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11-13-1978 MinutesF� 1 City of Salina, Kansas Regular Meeting of the Board of Commissioners November 13, 1978 The Regular Meeting of the Board of Commissioners met in the City Commission Meeting Room, City -County Building, on Monday, November 13, 1978, at four o'clock P.M. The Mayor asked everyone to stand for the opening ceremony. There were present: Mayor Jack Weisgerber, Chairman presiding Commissioner Keith G. Duckers Commissioner Dan S. Geis Commissioner Karen M. Graves Commissioner Gerald F. Simpson comprising a quorum of the Board, also: L. 0. Bengtson, City Attorney W. E. Harris, Deputy City Manager D. L. Harrison, City Clerk Absent: Norris D. Olson, City Manager The Minutes of the Regular Meeting of November 6, 1978 and the Special Meeting of November 8, 1978 were approved as printed. THE MAYOR PROCLAIMED the Week of November 12 through 18, 1978 - "WORLD MUTUAL SERVICE WEEK". The proclamation was read by Mittie Littrell, World Mutual Service Chairman. THE MAYOR PROCLAIMED the Week of November 12 through 18, 1978 - "VIETNA� VETERANS WEEK". The proclamation was read by Calvin Boyce, Commander of Post 1431, Veterans of Foreign Wars. STAFF AGENDA THE COMMISSIONERS considered proposals submitted by !•lilson and Company in letters dated October 26, 1978 concerning the scope of work and costs for providing the desired information on flood drainage project in South Salina. (Tabled November 6, 1978) j A motion was made by Commissioner Geis, seconded by Commissioner Duckers to remove the item from the table for consideration. Ayes: (5). Mays: (0). Motion carried. Craig Roberts, Wilson and Company, explained that the two letters outline the services to be performed in connection with the South Salina Drainage) Improvement project for phases 1, 2 and 4, with 4 different options as instructed! by the City Commission. The upper limit for phases 1 and 2 is $1,700.00, and the upper limit for phase 4 is $2,530.00; but if the work can be done in fewer hours than estimated, the cost will be less. Commissioner Graves suggested that if the City Commissioners could agree on the alternative for distributing the cost of the project, then klilson and Company wouldn't have to examine all four of the alternatives and the fee would be less. Mr. Roberts said that a decision would decrease the cost. Commissioner Graves said her choice for distributing the cost of the project is option 'd'. The Commissioners discussed the scope of the information and the cost. A motion was made by Commissioner Geis, seconded by Commissioner Graves to authorize the Mayor to sign the agreements with Wilson and Company for Phases 1, 2, and 4, to be paid from the Contingencies Fund. Ayes: (5)• Nays: (0). Motion carried. Mr. Roberts said the information will be ready next week. Commissioner Geis asked Don Rectenwald to tell about his plans for a program to cord off areas of Salina that are hit with surface flooding. Mr. Rectenwald said they are working on, and will probably finalize by the end of the month, working with volunteer groups especially the Central Kansas Amateur Radio Club plus a couple of other volunteer groups in the Salina area who have indicated their desire to help out in putting out a flood watch or storm watch like we do throughout the year, and they are setting up their guidelines as to how they can help the city law enforcement in keeping some of the traffic out of the flood areas. Commissioner Graves asked Mr. Boyer if he is aware of the motion she made October 16, 1978 that the city staff get together with Wilson and Company and go over that part of the Wilson and Company study that dealt with the master drainage plan and the drainage criteria. Mr. Boyer replied he is aware of the instructions, but the department has not done very much on it yet. Mr. Harris said that the Planning Department is obtaining ordinances from other cities for review. AN ORDINANCE was introduced for second reading entitled: ''AN ORDINANCE vacating a certain alley in Block 7, Oakdale Addition to the City of Salina, Saline County, Kansas, and repealing Ordinance Number 669." (Requested by Development Consultants, Inc., on November 6, 1978) A motion was made by Commissioner Simpson, seconded by Commissioner Duckers to adopt the ordinance as read and the following vote was had: Ayes: Duckers, Geis, Graves, Simpson, Weisgerber (5)• Nays: (0). Carried. The Mayor approved the ordinance and it is numbered 8673• The ordinance was introduced for first reading November 6, 197 THE COMMISSIONERS considered an ordinance for first reading authorizing the City of Salina, Kansas (''City''), to acquire the real property hereinafter described and to construct and purchase buildings, improvements, machinery and equipment to be leased to Morgan Supply, Inc. (''Company''), authorizing and directing the issuance of $325,000 principal amount of Morgan Supply, Inc., Industrial Revenue Bonds, Series of 1978, of the City for the purpose of providin funds to pay the cost of acquiring the real property hereinafter described and to construct and purchase buildings, improvements, machinery and equipment to be leased to the Company, and prescribing the form and authorizing the execution of a lease by and between the City and the Company. Mr. Ken Wasserman, was present representing Salina Supply Company. ''Although I am not speaking exactly as an opponent I am certain not a proponent either, for the following reasons. First of all Salina Supply is a competitor of Morgan Supply and for that reason I think what I am about to say is perhaps even more relevent than some other peoples objections would be. The major concern is with respect to the payment of taxes and the payment in lieu of taxes. It would be my client's position that some of the full payment in lieu of taxes be made by Morgan Supply really for the following reasons: as nearly as I can compute the dollars over the time period Morgan Supply Company will save approximately $70,000 worth of taxes based on the value of this new construction. That in and of itself would be of tremendous boon to any business if that money could be used in the operation of the business rather than paying the taxes, #1. #2 of course, in most instances the reason for waiving the tax payments is because of some other benefit, bringing in additional employees, bolstering the economy in some way. As I understand it this is in the nature of an improvement. It is not going to triple the number of employees, it is not D 1 1 going to greatly expand the facility so we see the city is losing that customary benefit. Secondly those taxes are going to have to be picked up by someone during that time period and that then is a burden the rest of the tax payers bare including business competitors, and finally, on the same date that the Morgan Supply question was raised initially, I believe the Salina Nursing Home also raised the same question and they were being treated as if they would have to make a full tax payment, or a full payment to the city in lieu of taxes, now although we agree with that decision, it seems that two inconsistent decisions were reached on the same day and I fail to understand that." Peter L. Peterson, was present representing Morgan Supply, Inc. "I am a proponent of the ordinance and I would like to speak to some of the questions raised by Mr. Wasserman. With respect to the first point it is true in one sense that Salina Supply is a competitor of Morgan Supply, Inc., but it is important to examine the nature of the competitive relationship. First of all, as you have been previously made aware approximately 70% of Morgan Supply's business comes from outside Salina. This is not a case where someone is picking up a newspaper and seeing a piece of pipe for 29G a foot at Alco and 26� at Gibsons and they make a decision to go to Gibsons, and they make a decision to go to Gibsons on that account. What you are talking about here is a significant majority portion of the business going outside of Salina. Furthermore Morgan Supply's primary source of business is related to the residential single family and apartment business, if you will, we have reason to believe that Salina I Supply's customers are greatly in number, for example, municipal waterworks including the City of Salina for that matter. Salina Supply bids considerably more commercial jobs than Morgan Supply, including school projects, commercial projects, so I submit to you that the nature of the competitive relationship is somewhat different. I don't think we are questioning here the benefits to the City of Salina although apparently Mr. Wasserman is. As we have made known to you before, this will result in an increased payroll, we do plan on expanding the business. All of it will be headquartered in Salina. The space presently located or presently occupied by Morgan Supply is inappropriate and is insufficienit to permit the kind of expansion that we not foresee, but plan on definitely. There will be an increase in tax base benefit to the City of Salina in the nature of personal tax increases and especially inventory tax increases by virtue of the increased space. Incidentally Morgan Supply is one of the first occupants of the former Urban Renewal area which can be also a significant tangible benefit to the City. We do foresee an increase in tax revenue to the City of Salina by reason of this bond issuance; furthermore it is important to note that this is going to free up another property. Morgan Supply will not be keeping its present premises, it will remain on the tax roll. So what we are looking at down the line is an increase in real estate property taxes for the City of Salina, not by any means a diminution or a subtraction therefrom. I'lith respect to another point that I feel should be brought up, Morgan Supply to a certain extent has relied on the fact that a forgiveness for at least 10 years would be in the offing. The Lee Hardware issue, for example had a tax forgivenessi clause, as did the School Specialty Supply bond issuance. Ile realize the Board of Commissioners is not bound by precedent, and although this is the first official action, first reading of the ordinance today, we have been proceeding on the assumption that the tax forgiveness would be forthcoming and our costing analysis to date have taken that fact into account, as a matter of fact, a part of the project has already been paid for. The lease that I prepared, the ordinancje that we have submitted to Mr. Bengtson for review have been prepared on the basis of the tax forgiveness clause. The repurchase obligation on behalf or on the part of Morgan Supply at the expiration of the lease term has been calculated and figured with the tax foregiveness in mind. Finally, an intangible point, but I think it is one worth making, Morgan Supply, Inc. is 100% locally owned and locally financed. We have a situation here where all of the profits and all of the money earned by Morgan Supply, Inc. is staying here locally. To the best of our knowledge a minority position and perhaps even a controlling interest' of Salina Supply, Inc. is located not just outside Salina, but outside the state. So we have a case here where be believe the benefits to Salina both i intangibly and tangibly in the form of increased revenue down the line would be greatly enhanced by this issuance and by the fact that tax forgiveness clause because it would enable much needed expansion, it would enable Morgan Supply to expand its business to a class of customers that is somewhat different in certain respects than Salina Supply and for that reason we believe the tax forgiveness should be granted.'' Commissioner Duckers said, "I have a question for Mr. Morgan, referring to the figure 70% today, of your business being done outside the City, my notes are incomplete but I seem to distinctly recall in our executive session with you the figure 2% was used and I cannot recall whether you said all but 2% of your business was done outside the City of Salina or that only about 2% of your business would be competitive to existing firms of the city." Mr. Morgan said, "We don't recall the 2% figure mentioned in that connection, but it is the rough figure used to calculate the repurchase obligation at the expiration of the lease term. The other point that possibly could have been mentioned with reference to would be the retail activity. " The Commissioners discussed the aspects of the bond issue and whether to repeal their resolution of intent to issue Industrial Revenue Bonds. A MOTION was made by Commissioner Geis, seconded by Commissioner Simpson to introduce the ordinance authorizing the issuance of $325,000 Industrial Revenue Bonds for Morgan Supply, Inc., for first reading. Ayes: (5). Nays: (0). ':Motion carried. Ordinance Passed: PUBLIC AGENDA Number: A REQUEST was received from Brown and Brown, Inc. to allow a 99 foot curb cut to allow for off street parking, at their new office building at the corner of Indiana and Stapler. The City Engineer reported that "To be consistent with Section 32-156, any curb cut in excess of thirty feet (30') must be approved by the City Commissi 'This request is to allow a full width opening to the parking area. The cars will be parked on private property and nineteen feet (19') back of the curb line on Indiana Avenue. As this will allow a clear view of the street before the car enters a travel lane, I would have no objection to granting this variance." A motion was made by Commissioner Duckers, seconded by Commissioner Simpson to accept the recommendation of the City Engineer and allow the 99 foot curb cut at Indiana and Stapler for Brown and Brown, Inc. Ayes: (5)• Nays: (0). Motion carried. PETITION NUMBER 3732 was filed by Robert R. Frisbie for the annexation of a tract of land in the North 1/2 of the Southeast Quarter of Section 19, Township 14 South, Range 2 West. A motion was made by Commissioner Simpson, seconded by Commissioner Duckers to refer the petition to the City Planning Commission for a recommendation. Ayes: (5)• Nays: (0). Motion carried. A CEREAL MALT BEVERAGE license application was filed by Eldene Moreno, d/b/a La Hacienda Dos, 1035 East Pacific. (New application). The City Clerk reported the applicant has paid the required fee and the application has been approved by the Health Department, Zoning Officer, and the Police Department. A motion was made by Commissioner Graves, seconded by Commissioner Geis to approve the license application and authorize the City Clerk to issue the license. Ayes: (5)• Nays: (0). Motion carried. COMMISSION AGENDA A MOTION was made by Commissioner Duckers, seconded by Commissioner Simpson to recess into executive session to discuss a matter of litigation and to reconvene in 10 minutes. Ayes: (5)• Nays: (0). Motion carried. The Commissioners recessed at 5:01 P.M. and reconvened at 5:15 P.M. A MOTION was made by Commissioner Duckers, seconded by Commissioner Simpson, that the Regular Meeting of the Board of Commissioners be adjourned. Ayes: (5)• Nays: (0). Motion carried. The meeting adjourned at 5:16 P.M. Z�W/at'� D. L. Harrison, City Clerk