Archive for Thursday, October 4, 2001

Stovall’s ruling places Oz on deadline

Attorney general’s opinion puts state incentive package at risk

October 4, 2001

Kansas Attorney General Carla Stovall issued an opinion Tuesday that gives Oz Entertainment Co. until Oct. 29 to repay the Wyandotte County Board of Public Utilities $400,000 if it hopes to develop the Sunflower Army Ammunition Plant under the terms of existing state legislation.

Last month, Oz reached an agreement with BPU in which the company agreed to buy power from the utility or delay repayment of the disputed sum until July 1, 2002. Stovall's opinion stated that agreement didn't satisfy conditions in a bill the Legislature passed last spring that extended by one year state financial incentives for Sunflower's development. The Sunflower redevelopment legislation was to expire July 1, 2001.

Johnson County Commission Chairman Doug Wood said the attorney general's opinion leaves Oz no alternatives.

"They need to pay up or walk away from the table," he said.

Stovall's opinion was requested by Rep. John Ballou, R-Gardner and Lt. Gov. John Sherrer, who doubles as secretary of the Kansas Department of Commerce and Housing. Subsequently, Oz attorney John Petersen asked Stovall to rule on the Legislature's right to turn what Oz maintains was a grant into a debt.

Stovall rejected that argument, stating Oz made an agreement with the Legislature to repay Wyandotte County when the one-year extension was passed. The attorney general wrote, " appears to us that the Legislature in the 2001 amendment struck its own 'quid pro quo' arrangement with Oz. The Legislature did not unilaterally order the repayment of an unconditional grant; rather, it gave the developer one more year to convince Johnson County Commissioners to approve the Oz plan, if it made certain payments within a specified time frame. The Legislature's intent in this regard must have been evident to Oz officials."

Ballou said the ruling summed up the Legislature's intent.

"That was the agreement," he said. "We said, 'If we give you a one-year extension, go show you're serious by paying back Wyandotte County.' They actually said that was OK."

Stovall's ruling is "just one lawyer's opinion," Wood said. Oz has the option of asking the courts to make a declaratory judgment on the matter. He noted, however, that should the company lose in court, the legislative deadline would have passed and Oz's redevelopment plan would be dead.

Oz officials did not return phone calls.

Commission Annabeth Surbaugh and Wood agreed Oz will have to repay the $400,000 before the county will go ahead with its planned $168,000 feasibility study of Oz's financial plan under the present conditions. Two weeks ago, the commission agreed to go ahead with the study on the grounds Oz had satisfied Wyandotte County Unified Government's and BPU's demands.

The county commission has twice deadlocked on the Oz proposal. Surbaugh said the feasibility study would give her a reason to change her no vote.

"We're obviously going to put the study on hold," she said. "It would be irresponsible to spend money on something that might not happen."

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