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Versailles real estate lawsuit moot, judge says

VERSAILLES — A judge has ruled against the attempt by a Versailles City Council member to have an ordinance for a complex land deal declared invalid.

Woodford Circuit Judge Rob Johnson ruled that "the ordinance has become moot" because the deal fell through, so he cannot issue a declaratory ruling on the ordinance's validity. Johnson's order and opinion were filed Monday.

At issue was the January approval of an ordinance by the Versailles City Council for $56.5 million in 30-year bonds from the city's Public Properties Corp. to acquire nine buildings in Frankfort. The deal fell through after the Herald-Leader raised questions about it.

Council member Ann Cox, the only council member to vote against the deal, filed a legal action against the city in February that asked a judge to rule that the ordinance was invalid because it lacked draft bond documents. That prevented the council and the public from fully understanding it, Cox said.

The other council members argued that the deal was moot and could not go forward since European bank Dexia decided against supplying a letter of credit to guarantee payment of the bonds.

Versailles Mayor Fred Siegelman was pleased by the judge's ruling. "I think it vindicates us," Siegelman said. He said the proposed deal was "no different" than the one that brought the headquarters of the Kentucky Community and Technical College System into the vacant Texas Instruments building in Versailles.

But Cox noted the judge wrote that he appreciated Cox's concerns "over the council's actions in enacting the ordinance in this case. Clearly the land acquisition project was a complicated undertaking involving a substantial amount of money."

Johnson wrote: "Adequate time should have been taken by each council member to make a well-informed decision prior to enacting the ordinance, especially since there was some uncertainty over the legality of acquiring the properties."

If the council had done its due diligence, Cox said there would not have been a need for her to file legal action. "But they wouldn't slow down and take their due diligence," she said.

The land deal is an issue in the Nov. 4 race for city council, in which 10 candidates are running. Cox is running for re-election, and her newspaper ads mention that she "was the only city council member to vote against the Frankfort land deal."

Cox said Wednesday there's a possibility that Versailles would have been put in a vulnerable position had the deal gone through. She noted that Belgium, France and Luxemborg injected almost $9.2 billion to keep Dexia afloat during the ongoing financial crisis.

But Siegelman said there is no way Versailles would have been on the hook for anything. He said numerous attorneys and other experts assured him and the council that "the city of Versailles would have never been responsible for one dime."