Bayer Properties, the developers of the 400-acre Summit Fremaux project next to Interstate 10 in Slidell, had said groundbreaking for the proposed $1 billion development would be in May 2008.

Almost two months have passed since the Slidell City Council approved the plans, but the Fremaux Economic Development District and the developers are still waiting for approval of a bond sale that will help to fund the giant project.

The committee that governs the FEDD is actually the Slidell City Council, which approved an ordinance hiring the law firm of Adams and Reese to handle the sale of up to $25 million in bonds but balked on an ordinance that would set the parameters for the bond sale because of concerns by Slidell Finance Director Sharon Howes. In the meantime, Bayer Properties is waiting to draw down on $350 million in Gulf Opportunity Zone bonds that were awarded for the Summit Fremaux project late last year.

The bond sale now seems to be back on track after a special FEDD meeting Monday morning where the committee approved the ordinance that actually starts the process of issuing the bonds.

During the May 27 meeting of the FEDD, Howes said she was concerned because she had not been informed of her role in the bond sale and didn’t know what the responsibility of the city was concerning the bonds. City attorney Tim Mathison agreed, saying having Howes be in charge of the bond sale might be a conflict of interest since she is also running the city’s finances.

Though the FEDD approves the issuance of bonds, Bayer Properties will be liable for paying back the debt through a special 1-cent sales tax and 1-cent hotel tax to be levied only in the FEDD. The TIF process takes liability away from the city and puts the financial burden on Bayer Properties. Mathison and Howes were concerned that if she handled the account, it would put the city in danger of being responsible for the debt.

The FEDD called a special meeting May 29 with lawyers from Adam and Reese to discuss the issue. David Wolf, special counsel with Adams and Reese and a legal expert on bond sales, said the process had to begin soon in order to meet the July 1 deadline for the bond sale.

He suggested the FEDD find an independent trustee who would take possession of the TIF revenue and allocate it to Bayer Properties during the construction process.

Then at Monday’s meeting of the FEDD, Howes said she felt comfortable with the process, and the FEDD board voted 6-0 to adopt the ordinance setting up the parameters of the bond sale. Members Richard Hursey, Kevin Kingston and Bill Borchert were absent.

The parameters state the $25 million in bonds cannot exceed 12 percent interest and will mature in 30 years.

Wolfe said once the ordinance that authorizes the issuance of the bonds is passed, Adams and Reese can file a Bond Validation Suit in the local district court. The judge will then validate the bonds and declare the sale legal. After that, the bonds will be sold to a bond underwriter, who will market and sell the bonds to private investors.

Wolf said the St. Tammany Parish Sheriff’s Office will collect the special tax from the FEDD and turn the money over to the city.

Slidell will then turn the funds over to a bank trustee, to be named later, who will act as an intermediary between the FEDD and the developers.

The trustee will set up accounts and disburse the money as needed for construction and for debt service. Any surplus money will go to paying off the debt.

The only thing the city has to do is set up an account, where the money will be deposited, and that account will then be used by the trustee.

Even though it is not required by law, Wolf suggested the FEDD hire a construction manager who will make sure the requests for money during the construction process are legitimate. The construction manager would be paid with bond proceeds.

“The construction manager would be a shield for the city,” Wolf said.

All construction would be inspected by city inspectors just like any other construction project within Slidell.

This pleased Howes because the construction manager and the trustee would take liability away from the city’s Finance and Public Works departments.

“A lot of the construction will be infrastructure that will be taken over by the city in the future. This makes the process safer for the city,” Howes said.

During construction, Bayer Properties will build several streets and connections to the city’s sewer system.

“The flow of money is minimal for the city and reduces its liability,” Council President Raymond Canada added. At the same time, the city can check the account to make sure that money is being collected to pay off the debt.

Wolfe said the Bond Validation Suit will take about a month, and the sale of the bonds can start after July 1.