June 19
CITY OF HIAWATHA
CITY COMMISSION MINUTES
MONDAY, JUNE 19, 2006
5:35 P.M.
HIAWATHA CITY HALL
723 OREGON ST.
1. Pledge of Allegiance/ Call to Order
The Hiawatha City Commission met in regular session Monday, June 19, at 5:35 p.m. with Mayor Gernon, Commissioner Schmitt, Commissioner Collins and Commissioner Shamburg present. Commissioner Gamble arrived at 6:37 p.m.
2. Approval of minutes of the June 12, 2006 City Commission meeting.
Mayor Gernon said that there needed to be a name correction in the minutes to correct the name of Jeff Conway to Jeff Conner. Commissioner Schmitt made a motion, seconded by Commissioner Shamburg, to approve the minutes of the June, 2006, Hiawatha City Commission Meeting with the name correction. Motion carried, 5 ayes.
Mayor Gernon noted that he would like to change the Budget Work Session, Number 7 on the agenda to after adjournment of the regular meeting.
2. Presentation of petitions, public comments, memorials.
3. Hiawatha Jayhawkers 4-H Club Community Service Proposal
The Hiawatha Jayhawkers have cancelled their appearance for June 19 due to a conflict, and will reschedule their proposal for June 26, 2006.
Old Business
New Business
4. Jeff Conner with Koch & Co. IRB
Jon Daeschner, Hiawatha Foundation for Economic Development President, introduced the group representing Koch & Co. from Seneca which included Bill Brennan, Director; Jim Koch, President; Jeff Conner, General Manager; and Janet Garms, Attorney with Kutak & Rock.
Daeschner said that Bill Brennan and Jim Koch indicated to him their interest in obtaining a building in Hiawatha in which to do light manufacturing of doors. Daeschner showed them Dave Govea’s (the former grocery store on First Street) and the Lester Papadakis building (old Flairfold building.) They were more interested in the Papadakis building. Marion Tubach, Economic Development Director, negotiated Koch’s offer with Papadakis. After hearing their plans, he accepted the offer.
Daeschner said that tonight they are here to talk about IRB bonds. Mr. Koch presented commissioners with a sample of the doors they plan to manufacture. He said that Lowe’s Building Supply is interested in purchasing the doors in all of their stores nationwide. Once in operation, Koch plans to ship them out by common carrier to the Lowe’s stores.
Koch said that in their Seneca plant, they manufacture kitchen cabinets. Koch & Co. went from zero to 250 employees, pulling employees from Hiawatha and Falls City as well Seneca and 30 miles east of Seneca into their labor pool. They also have a business in Topeka with 15 women working there.
They have been working five or more years trying to get Lowe’s on line for a product. The buyer from Lowe’s wants to purchase the doors from them for 1400 stores.
They wanted to find a labor pool and a facility large enough to house the business. Initially they plan to employee about 15 people. They will transfer some of their employees to the Hiawatha store. Lowe’s anticipate doing about 5 million per year the first year. It will be just a matter of time to see how it will actually go.
Jeff Conner, General Manager and CFO, has been with the company about four years, before that he was their banker. Koch & Co. has about 250 employees, with a payroll about $6 million per year.
Koch & Co. wants to get financing. When they expanded their Seneca cabinet plant two years ago, they used a private placement industrial revenue bond to finance it. The Morrill & Janes Bank purchased that in it’s entirety.
Janet Garms, Kutak & Rock, explained that Koch is requesting the city to authorize the intent of the city to issue federally taxable private activity revenue bonds in the principal amount not to exceed $800,000 for the purpose of financing the acquisition of a warehouse/manufacturing facility, including real estate, buildings, improvements and equipment by signing the resolution.
They are requesting a100% tax abatement on the real estate for the life of the bond. Conner thought that the current real estate taxes are just under $20,000 per year. The tax abatement would be decided upon by the Kansas State Tax Appeals Court.
Koch & Co. is currently the largest employer in Nemaha County. They feel like they are a good employer. They have good benefit package, competitive wages, and attendance bonuses.
Mayor Gernon said that he had toured the Koch plant in Seneca, and felt that it was an impressive facility. He commended Jon Daeschner and Marion Tubach for their hard work in getting this going. Gernon said that this is exciting for Hiawatha.
Kevin Hill explained the resolution that Koch & Co had presented. The financial risk to the city for an industrial revenue bond would not be as great as a regular general obligation bond. He said that the IRB would basically be tied to the rent of the property. The city would purchase the building and lease it to Koch & Co. The bond proceeds would be paid out of the rent from the property.
Jeff Conner said that Koch & Co. would be paying the bond council. Morrill & Janes Bank would be the trustee. It would be a live issue, the bond money would be transferred directly into the city’s account. They are looking a ten-year issue.
Commissioner Collins said that he understood they are asking for the city’s portion of the tax abatement.
Koch would also be putting in equipment which would be taxable.
Mayor Gernon said that if it would not be a problem to wait to vote until next week then they would prefer to wait until they had a chance to look over the resolution.
Janet Garms said that another week would not matter. She explained that a public hearing would have to be scheduled and published in the paper.
Jeff Conner asked if anyone had any reservations about this. The commissioner all indicated they had no reservations but just wanted a chance to look over the resolution, since they had just gotten a copy at 5:35 tonight.
Commissioner Collins said that they try to support any business who wanted to come into Hiawatha.
Mayor Gernon expressed appreciation to them for coming.
5. Request to Increase Court Costs
Mayor Gernon explained that Judge Michael Riley had sent a request to increase the court costs by $10, from $50 to $60, due to the fact that the state had raised them at the state level. [The increase in Municipal Court Docket Fees is to fund the Kansas Law Enforcement Training Center fees and to fund the Kansas Commission on Peace Officers’ Standards and Training.] Our fees need to be raised to offset this increase from the state.
Commissioner Collins made a motion, seconded by Commissioner Schmitt, to raise the Municipal Court Docket Fees by $10 to cover the increase at the state level. Motion carried, 5 ayes.
6. CONSENT AGENDA
a. Appropriation Ordinance #1094 in the amount of $43,074.26.
b. Utility Refunds of $475.87.
c. Application for License for 1 Electrical, 1 Plumbing, 2 Commercial Tree Surgeon & Trimmer.
d. Municipal Judge Report
Commissioner Schmitt made a motion, seconded by Commissioner Shamburg, to approve the Consent Agenda as presented. Motion carried, 4 ayes. Commissioner Gamble abstained.
7. Mayor Crosby Gernon.
Mayor Gernon explained that the Blue Lab situation will be more complex than originally thought, so they decided to leave it for the new administrator.
He said that the settlement agreement for Mr. Gatz had been prepared. The commissioners were given a copy of the settlement to look over. He instructed the city clerk to notify Mr. Gatz that the agreement and check were ready for him. Upon his signing the agreement, he could be given the check.
Mayor Gernon mentioned that Stifel, Nicholaus & Company had presented a letter from a number of years ago in which the city had retained their firm as financial advisor for all bond issues.
Kevin Hill, Assistant City Attorney said that the terms in the letter required a 30-day written notice to terminate the agreement. The city needs to authorize the Kevin Hill to write a letter terminating the arrangement.
Kevin Hill explained that in his opinion that the letter wasn’t obligating, but that he wanted to write a letter to them outlining that the city will not be bound to use them.
Commissioner Shamburg made a motion, seconded by Commissioner Collins to authorize the City Attorney to write a letter terminating the agreement with Stifel, Nicholaus and Company. Motion carried, 5 ayes.
8. Com. William Collins.
9. Com. Curtis Gamble.
10. Com. Marianne Schmitt.
11. Com. Steffen Shamburg.
Commissioner Shamburg said that he may not be here for the meeting next week. He indicated his approval of Koch & Co.
12. Adjourn.
Commissioner Shamburg made a motion, seconded by Commissioner Collins, to adjourn. Motion carried, 5 ayes. Meeting adjourned at 6:22 p.m.
A brief budget work session followed the meeting.