Archive for Thursday, August 16, 2001

Oz study authorized, with stipulations

August 16, 2001

It could be November before the Johnson County Commissioner learns the results of its $168,000 independent review of Oz Entertainment Co.'s redevelopment plan for the Sunflower Army Ammunition Plant.

Last Thursday, the commission approved the selection of three firms to conduct three different reviews of the Oz plan. But the commission won't fund the reviews until questions surrounding Oz's debt to Wyandotte County and the Wyandotte County Board of Public Utilities are resolved.

Last spring, the Kansas Legislature passed legislation extending the state's ability to offer tax incentives to qualifying Sunflower developers. The legislation also required Oz to repay Wyandotte County $550,000 the company received for feasibility studies the company did when it was considering locating its theme park in that county.

The company has sent Wyandotte Unified Government a $150,000 check to repay part of the debt and has reached an agreement with BPU that would forgive $400,000 owed in return for a contract to buy power for theme park and resort from BPU.

State Rep. John Ballou, R-Gardner, and Lt. Gov. Gary Sherrer, who doubles as director of the Kansas Department of Housing and Commerce, have asked Attorney General Carla Stovall for an opinion on whether such an agreement would satisfy the stipulation in last spring's legislation.

Mark Ohlemeier, public information officer for the attorney general's office, said the opinion will be issued in September maybe.

"We're guessing sometime is September," he said. "I can tell you that's more specific than we really like to get."

Commissioners concede the independent reviews are being done for Commissioner Annabeth Surbaugh's benefit. She has twice voted against the $861 million Oz redevelopment plan and has said she has no reason to reconsider her position absent positive results from the independent reviews. In both previous votes, the commission deadlocked 2-2 over the Oz proposal with Commissioner Gary Anderson abstaining because of a conflict of interest.

Commissioners Doug Wood and George Gross remain supporters of the Oz proposal. De Soto's representative on the commission, Susie Wolf, reaffirmed her opposition before voting against the independent review.

"It's not prudent for the county to rely on a company that has been slow and reluctant to pay back debts, nearly a decade old, owed to a public agency," she told her fellow commissioners.

Surbaugh and Bill MacGillivray, of Springsted, the county's financial adviser, have been seeking firms qualified to conduct parts of the independent review. Last week, the national accounting firm of Deloittee & Touche was appointed to review Oz's attendance studies and financial feasibility for a cost not to exceed $120,000. Consoer Townsend Envirodyne Engineers Inc. will research the Oz project's effect on county infrastructure for $30,800. Springsted will review the county's cost of providing services to the Oz development for $17,500.

Unwilling to fund the independent reviews with the possibility the legislation could shut down the Oz project, Surbaugh made a motion that would have the three firms proceed only after the Wyandotte County issues are resolved. In her motion, the studies will start once:

Wyandotte County Unified Government and BPU provide a written statement that the pay-back issue is resolved, or

The attorney general issues a legal opinion determining the repayment is resolved or not an issue: or

Oz repays BPU or establishes an escrow account with the funds necessary to repay the debt.

If the repayment issue isn't resolved by Sept. 25, the commission will reconsider how it will preceed.

Commissioners were told last Thursday that the attorney general's opinion would neither settle the issue nor assure the county it hadn't wasted its $168,000.

"This issue will likely be litigated even with a positive attorney general opinion," Oz Watchdog Committee attorney Jeff Carey said. "I strongly suggest you ask the courts to make a declarative decision on the statute."

Wood, in turn, questioned the constitutionality of the legislation because it changed a grant into a debt.

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