Archive for Thursday, October 5, 2000

Oz makes progress with commission

October 5, 2000

Even Oz Entertainment Co.'s most vocal critic on the Johnson County Commission agreed the company provided needed answers during a Monday work session.

"They (Oz) obviously heard the message that we didn't want another Aug. 31," Commissioner Johnna Lingle said in reference to an earlier work session during which Oz representatives were unable to answer key questions. "It (Monday) was a much more productive session."

At the end of Monday's seven-hour session, which was interrupted by the commission's regular Monday agenda review and a United Way ceremony, commissioners indicated they had nearly all the information they would need to make a decision on Oz's $861 million redevelopment plan for the Sunflower Army Ammunition Plant.

Tuesday, Lingle said it appeared the commission might make a decision this month.

Lingle gave the credit for the progress made Monday to county legal counselor Don Jarrett, who prepared a summation of Oz's subsequent responses to the questions it couldn't answer Aug. 31.

By Kansas statute, the county commission and the Kansas Development Finance Authority must approve the redevelopment plan before the closed plant can be transferred to Oz.

To help finance the development, the company is asking for a $39 million tax break from the county in the form of tax increment finance (TIF) bonds, and another $189 million in sales tax revenue bonds (STAR) bonds.

In exchange for the TIF agreement, Oz proposes making a $1.8 million annual payment in lieu of taxes. On Aug 31, commissioner asked how the company arrived at the figure, which is meant to offset the expenses the county incurs from the theme park.

Commissioners were concerned the figure wouldn't pay for the additional security, fire and emergency medical services the theme park would require.

Monday, Oz CEO Robert Kory explained the company would provide much of the theme park's needed emergency services.

On a normal day, 11 uniformed security officers and 10 non-uniformed officers would man the theme park, Kory said. They would be backed up with administrative and support personnel.

In addition, the theme park's staff would include four trained firefighters and at least two certified emergency medical technicians.

Emergency equipment and facilities would include a first-aid station, ambulance, fire engine and lift bucket capable of evacuating any ride in the park.

Perhaps the biggest failure of Oz representatives Aug. 31 was their inability to explain the project's cost-benefit model to the county. When questioned, a Oz consultant said the theme park would increase property values a prospect commissioners said county residents wouldn't welcome.

Jarrett's summation listed the financial benefits the county would receive from the development.

Oz would be required to pay the county's two dedicated sales taxes that fund storm-water projects and jail improvements. Oz figures show the taxes would earn the county $1.46 million in revenue from the theme park.

The theme park would also spur economic activity that would earn the county another $5.7 million in sales tax revenue and $636,000 in added property taxes, Jarrett's summation stated.

Monday, Kory proposed a new plan to finance the $11.2 access road from Kansas Highway 10 into the theme park. Oz had been asking the county pay for a 1,600-foot road.

Monday, Kory proposed Oz and the county join in a benefit district to build the road.

Oz's 10 percent would pay for the road's design and engineering. The county would then issue 20-year bonds to pay for the road's construction. The bonds would be retired from the company's $1.8 million annual payment in lieu of taxes.

Commissioner Doug Wood of Olathe said commissioners have received numerous e-mails, letters and phone calls questioning Oz's involvement in Sunflower's redevelopment. Wood told Kory critics are upset that Oz has provided limited upfront capital investment in the $861 million project.

The company's investors have provided $35 in venture capital to date, Kory said. Other investors are interested in the project, Kory said, but they are waiting for the project to receive approval before committing money.

During a break in the work session, Wood said the investment issue and a Kansas Highway 10 interchange present Oz with a dilemma. The company needs the county and KDFA's approval before it can attract added investors or get the state's commitment to build an interchange.

Wood suggested the commission could resolve the chicken-and-egg questions by approving the project with stipulations.

"I think it would be a lot more reassuring that they had staying power if they had at least 10 percent equity investment," he said. "I'm asking that be a condition of any approval."

During the Aug. 31 meeting, an Oz financial advisor told commissioners the company could use sales tax revenue above that needed to retire STAR bonds to paying off privately place loans used to finance the theme park and resort.

That news alarmed commissioners. But Monday, the county agreed the use was anticipated in state statute. Wood suggested that Oz should pledge any excess sales tax to retiring any bonds used to build the access road.

The commission's final decision may hinge on questions Oz can't answer. Near the end of Monday's session, Commissioner George Gross noted Oz development at Sunflower would change the nature of Johnson County. It would make the county a tourist destination for the first time, he said.

After the meeting, Lingle and Wood wondered if that is something county residents want and, if so, how much.

"That's a subjective question," Lingle said. "It's not a question Oz can answer, but it's one we have to talk about."

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