County agrees to purchase land for warehouse distributor      

[APRIL 20, 2005]  After sorting through several related concerns, the Logan County Board passed a resolution to fund the purchase of land to be given for an unnamed warehouse/distributor. The board financed the project by issuing $900,000 in debt certificates that will be paid back out of general revenue funds at $45,000 per year for 20 years. The sum includes the principal and interest.

Summary of the concerns:

1. The agreement is directed toward an unnamed company. If this project should not go through, could those funds be used toward any other project that is not approved?
2. How can the county legally finance the project as a government entity?
3. Could this set the county up for a discrimination lawsuit from another business?
4. What are the financial risks and how will they be kept to a minimum?
5. Should taxpayers' money be used this way?
6. Who is Froehlich, who pays him, and will he be billing Logan County for something?

Responses to concerns:

1.  Board member George Mitchell asked this question.

Simply put, county coordinator Dewey Colter said, "No, this is not open-ended. This will go away if it does not go through."

2. Logan County State's Attorney Tim Huyett said that there is newer (1990) state statute that allows government to invest in industrial property. It says that they can sell, lease, rent or otherwise dispose of property for that purpose. It is the "otherwise dispose of" terminology that is unclear. There is nothing to say that you can (or cannot) give it away.

It appears as though there is an expectation that something of value be given back, he said.

He concluded by saying that he was not giving a position on the matter. He said that he thought everyone there wanted to see the project move forward.

Colter said that this is why Froehlich was consulted. Froehlich is who recommended the debt certificates. He is an expert in this field who has been used by many government entities in the state of Illinois.

Contrary to common belief, there is some sales tax collected on wholesale with this type of business, Colter said. The county and city will receive sales tax dollars back from the company, which is in both wholesale and retail sales. Based on current company information that has been validated by the state, the first year's sales tax return to the county is projected at $58,000. And it is expected to increase by half again the following year.

Furthermore, payroll is projected to be at $36 million in six years.

And impact figures indicate that hundreds of millions will turn over within the community.

3. John Stewart had with him an example of another government entity from another state caught in a lawsuit where one company felt it was not offered incentives comparable to another company.

This is the only known situation regarding that type of litigation and it has not come to an end. This is a new territory that governments have become more involved in. Huyett couldn't speculate on what might happen.

4. It was clarified that this is an agreement to purchase the land. It is intended to make a clear statement to the company that we are willing to work with them and that we want them here. Should they decide to come here, the contracts will be drawn up with clauses that protect the county's interests.

"This process is to say, 'Yes, we will work with you,'" Colter said.

5. John Stewart said that he had been strongly opposed to this at first because it is using taxpayers' money to pay for land and then give it away. But, he said, "I will be voting for it because if that's how it has to be, that's how it has to be."

6. Kurt Froehlich is an attorney who specializes in the field of municipal financing and has provided unpaid and appreciated advice.

If the project goes through and he were to handle the debt certificates, he would be paid $3,500 to handle the city's certificates and $3,500 to handle the county's certificates.

Dick Logan was the only member in disagreement in approving the land purchase. He made a comparative statement to a measure the county voted on earlier in the meeting. They decided to accept a new health insurance that cost more but not to raise the employee cap to cover the difference. The difference per employee for 12 months would amount to an additional $37,812 cost per year to the county. He was the only one to vote to raise the cap.

He was the last to vote on the land purchase, and with 11 yeses pledged he said, "No. You just gave away $45,000 to complete strangers."

Both Logan County and city of Lincoln officials have worked aggressively with the Lincoln and Logan County Development Partnership to bring the company to Lincoln. Partnership director Rob Orr, who has facilitated the effort, said that he hopes to hear from the company within a few weeks.

[]