G&W given cash incentive

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April 5, 2017 - 12:00 AM

Construction of a new G&W grocery will start by May 1, after Iola, Allen County and Iola Industries put together an incentive package totaling nearly $390,000.
The decision was in reaction to a plea from G&W for financial aid, after a bid for construction of the store came in at $500,000 more than the company had budgeted.
G&W earlier purchased the parcel of land, where Allen County Hospital once stood, for $20,000.
The county spent about $250,000 to maintain the hospital building while trying to sell or lease it before having it demolished.
Iola will extend utilities to the store site without charge, a savings for G&W of about $38,000; the county will contribute $180,000 to the project; and Iola Industries will pitch in $170,000.
The package found legs when county commissioners gave approval on a 2-0 vote, from Tom Williams and Jerry Daniels.
The third commissioner, Jim Talkington, announced ahead of time that he would recuse himself from voting, saying he had a conflict. Attempts by the Register to identify the conflict went unanswered, other than Talkington saying, “I might tell you in a couple of years.” If that was a blemish on the proceedings, it was a minor one, although, politically, it does affect the third of Allen Countians represented by Talkington.
The cash awards have conditions:
— The store’s construction must start by May 1.
— It must be completed by Dec. 15. G&W officials said they would prefer to have the store open before Thanksgiving, Nov. 23, said County Counselor Alan Weber.
— On average, the company must have at least 35 employees, full- or part-time.
A catalyst for G&W to meet the requirements is the way county and Iola Industries fund transfers will be made. Iola Industries will hand over $10,000 at the start, $35,000 with 50 percent completion and the remaining $125,000 when the store is completed. Allen County will provide its contribution in increments of $10,000, $35,000 and $135,000 at the same time-intervals.
If the agreement is broken, a portion of the funding will be “clawed back,” as David Toland, Thrive Allen County executive director, described it.
The store also will have the advantage of Iola’s Neighborhood Revitalization Program. That means it will pay no property taxes, with a 5 percent charge made by the county for managing the program the first six years, and then will pay taxes in 20-percent graduations until paying the full amount after 10 years.
Daniels said he wanted to “make it clear there will be no added taxes” to account for the county’s support. “We’re looking at the budget (for 2018) now and we’re considering a reduction in the levy.”
Further, he pointed out, “We wouldn’t be having this discussion without Enbridge,” alluding to the $40 million increase in county assessed valuation from the 36-inch pipeline and pump station the company completed in Allen County three years ago.
The increase in valuation, and attendant tax dollars, permitted commissioners to sock away about $2 million in a capital outlay fund, from which the G&W incentive will be drawn.
Williams added that the county may have another fiscal bump if, and when, one or more wind farms are erected in the county. “That could be like Enbridge,” he said, although wind farms have a 10-year property tax exemption by state law as an incentive. Common practice is for the companies to make payments in lieu of taxes until they join tax rolls.
EDP Renewables, which has leased about 14,000 acres in northeast Allen County, has a wind farm in Coffey County, near Waverly. It makes a payment in lieu of taxes of about $500,000 a year.
Daniels concluded discussion with a warning: “I’ve had constituents say if we gave G&W a cash incentive, we’d be setting a precedent. I look at what precedent we’d be setting if we didn’t do it.”

BEFORE discussion of G&W and resultant incentives were discussed and approved, Iola attorney Chuck Apt encouraged commissioners to refrain from handing over cash. Rather, he said, if G&W, or any other business, were to receive assistance from the county, it should be as a short-term loan.
“I support a new grocery store,” Apt said, but allowed it should have developed a business plan that took into account overruns in construction bids, and not depended on the county for a bail-out.
He proposed instead commissioners be certain they had adequate reserves to handle whatever financial problems that might arise with Allen County Regional Hospital. “The hospital is more important than a grocery,” he said.
Income has been an issue for the hospital, and it took a hit Monday when the Kansas House failed to override Gov. Sam Brownback’s veto of a bill that would have expanded Medicaid in Kansas to about 130,000 people living in or near poverty.
Also, Apt said commissioners should have written policies with objective guidelines for any financial assistance that might be proposed for a business or industry.
“Make money available each year, and don’t go on a case-by-case basis,” Apt proposed. “Loan from the fund. I wouldn’t mind if you forgave a loan if they (business or industry) did what they said. Don’t just hand out money.”
He declared G&W “is going to build (the store) if it makes sense. If you don’t give them money and they pull out, it will be a business decision.”
Commissioners spent 25 minutes in executive session before deciding to make the $180,000 available to G&W.

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