Daily Progress, Jacksonville, TX

Local News

October 8, 2012

City hopes to retain rodeo arena in Lon Morris bankruptcy case

JACKSONVILLE —

City officials and the Jacksonville Rodeo Association said they are confident the rodeo grounds will  revert back to the city and not be included in a proposed cash auction of Lon Morris College's assets.

Attorneys for LMC filed a petition last week in the United States Bankruptcy Court Eastern District of Texas for permission to liquidate all of its assets, including buildings and property in a cash-only auction.

Jacksonville City Attorney Joe Angle said among the assets listed in the document is the rodeo arena, which was deeded to the college with specific conditions in April 2009.

The document was filed with the court in Tyler and the hearing is scheduled for 9:30 a.m. Oct. 31, where the judge can approve, deny or amend LMC's request, including the status of the rodeo arena.

“I don't know if they will continue in that position,” Angle said. “Last time I talked with their attorney, they were keeping (the rodeo arena in the proposed auction).”

City Manager Mo Raissi said the city, rodeo association and LMC entered into the contract to allow the college additional space for its agricultural programs.

In documents between the three entities, the college was allotted seven years to do improvements to the arena and recreational center, which was formerly a national guard armory. Repairs were to include include painting, roof patching, regular maintenance and hosting youth summer activities in the recreational center. The improvements should have cost the college $250,000.

LMC was also required to allow the arena to be used by the rodeo association for the annual PRCA Tops in Texas Rodeo event.

The special warranty deed, signed by both parties, says if the improvements were not made, the property would automatically revert back to the city. Angle said he is confident the court will allow the city to take ownership back.

“You never know when you go to court, but we feel confident, especially in view of the terms and conditions that Lon Morris accepted the donation,” he said.

Byron Underwood, president of the rodeo association, said he is also confident the city and bankruptcy court can come to an agreement.

“We are already planning for the 51st rodeo, so we are hoping that works out,” he said. “We are planning for the third Wednesday in May.”

The city also has a claim against LMC for an outstanding utility bill.

Finance Director Freddy Thomas said the college owes about $25,600 in unpaid water bills. He said the college started paying late in March and had an outstanding balance for April, May, June. The college began making partial payments to the city, but Thomas said the full amount owed never came in.

Raissi said the city kept the water running as a courtesy to the school.

“We were trying to help them,” Raissi said. “With health and safety regulations, if a school doesn't have water, they shut down. They can do without electricity, but if they don't have running water they can't operate, and we knew if we cut them off, they would have to shut down, so we didn't.”

Raissi said he is discouraged the college is trying to auction the building when the city did not turn off water service.

“It shouldn't go that far,” he said. “They were behind on the water bill, and we could have closed the college, to just turn the water off for non-payment, and we didn't do that to help them out and not turn the light off on them. That should stand for something.”

Angle said while the city stands a good chance of getting the rodeo grounds back, the outstanding amount owed to the city for water is unsecured debt and the city has a small chance of recouping its funds.

“I doubt we will get very much, but we will have to wait and see,” Angle said. “Typically the unsecured creditors in bankruptcy receive pennies on the dollar, but we won't know until it's actually done.”

 

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