Archive for Thursday, October 23, 2003

County nixes quick transfer of SFAAP water plant

City of De Soto proposal would have unlinked treatment facility from U.S. Army’s disposal of Sunflower

October 23, 2003

An attempt by city of De Soto officials to secure an early transfer of the water plant it leases at the Sunflower Army Ammunition Plant has failed for lack of support from Johnson County.
"I'm pretty disappointed," Mayor Dave Anderson said. "I don't know what's gong on with the county. It's past the point of being ridiculous."
At the Army's suggestion last year, city officials abandoned attempts to secure a long-term lease for the water plant and started working with the U.S. General Services Administration to unlink its transfer from that of the entire plant -- a move that cost the city $10,000 to survey the property. The city needs title to the water plant before it can issue bonds to improve the World War II-era facility.
Blaine Hastings, GSA Sunflower project manager, agreed to support the city's request. In a further step, the U.S. Justice Department agreed to file motions that would remove the transfer of the water treatment plant from two lawsuits attempting to prevent an early transfer of Sunflower.
But these promising developments were upended last week when Hastings informed the city that the county opposed the proposal.
Johnson County Counselor Don Jarrett said the county was simply holding to a long-held position of opposition to any piecemeal disposal of Sunflower.
"It shouldn't come as any surprise," he said. "The county's position is the same as it always has been, and that is we don't want the GSA to proceed with any part of the transaction before the plant as a whole is transferred."
Myriad concerns buttressed the county's position, Jarrett said. In addition to a desire to prevent Sunflower's piecemeal disposal, the county was concerned about the consequences of the early transfer to an eventual developer, jurisdictional complications of a piece of city property surrounded by a federal reserve, and environmental cleanup issues.
Jarrett said county officials were sensitive to the city's position and that of others still waiting for public benefit transfers.
"We understand there are timing concerns," he said. "We just ask that they be patient a bit longer."
The county's position rankled City Hall because county officials failed to make their objections directly to the city. County officials had ample opportunity to explain to the city that its opposition to the piecemeal disposal of Sunflower to private developers applied to the proposed public benefit transfers as well, Anderson said.
During the last year, county officials sat in on numerous meetings at which Anderson explained the city's efforts to secure the water plant early, the mayor said.
"Never once did they say, 'That is contrary to our position,'" he said.City Attorney Patrick Reavey said he sent copies of letters to the GSA explaining the city's position with county officials. Anderson also sent a letter to the county in July explaining the city faced a crisis at the water plant.
The only consistent opponent of unlinking the water plant's transfer has been Kessinger/Hunter & Co., Anderson and Reavey said. Anderson said the opposition traced back to his first conversation with Kessinger/Hunter attorney John Peterson soon after the May 2002 announcement that the company would negotiate Sunflower's early transfer with the administration of then-Gov. Bill Graves.
"He told me he couldn't support that, but I should be patient because something would happen in October (2002)," Anderson said. "That came and went a long time ago."
County officials also had an opportunity to voice objections at an August Sunflower meeting involving federal, state and county officials, as well as representatives from the city and Kessinger/Hunter and Co.
At that meeting, Anderson restated the city's position and asked if any party had an objection.
After the meeting, John Turner, who attended the meeting with Kessinger/Hunter officials, approached Reavey, saying they needed to talk further about the water plant. Turner is a principal with New York-based Coventry Real Estate Advisors. His biography on the company's Web site identifies him as "responsible for identifying investment opportunities, conducting due diligence, structuring transactions, negotiating with sellers and managing dispositions."
Reavey said he subsequently had several phone conversations with Turner, which ended when the advisor explained the proposed developers opposed any immediate transfer of the water plant because they had not yet done their due diligence on the proposed Sunflower transfer and out of concern the water plant might not be a reliable source of water for future development.
Jarrett's subsequent objection to the GSA only enhanced Anderson and Reavey's suspicion that the decision was actually that of the developer. Kessinger/Hunter would be in line for a tax credit for all approved public benefit transfers of Sunflower property approved by various federal agencies.
"What would the early transfer of that water plant do except short a developer of a tax benefit?" Anderson said. "It's a play by a developer at our expense, and they're supporting that."
Johnson County Commissioner John Toplikar, said he, too, suspected the county's position was determined by the developer.
"I think that is what is going on," he said. "The developer wants everything they can get at Sunflower."
Toplikar also regretted the breakdown in communications that led to the city learning the county's position through the GSA. But he said the breakdown in communications apparently extended to the County Commission.
"I think Mayor Anderson has a good point in that he did send us a letter in that he laid out what the city of De Soto's problem was and what they were facing," Toplikar said. "The way I understand, it's critical. I thought we needed to respond with a letter laying out our position. If we do have a position, we ought to talk about it in a public meeting.
"I don't recall the Commission ever taking any kind of public vote or coming to a consensus of any sort on the water treatment plant. To my knowledge, we've never discussed it in a public meeting. The only thing I can figure out is it's possible when the County Commission gave Don the directive to negotiate with the GSA, sometime after that meeting he could have taken it upon himself to make that judgment call himself."
Toplikar said he would ask the Commission to take a position on the issue at a coming meeting and draft a letter to De Soto explaining it.
Anderson said the county's call for patience was just the latest in a series since the city started leasing the water plant nearly five years ago. He was skeptical of Jarrett's claim that a transfer would happen next spring.
Nothing had changed since he sent the letter to the GSA and the county, explaining the city faced a crisis situation at the Sunflower water plant, Anderson said. Unless the city saw movement toward its ownership by the end of the year, the mayor said he would recommend the City Council close the plant that has been a drain to city taxpayers and water customers.
The city has been discussing an arrangement with officials from Johnson County Water District No. 1 that would make that utility the city's water supplier. The deal would require a buy in that is equivalent to the $4.7 million the city would have to spend to make the Sunflower water plant reliable.
"Our patience is exhausted," Anderson said "We don't have any options anymore. We will have to drop all efforts and simply go to Water One."
Closing the Sunflower water plant would have consequences. Its lease required the city to supply the Army with free water, including that used to contain fire when structures contaminated with explosive particles are burned. That burn program is currently in hiatus, but federal officials have promised to start it again at an accelerated rate in the event of a transfer.
De Soto City Engineer Mike Brungardt said the exact amount the city provided the Army during the last burn program was uncertain because the water was provided unmetered. But when the program was running two years ago, the city was operating the Sunflower facility three days a week and producing 1.5 million gallons of water a day.
Some of the water was sold to Clearview City or other Sunflower lease holders, but the vast majority was diverted for Army uses, mostly the burn program, Brungardt said.

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