Notice of default issued on Country Crossing bonds [Dothan Eagle, Ala.]

Nov. 14--The trustee of two Country Crossing revenue bond offerings totaling $29 million have filed notices of default on the bonds after the entities created to pay the bonds failed to provide a required accounting.

An initial bond offering of $21.325 million was issued in 2009 to help fund the construction of the Country Crossing project in south Houston County. A later bond offering of $7.735 million was issued in 2011.

Country Crossing opened briefly in December of 2009, but closed in late January of 2010 under threat of raids by then-Gov. Bob Riley'sTask Force on Illegal Gambling. The bonds were supposed to be repaid through fees generated from gaming and entertainment at Country Crossing. The complex reopened under a new name -- Center Stage Alabama -- in June of 2011 with new management. It has been operating, however, under the same agreements that created a Cooperative District and Improvement District for the purpose of issuing the bonds, collecting the fees and repaying the bonds.

The U.S. Bank National Association issued notice of indenture defaults on the bonds Monday for the following reasons, according to the notice:

» The Cooperative District failed to provide the trustee with an audited financial statement of the district within 210 days of the end of the 2010 fiscal year.

» The Improvement and Cooperative District failed to maintain the fees and special assessments necessary to fund the districts and pay the bonds.

The trustee gave the district 30 days to cure the following, or face additional defaults:

» The districts failed to employ or retain a certified public accountant to perform the accounting and auditing functions of the district.

» The districts failed to maintain proper insurance as determined by an independent insurance consultant.

» The districts failed to provide payments to the trustee for its fees and expenses.

» The districts failed to remit special fees to the trustee to pay the bondholders.

The notice of default also demanded a full accounting of all fees and special assessments levied during the initial opening of Country Crossing (December 2009 through January 2010) as well as the most recent period of operation for Center Stage Alabama (July 2011 through present).

Jeff Rubin, CEO of Resorts Development Group which oversees the development at the Center Stage Alabama site, said he was not aware of the notice and declined comment. Calls to Cooperative District attorney Gary Sherrer and U.S. Bank National Association were not immediately returned.

The Cooperative District took steps to avoid default in May. The district members voted to remove $300,000 from a reserve fund in order to pay taxes on the property owned by the district and to pay attorneys fees.

The remainder of the reserve fund -- about $2 million -- was to be used to make the next payment on the district's 2009 bond issue of $21 million, which was due this month.

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