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City attorney says RS Fibersale could leave Green Isle exposed to substantial bond costs
Summary
City attorney reported the joint powers board requested more financial information from RS Fiber and may hire a bankruptcy or bonding attorney; she said the city could face significant bond liability if RS Fiber defaults and a buyer forecloses (approx. $500,000 cited). A special meeting to review legal options was discussed.
City attorney Janis told the City Council of Green Isle on Oct. 8 that the joint powers board has asked RS Fiber for additional financial information before approving a pending sale, and the board is considering legal options including bankruptcy counsel or a bonding attorney.
Janis said RS Fiber has signaled it is in financial distress and that one of its principal creditors may also be the buyer of the system. "We need to do our due diligence," Janis said, adding that the board asked for further financials to understand how a sale would affect outstanding bonds and what liabilities the participating cities might inherit. Janis said it is "pretty likely" cities could end up absorbing a substantial portion of the bond; she estimated the City of Green Islemay be on the hook for about $500,000 (approximate figure reported in the meeting).
Council members discussed holding a special meeting for an attorney the board is considering to present options and next steps; Janis said the purpose would be to determine whether the cities should retain that attorney to explore legal and financial remedies. She said the goal is to consolidate information for the cities, because multiple stakeholders have different interests at stake.
Council members and staff emphasized minimizing service interruptions for residents while also protecting taxpayer funds. Janis said RS Fiber represented to the board that it was current on payments but that those payments might not continue. The attorney cautioned that if RS Fiber were to default or be foreclosed on, service could lapse unless another provider intervenes.
The council did not take formal action on the item at the Oct. 8 meeting; Janis said updates and possibly a special meeting will follow once the board and counsel have more information.
