February 10, 2016

Kutak Rock official explains IRB benefits to city

Corbin H. Crable
The city of Edgerton’s costs in preparing for the approval of the issuance of $500 million in industrial revenue bonds for the KC Logistics Park have been minimal, according to at least one official involved with the deal.
Scott Anderson, bond counsel from Kutak Rock LLC, said the city of Edgerton will pay Municipal Partners a total of $250 for the cost benefit analysis associated with the project. That $250 is a reimbursable expense for the city, he added.
“All (the firm) did was input the data into a program,” Anderson said. Edgerton City Administrator David Dillner said that fee has not yet been paid.
But those numbers have been disputed by more than one organization. At last week’s Edgerton City Council meeting, USD 231 Superintendent Bill Gilhaus said the analysis calculates financial impact based on a decadelong growth of 182 students in the school district, while USD 231’s own growth estimate is 458 students over the next 10 years. Patrick Robinson of the Allen Group also disputed Kutak Rock’s estimates of growth in the school district but did not elaborate.
Anderson, speaking with The Gardner News on July 13, said Kutak Rock is paid for its services off the cost of the issuance of the bonds, and that the company is paid based on what it calls ‘basis points,’ which represent one one-hundredth of a percent of the total of the IRBs being issued. Anderson said Kutak Rock will be paid for roughly 10 basis points, which comes out to be $50,000.
“The fees for the city’s bond counsel is paid by the borrower,” Anderson explained. “The borrower will have their own fees as well. They have to pay for all of those fees for the city as part of the process.”
Anderson said that in addition, bond counsel will charge the IRB’s borrower for Kutak Rock’s contract negotiations on the project.
“Anytime there’s a property tax abatement, we’re paid according to a fee schedule,” he said. “Our fee is always paid by the borrower, not the city. That’s how it works with tax abatement financing in every Johnson County city.”
Anderson said that for a project of this size, those fees will total an estimated $40,000.
“For a typical warehouse distribution facility, it’s $40,000,” he said. “But that includes preparing the bond documents and getting it through the Court of Tax Appeals. That fee is paid by the borrower. The city’s not out that money.”

Planning Commission OKs rezoning land for distribution center
Edgerton City Administrator David Dillner announced on the Edgerton Insights blog on Wednesday that the Edgerton Planning Commission has recommended to the city council approval to rezone 16 acres of land south of U.S. 56 to Business Park District.
Pending the council’s approval, the land eventually will be home to a 312,000-square-foot warehouse/distribution facility for Leawood, Kan.-based Demdaco, a company that specializes in figurines and collectibles.
The Planning Commission made the approval with several stipulations, including the inclusion of a photometric lighting plan for the building and installation of additional landscaping in lieu of a required 30-foot setback.
The council will review the rezoning issue for discussion and approval during a special meeting at 7 p.m. Thursday, July 29, at the Community Center, 404 E. Nelson St.


  1. So everyone is disputing the data? Like I said, no one really knows what is going to happen with this project.

  2. gardner2 says:

    It’s a little scary their are so many discrepencies. I hope this doesn’t end up like the Legends or the Power & Light and all of the sudden 5 or 10 years later the tax payers are on the hook for another 10 or 20 million dollars.

  3. Is it sinking in, gardner 2?????

    Have you got this all straight as to who pays who?????? Do you, an average citizen, think you will ever get your check????? I would be glad to tell you what you are going to get when you take off your rose colored glasses.

    It is my understanding a bond salesperson also helped to write the bill Brownlee submitted back in 2007 allowing a TIF for the intermodal project and which deleted the school district and the county’s ability to nix a TIF for the taxpayers protection. You might want to think about that one too if that information is true.

  4. More blah blah blah from Judith.

  5. Ryan, you are getting more blah, blah, blah from the thieves and the worthless politicians than I could ever give you. Eat it up.

  6. Ryan, have you heard the term GIGO? Garbage In, Garbage Out. No one verified the data in that report. No one even says where it comes from. Would you buy a home or a car without any could data, or a plan of how you would pay for it? Apparently, you just close your eyes and sign. Good luck my friend.

  7. Wendy I understand what you’re talking about. I’m just not as closed minded about things I don’t totally understand. If you’re comparing this billion dollar + intermodal project to buying a car or a house (and you are) than I can see why you and Judith pull your hair out trying to understand it. It just isn’t that simple, so instead of trying to patiently figure out what is going on you throw your arms in the air and start vilifying EVERYONE and EVERYTHING.

  8. gardner2 says:

    @Tin Hat; I’m not coming to any realization, I’m just bringing up the fact that you don’t know squat about this situation anymore than you know about another. You keep talking on here like you know anything and all you do is play the blame game.

    I don’t know what this is going to be, in general I’m against any tax subsidy for private enterprise. This is going to happen no matter what, out elected leaders should have played a better hand. You blame the BNSF; you’re blaming the wrong people. The elected leaders are to blame.

  9. Jerry L Kellogg Sr says:

    Discussing cost benefit figures at the July 6 Edgerton City Council meeting, Dr Gilhaus stated the School District makes it student enrollment predictions based on the fact that 21% of the current 21,000 residents within district boundaries are children of K-12 age. Thus, using Kutak Rock’s estimate of a 10-year increase in community population of 2,183, the District calculates 458 additional students. Patrick Robinson of The Allen Group did state to the Council that they estimated 287 new students within 10 years, while Kutak predicted only 182.

    The Kutak analysis shows 5,674 jobs will be created in the next 10 years. Patrick Robinson said that, based on The Allen Group’s guideline of 5 workers per 10,000 square feet, the aggregate total of 7.100,000 sq ft in the Logistics Park would provide only 3,550 jobs.

    Obviously lots of variables to consider, depending upon whose figures are used.

  10. gardner2 says:

    One of my favorite primers on whether States should be in, or benefit from, giving out tax subsidies to business. http://www.cato-at-liberty.org/2009/06/05/injustice-of-state-subsidies/

  11. gardner2 says:

    I think a good question right now should be what recourse do we as citizens in Gardner have against Edgerton in the event that indeed our taxes are raised? Or, are their steps we can take now?

  12. gardner2 says:

    Another good article on corporate welfare http://www.showmeinstitute.org/publication/id.123/pub_detail.asp

  13. I doubt there’s any recourse against Edgerton, other than if Edgerton voters vote their council out, and by that time the deal is done. Ideally, Edgerton, the school district and Gardner would have worked together to benefit taxpayers, but old feuds die hard. I would think someone from the school district or Edgerton resident could challenge the bond resolution based on bond counsel’s statement that there was already a contractual obligation to accept. It’s not a matter of stopping the project, as far as I think, it’s more a delay until someone can come up with good data and make sure district taxpayers are treated fairly. Mr. Kellogg, you make a good point regarding the figures.

  14. Ryan, you say you’re not as close minded about things you don’t understand. I was taught never to sign on the dotted line until I fully understand it. I’m not sure that’s closed minded. I think that’s prudent. I don’t think I’ve villified anyone or anything. But I am expressing concern that from the CBA that was presented, it clearly indicates the school districts loses 50 cents on the dollar and no one really cares until the tax bill comes.

  15. I agree with you Wendy regarding understanding. But, I will warn you that the CBA is pretty much of a joke. It’s required by the state anytime abatements are given. If you do a little digging you’ll find that the model has absolutely NO vertification. In other words, its output has never been compared against actual results. Wonder why not?

    I’m really weary of the claim that thousands of jobs will be “created”. The only thing that will create new jobs in this case is an increase in freight traffic. Without that, the jobs already exist somewhere. Other than that, it’s the temporary jobs that come with the construction. Did you happen to notice the wages associated with the alleged “new” jobs? Try dividing the increase in salary by the number of jobs. Average wage will be approximately $10.50/hr. Maybe the INS can open an office here.

  16. To all Gardner citizens: Aren’t you glad this project is not within your city limits and your town won’t be owned and operated by BNSF and a belly-up developer, the Allen Group, like the city of Edgerton??????????????? Thompson, Peters and Shepherd still deserve the medal of honor from the people for that – they saved your rearend from a lot but you will still have adverse affects from the project and in many ways – thank the Edgerton Mayor, Council and city administration and other worthless politicians and bureaucrate for that part. That vote on the election ballot is one of the most important choices you make for your financial stability, your health and your quality of life, that is if you have any decent people running for office who deserve your vote.

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