Special to The Gardner News
As growth continues at LPKC USD 231 has corresponded to Edgerton City Council that in-lieu of tax payments (PILOT) are not enough and have asked if a higher rate can be established or if they can be involved in negotiations for additional funds.
At the March 9 city council meeting, Beth Linn, city administrator, asked Scott Anderson, bond counsel, to summarize and update council on communications between USD #231 and Edgerton, regarding tax abatement deals at LPKC.
Anderson said that, in one letter, the school district inquired about fees paid to Columbia Capitol. In response, they were provided a fee schedule and agreements with the city.
The district has twice inquired about the ability to ‘negotiate separate contributions’ to the school district.
Anderson interpreted this as a request for negotiation of a payment to the district, in addition to abatement rate and term, PILOT payments and origination fees that are determined during the bonding process.
Anderson has consistently advised the city that negotiating a separate payment would not be compatible with Kansas state law.
At the Oct. 27 meeting, Anderson said “The city is powerless to negotiate any kind of separate capitol outlay, or negotiate any other payment, with the school district or any other party. That is beyond the scope of what’s permitted by statute.”
Kansas Statute: K.S.A. 12-1742 was cited at that meeting.
Anderson said the district had sent the city an email after the last public hearing. He summarized the message as saying – “the district would not want Edgerton to violate Kansas law and asked what statute prohibits them from receiving financial contributions.”
The school district is not prohibited from receiving contributions, but the city is prohibited from negotiating separate payments, on anyone’s behalf, as part of the abatement and bonding process, according to Anderson.
The topic has been discussed before at public hearings. It was noted that the district has not had a representative attend public hearings
“I’ve previously advised the city that Kansas statute basically allows the city to charge for three things in industrial revenue bond financing. The first is a rental for bond payments, the second is reimbursement for actual costs and the third is origination fee,” said Anderson.
“My advice to the city has always been that these are the three things we can charge for in these tax abatement deals, and nothing else,” he said.
Anderson noted the city has sole authority to grant abatement and that collected funds must be distributed to all taxing jurisdictions as established. He said he thought the rationale was that legislators didn’t want cities cutting special deals that favor one tax jurisdiction over another.
The district’s latest reply, received the day before the meeting, thanked the city for the information and said they understood.
Ron Conus, council member, asked if this would be the last council hears of this issue.
Don Roberts, mayor, said he expected letters from the district to continue with each project.
Roberts said, “We did the best we could to make sure that all the taxing jurisdictions receive money from this – and all of them actually did receive increased income from these projects.”
Roberts also commented that, in his opinion, analysis of growth In Edgerton and Gardner shows that LPKC has not brought a significant increase in the number of students to the school district.
“There’s some difference in philosophy here – they believe that because of the amount of employment traffic we’ve generated, that we have generated students. I adamantly oppose that theory,” said Roberts.
In April, 2016, USD 231 staff indicated that when abatements are granted, PILOT (payments in lieu of taxes) may be required; however, there is a misconception that all PILOT taxes go to the school district. According to USD 231 staff, only about 13 percent of PILOT taxes are returned to the district as additional revenue.