Marion asks Philadelphia investor for more money

O'Connor, president of a brain trauma facility called Delaware Valley Residential Care in Chalfont, Penn., has asked the city to issue up to $60 million in tax increment finance (TIF) bonds to finance I8-69 Land Development LLC's development of 164 acres for housing, recreation and retail uses. O'Connor and James A. Cook, chair and cofounder of Delaware Valley Residential Care, are behind the development company, according to a booklet provided to city council members.

Council members voted in favor of moving forward with the bond deal Tuesday but must have a public hearing about it and vote in favor of it at least once more before it's final. A Development Committee meeting was also scheduled for 6 p.m. Tuesday in the city hall council chambers for further discussion.

If council members approved, Marion would use TIF revenue, a special property tax revenue earmarked for redevelopment, to secure a type of bond technically called a conduit bond. The city would then give the loan proceeds to 18-69 Land Development LLC, which must repay the debts if TIF revenue is insufficient.

"In a conduit financing, the conduit (third-party) borrower is liable for making debt service payments on bonds," according to the website of the Municipal Securities Rulemaking Board, a body created by U.S. Congress to help oversee the municipal bond market.

"We are the guarantors," O'Connor told council members Tuesday.

While city officials and their financial consultants have also said the city is not liable for the debt, city officials have refinanced past conduit bonds under terms that relieved the third-party borrowers of their obligations to the debts.

"We are being told that we are not on the hook," Whitticker said Friday. "If (O'Connor) is not willing to put that on the table, we should not vote."

O'Connor said his obligation is not to the council but to the bank that gives him a loan with which he said he plans to buy the bond. The bank would essentially have a mortgage against 18-69 Land Development's cash flow.

"We're going to give the bank whatever they want to get this done," he said. "They're going to control what we're doing."

O'Connor also pointed out that city officials said they didn't have to come to the council for permission to issue bonds for the Ind. 18 and Interstate 69 area because the council previously authorized the city to issue up to $180 million in bonds for the area.

"We didn't have to ask for this. It was already in place. One of the things we want to say to the community is, 'Folks, if you don't buy into this we won't do this,'" he said.

O'Connor also told the council, though, that he didn't expect to need more than $40 million.

"The $60 million is more than we're ever going to need," he told them Tuesday.

O'Connor said he's worked on obtaining the loan from a major bank on the east coast, which he said he declined to name because he's giving a local bank an opportunity to match the first bank's offer before he closes on the loan.

"I can tell you candidly," he said, "First Farmers has put a full-court press and wants to play. We've given them all the information."

The Converse-based First Farmers Bank & Trust is the same bank that the city administration hired to serve as trustee on $8.5 million worth of conduit bonds whose proceeds benefited Marion Sports Authority and Marion Land Development, which also sought to develop a block of Ind. 18 and I-69 for mixed use, and Global Investment Consulting, which sought to revamp the vacant old YMCA building.

First Farmers also bought those bonds, which have more in common than the bank. In all three cases, the projects for which the city issued the debts failed to happen yet the bond proceeds were spent. For Marion Sports Authority's arena project, neither the city nor the bank could produce all of the associated bank statements to show how the money was spent. For the YMCA project, no bank statements have been produced to date even though the Indiana State Board of Accounts has said there should be a paper trail documenting how the money was spent.

Whitticker also questioned O'Connor's and Cook's experience.

"The pamphlet is well done, but how much substance is actually there?" she said, referring to the booklet given to council members about the first phase of their plans.

The page of the booklet that describes their past projects does not name any of the "successful healthcare businesses," "multiply [sic] healthcare facilities" or "hospitals, nursing homes and assisted living facilities" that it says O'Connor has been involved with or the "large nursing home group" that it says Cook chaired.

When asked about that page Thursday, though, O'Connor said he would send a resume to the Chronicle-Tribune.

O'Connor was also asked, when he met with the press Tuesday, to share the feasibility studies that he said guided his development plans, which include a sports and entertainment arena, a tournament center, rental housing for adults over age 55, a medical office and a hotel. O'Connor said Thursday that his attorney was asking for a release so he could give out the studies.

One chapter of O'Connor's experience that is not mentioned in the booklet is his prior foray into hockey, which ended with the now-defunct team filing for Chapter 7 bankruptcy protection, court records show. The case remains pending.

O'Connor said he learned from his mistakes, however, and has structured plans for development in Marion such that past mistakes aren't repeated.

"That was a bad deal," he said, citing one year left on the team's lease. "We should have listened to (our attorney)."

On March 28, 2012, the East Coast Hockey League approved the sale of Blue Line Sports LLC, owner of the Trenton Titans, to Delaware Valley Sports Group LLC, according to a media release from the league. The minor-league franchise was affiliated with the Philadelphia Flyers.

On March 11, 2014, the team filed for bankruptcy. In the bankruptcy filling, which O'Connor signed as "president/manager," Delaware Valley Sports Group has the same address as Delaware Valley Residential Care, and O'Connor and Cook are listed as codebtors.

"It was a very simple thing. They had no place to play. The league took away the team," O'Connor told the press Tuesday.

That's why Marion Sports and Entertainment Group LLC will own the arena and tournament center planned for Marion and own the hockey team that would call the arena home, O'Connor said. He and Cook are behind that group, according to their booklet.

O'Connor's and Cook's contributions to Marion Mayor Wayne Seybold's campaign for state treasurer in 2014 also have yet to come up in literature or public meetings, but O'Connor said it's standard practice for the two, who see supporting political leaders as a way of supporting their communities.

"I thought (Seybold) was a good guy. We made a history of trying to support guys we believe are good guys. If you look at Pennsylvania, we've tried to do that consistently," O'Connor said. "That's something we've done all the time and it's something that we think we should (do to) support good government."

Campaign finance records show Delaware Valley Residential Care, O'Connor and Cook each donated $5,000 to Seybold's campaign on March 28 for a total of $15,000. Two other health care executives with Pennsylvania addresses each donated $2,500 on the same date.

O'Connor said Seybold did not solicit donations and O'Connor did not attend a political event.

The businessman said he wants to be forthright with the community because he understands some community members have hard feelings about past bond deals that failed. He wants to be open to questions, to people coming to "test" him, because he understands words are "hollow."

"There's really not a whole lot that we can add," he said. "A lot of me is talked out. It's now time to deliver."