What’s Become of that “TIF” Subsidy Deal for the Old Salisbury Mall

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The last we knew, Salisbury’s former “Dream Team” City Council – under the “leadership” of Mike (“gone with the wind”) Dunn – was amending the regulations for the special subsidy (“TIF”) for the mall owner to allow Barrie Tilghman to exercise even more power without the need for Council approval of her actions. That was done by means of Resolution No. 1501 and Ordinance No. 2030, both adopted by the Council on March 26, 2007 – just prior to the election when it was still uncertain how the next Council would view the subsidy deal (and who would be elected). Unfortunately, the minutes of the meeting provide no details of the discussion; Salisbury uses the “no embarrassing record” concept.

However, documents prepared for the special subsidy deal, specifically to support the City’s TIF bonds, state that the redevelopment project is “expected to be build out in four to six years,” and a news article last summer said that construction would begin within a year (now down to 9 months). And, the walls are tumbling down as we speak.

Thus, it looks like the TIFbonds must have been issued by now. But the City has not announced that anything has happened or, if it has, who purchased the bonds.

Now, the recent news of a lawsuit against the mall owner (Salisbury Mall Associates, LLP) by the firm that had agreed with it to purchase residential lots for build-out (K. Hovnanian Homes of Maryland, LLC) makes you wonder just who did purchase the TIF bonds because that case does not bode well for a happy outcome. The developer’s “Complaint for Declaratory Relief” states that Salisbury Mall Associates, LLP “has not submitted a Final Comprehensive Development Plan to the Planning Commission, nor completed Phase I Civil/Site Construction Plans, nor recorded either a Final Subdivision Plat or a Final Development Plan.” By letter dated September 27 an attorney with the law firm “Venable, LLP” wrote to the mall owner by way of its spokesmen – the notorious MessrsNatelson and Dzaman – to state Hovnanian’s declaration that their contract “is null and void.”

It looks like that 4-6 year build-out schedule may be delayed, which could cause major difficulty in amortization (repayment) of the bond debt. The bondholders must be wondering what to do, just as we are wondering who holds the bonds. Maybe Barrie Tilghman could let us know, but don’t count on it.

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