Either way, county faces "all hell" with streambank borrowing


By David Avitabile

Two top Schoharie County officials last week gave supervisors completely opposite views of the stalled streambank project.
Treasurer Bill Cherry warned supervisors at a special meeting last Tuesday night, to reconsider borrowing that money while county Attorney Mike West said if the county does not borrow the money "all hell is going to break loose."
Supervisors agreed, in a split vote at their meeting on November 20, to borrow $15 million more to pay contractors and keep the work going on the project. Work ceased around September 4 after NRCS, which had agreed to fund 75 percent of the work, suspended payments in June. County officials are hoping that suspension will be lifted this month and funding will be resumed.
That bonding resolution must be approved by a two-thirds majority when the board meets at their regular meeting on December 18. The county has already borrowed $8.5 million for the project.
By borrowing the additional $15 million, the county is taking a huge financial risk, Mr. Cherry told supervisors last week.
"As county Treasurer, I am bringing to your attention the severe financial gamble that is attached with your vote to borrow more money."
NRCS, he noted, suspended payments in June due to concerns with design and construction problems. At that time, NRCS said the problems needed to be rectified by June 30.
Despite ongoing negotiations, a full five months have passed and NRCS has not lifted the suspension, Treasurer Cherry added.
"Unless that suspension is lifted, borrowing an additional $15 million to keep this project moving could prove to be one of the biggest financial blunders that the Board of Supervisors has ever approved."
The project, he said, is now estimated to cost $29.5 million. If the resolution to borrow another $15 million is approved, the county would be responsible to pay back $23.5 million for "what is essentially public funding of erosion control improvements done on private property."
If the county borrows money and the suspension is not lifted, it could be a huge drag on the county budget for many years, according to Mr. Cherry.
"Saddling county taxpayers with $20 to $25 million in potentially non-reimbursable debt will absolutely cripple our finances for the next 10 years and sharply increase property tax rates."
Mr. West countered that the county could be faced with numerous and expensive lawsuits if the money is not borrowed and the vendors are not paid off.
"This is the most dangerous issue this board has faced in the last 20 years," Mr. West told supervisors.
In addition to possible lawsuits from vendors who have completed work on the project, the county could also be facing legal action from property owners for work that still must be performed, Mr. West warned board members.
Supervisors "should tread lightly" and should not pass this decision to another board next year," Mr. West said.
Though Mr. Cherry pointed out that the contracts state that the vendors will be paid only after the county has received funding from NRCS, Mr. West warned supervisors that if they go to court using that contract language as a defense, they will lose "big time."
Mr. Cherry urged supervisors to "redouble their efforts to find a solution between AeCOM and NRCS and get the suspension lifted rather than borrowing the additional money."