 5 facility, according to the company. Potentially, that operation could be a competitor of a mulch business on the county’s site, should a new operator use it for its original purpose.

Johnston, a member of the commission in 2006, was in the almost two-hour-long meeting of the RRDA on Friday to discuss Cowart’s offer, along with Commission Chairman Buzz Ahrens and Cooper. RRDA member John Konop and Cooper were asked after the closed meeting to work together on some of the points of the agreement before a decision would be reached. The RRDA must recommend approval or denial to the Board of Commissioners, which would make the final call.

County Manager Jerry Cooper said Tuesday he could give no update on where the county stood on the offer, but another meeting of the RRDA was scheduled for Monday to discuss the matter again.

Taxpayers in Cherokee County have been responsible for about $100,000 a month in lease payments on the facility formerly run by Jimmy Bobo, since Bobo stopped making the payments. The Board of Commissioners in 2006 created the RRDA to guarantee debt on $18 million in bonds to relocate Bobo’s operation from its former home on Blalock Road to its final spot off Highway 5.

How the situation started

Those in attendance Monday mostly asked questions about how the county is trying to correct the Ball Ground Recycling situation, but Johnston also wanted to offer his version of how the whole thing started.

Others have offered different versions of events and a criminal investigation is underway by the Cherokee County Sheriff’s Office and the Georgia Bureau of Investigation to determine if any criminal activity took place in the deal.

According to Johnston, Cherokee County’s deal to back Bobo’s debt essentially came from the fact his business led to complaints in the Blalock Road area, which was mostly residential and not exactly suitable for the business that ground up construction debris and sold it as mulch.

“He’s in a real heavy industrial scale: mountains of mulch, mountains of stumps, caravans of trucks coming and going, really not a good use for that site,” the commissioner said of Bobo’s Bobo Grinding operation prior to the move. “That generated understandable complaints.”

Because of the complaints, Johnston said the county started looking for ways to get the business off the property, which was adjacent to an inactive county landfill.

“We had the rights, with reasonable notice, to terminate the lease, but (Bobo) said if we forced him to move, he had claims against us and he’d sue the county for some debris we made him to move (and other tasks the county had him do),” Johnston said. “Furthermore, he had a good business. He employed about 100 people. Out of all that discussion came the idea (that) we’ll partner on a new site.”

The initial agreement with Bobo and the county came in 2005.

“It said, ‘OK, if we underwrite financing on this new site, on more or less these terms, he’ll move there.’ That’s how we got where we are,” Johnston said.

It took a few years to get the new site ready for operation, but not long after Bobo got to work at the Highway 5 facility, Johnston said “the bottom fell out” of the stump-grinding business.

“No more stumps, no more development of land, therefore no more stumps to be ground up,” Johnston said. “The whole economics of that business just turned around.”

The “beauty” of the Bobo’s operation originally was the business could charge to take stumps and other debris, grind it up, and then sell the mulch, making money on the front and back ends.

“What happened was the supply of raw materials dried up,” Johnston explained. “All of a sudden ... you couldn’t get that stuff for free anymore. You had to actually pay.”

Johnston said Bobo stopped making payments on the facility, but the county let it go for a while.

“We let it drag out. We let him stay on the property about a year after he quit paying, because we thought ‘Things will turn around, maybe this economic downturn will end soon and he’ll get back on his feet,’” Johnston remembered.

Then the county decided to stop letting it drag out and ran Bobo off the property in 2012, Johnston said.

So far, Johnston said, the county has made roughly three years’ payments on the property, totaling about $3.6 million.



Comments
(4)
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Interested Observer
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February 14, 2014
With considerable respect...who in their right mind thinks that project is worth $6m? The best number I've heard from anyone in the industry is that you could build new for a third of that, plus land. The next question is...who in their right mind thinks that it gets more valuable over time (Harry)? As equipment rots the value decreases. Right now, the commission gets to call this an asset...the minute they sell, they have to recognize a substantial incredible loss...with Harry and Buzz's signatures on the document. Who wants to bet that doesn't happen until after the next election?
foolmetwice
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February 13, 2014
Wasn't it Commisioner Johnston, an accountant, who told taxpayers in 2010 that there was very little risk to taxpayers if the BoBo's defaulted on the $18 million dollar loan because the county could sell the BoBo property. Well here we are Mr. Johnston. Better do the math again, check it twice, and keep an eraser handy.
anonymous
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February 12, 2014


they should pay the difference, it was such a good investment. A BLIND MAN could see through that.

Concerned Taxpayer
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February 12, 2014
Johnston's side of the story in this paper never explains how incompetent he was in issuing checks to Bobo for inflated draws on the land, construction, and machinery. That's is why the county owns a $6 million facility that they paid $18 million for. Now Johnston is trying to sucker someone to pay more than the facility is worth. Any good businessman (Cowart) ain't going to get suckered. Johnston is the problem from start to finish.
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