ELLY GRIMM
• Leader & Times
The Liberal City Commission found itself yet again discussing a Dairy Queen project at the end of its most recent meeting last Tuesday evening.
Damien Denmark began the discussion.
“As you might remember, this time last year, we presented a term sheet for a prepaid Community Improvement District (CID). We wanted to revisit that term sheet again this year in light of recent updates on this potential project that is going on the south side of Liberal adjacent to where the City has committed to the retention pond near Fellowship Baptist Church,” Denmark said. “You have a copy of the term sheet for the prepaid CID that outlines the cost of the development, the cost of the land, as well as the proposal. The amount did not change, and the prepaid CID request still stands at $350,000, with the split CID amount to be determined. I am aware the commission obviously does not have in-house bond counsel as well as the city attorney present, but I am asking essentially for this for the commission to approve this on merit and principle and work with legal counsel to determine what’s legal and if the City can legally bond itself to it and work with Gilmore and Bell. It’s been a long two years on this project, I am very confident this isn’t the last project as far as retail that is slated for this outside of town, this is one of many. We – the developer and my company – are willing to work with the City of Liberal to develop a policy where we’re not taking advantage of the City and able to provide clawback or drawback on the policy. Or, in this agreement, for the prepaid CID to make finance, legal and bonds counsel satisfied with the agreement and where the City has no liability, and we proceed with the agreement routine to move forward.”
Commissioners then shared their thoughts.
“I, for one, am not prepared to approve anything at the moment. I would much rather have things done and agreed upon – at least in principle – before we vote on something. I don’t want to vote on anything in principle or anything like that,” Commissioner Jeff Parsons said. “I’m not opposed to this project. My feelings about the prepaid CID haven’t changed, and I would like to know more about the project. I would like to know more about the finances of it and what the future of the development might look like. There’s also the question of is the district going to include any future developments? I feel like there are a lot of questions that still need to be answered. I would be more comfortable in maybe discussing alternative incentives as opposed to a prepaid CID, I have a fundamental problem with that sort of incentive, like maybe doing some street works or sewer works or water works, something that would remain there as opposed to just a cash disbursement. I would like to see how we’re going to model this CID, what it’s going to look like, what the repayment might be, etc. There are many things I would rather have more fully developed before we vote. I don’t have any concerns about the overall viability of this project, I think it’s going to be wildly successful. But one of the things when you do something like this is you set a precedent, and I would like to see us, if we’re going to do something like this, fine-tune our policy beforehand so it’s in place before we approve something like this. I don’t want to wait around and make this a lengthy process, we can start discussions about it within the next couple days if we really feel like it.”
“If I remember correctly, Eli [Svaty] did have a guideline of a policy we could follow through with ... if it’s new construction, how much they would need to bring in, how big it would have to be, how many jobs, etc.,” Liberal Mayor Jose Lara replied. “I do believe that exists and we can use that as a model.”
Fellow Commissioner Ron Warren then shared his thoughts.
“I’m probably never going to be in favor of a prepaid CID, I just feel like that opens up so many things, almost like picking winners and losers, and that’s one thing throughout the years I’ve always been against,” Warren said. “I am in favor of working to figure out some other way we can help them, but a prepaid CID is not the way I would go with. To me, this isn’t because we haven’t done this before, that’s not what this is. I’m definitely in favor of seeing progress, but to me, we don’t have $350,000 to give to just anyone who wants to come in and do a project. If we say we’re going to do this just one time, then I’m open to saying whoever wants to bring us 20 projects, we’ll give $350,000 away and then we decide what the project’s going to be. I think this is a good project, and a viable project, but they’re asking us to play bank, and if it’s a good deal, any bank ought to loan them the money. I don’t feel like we’re the ones holding things up, so I don’t know why they’re not getting the $350,000 at a bank, because we’re not a bank. This isn’t something we’d be able to do on a frequent basis.”
“What I can say about that is a lot of the projects we’ve been dealing with, including the industrial side, the banks and the entities these companies get their financing from, the buy-in from city leadership weighs heavily on whether they’ll give that project any money,” Lara replied. “And what bigger buy-in can you give a business that guaranteeing funds for the beginning of that?”
Liberal Vice Mayor Matt Landry agreed he would like to see the project move forward.
“My main question is, with the $350,000, is that the hurdle between the day we put shovels in the ground or what? I’m not opposed to doing anything that’s going to move a project in a forward direction,” Landry said. “Right now, the murmuring is all about us not doing anything and how everything that’s supposed to be coming isn’t coming, and I don’t want to hear those murmurs anymore, I don’t want those echoes anymore. One of the things I said when I ran for office was I wanted to move the city in a forward direction and wanted to do things better and bring companies and other things here to Liberal. I don’t want to keep seeing projects fall flat on their face prior to us being able to do something, so I’m all ears to doing whatever we need to do in order to get the ball rolling and get something taken care of. We’ve approved projects in the past that were quickly done and moved through. Have we always received the best feedback when we did that? No, but they’ve turned out to be good and successful, and we’re not going to make everyone happy when we do that. Moving this project in a forward direction is something I really, really want to see. If this is what is holding us up from someone putting shovels in the ground and getting it done ... I understand the standpoint of us never having done this before, and we don’t want to get into that habit, but it’s not a situation where we have to open up the door and say everyone who comes into town is automatically going to get a prepaid CID. We’re not saying this is what it’s going to be like for every other future project we deal with. And we’re not picking favorites, but if there’s a gap somewhere, or if there’s something preventing the movement, maybe we need to look at it and just say ‘We got this.’ Yes, it’s a sum of money. Yes, it’s not the greatest amount. We’re not really saying ‘Oh man, that’s really what we want to do!’ But I don’t think anyone here wants to see a project fall flat on its face and not happen.”
However, Parsons replied, there are still several variables to take into account.
“With the financing, if you’re talking about manufacturing or industrial, those are very individual and unique projects. When you’re talking about a restaurant, that is not really a unique project, so in some ways, if you don’t do this for everyone but a select few, it is about like playing favorites,” Parsons said. “And we simply don’t have the resources to do this for every project. We’ve done some things in the term sheet and development agreement we approved previously – we agreed to do the CID, which is set up to benefit retail. That was the reason it was set up, because you couldn’t really do any other projects without picking favorites as an incentive, so the State of Kansas stepped in and said ‘Okay, this can be done for retail.’ This is the unique incentive we do for retail because we can apply it across the board – it doesn’t take investment from the City, but it does give the chance to generate some additional revenue. We agreed to that, we agreed to the Industrial Revenue Bonds, and we agreed to do the neighborhood revitalization, so it’s not as though we’ve done nothing to help incentivize this project, we’ve done a great deal. We’re also waiving permit fees, utility hookups and things like that, so we’ve done a lot. I’m not opposed to doing something else. This form, to me, however, is not the right way to go. I would welcome the chance to explore something else, but I just think doing this is not a good way to incentivize this project. The CID is great, and we’ll do whatever they want with the CID on a pay-as-you-go basis, or even explore the idea of bonding it out, but I think we’re going down a slippery slope if we start just writing checks for retail developments.”
“I would say you’re even more optimistic than I am. Even with an incentive like this, I don’t foresee us having 10 companies coming and knocking on our door saying they want this incentive as well,” Lara said. “And in terms of finance, we have a clear picture of where capital expenses are, and we still have $5 million unencumbered, and that’s just in capital expenses. The unencumbered total is, I would imagine, somewhere closer to $6 million, and that’s with everything we’re already doing being paid for. And that doesn’t include the $2.5 million we get annually into capital expenses.”
“As I’ve already said, I’m perfectly willing to discuss multiple other alternatives. I just don’t like this alternative,” Parsons said.
The commission ultimately gave a 3-2 consensus to continue the discussion of a prepaid CID in the amount of $350,000 for the Dairy Queen project with Lara Vazquez and Landry approving while Parsons and Warren voted against the proposal.
