By MELINDA J. OVERSTREET
for Glasgow News 1
The Glasgow Common Council took two actions at its special-called meeting Tuesday toward designating funding for land purchases and activities related to those as well as financing part of the overhaul of American Legion Park.
The council’s normal meeting date fell on Veterans Day, so it was postponed by one day.
A majority of the legislative branch of the city government approved 6-2 the first reading of an ordinance that would amend the budget for the current fiscal year to:
– allocate $751,501 from the as-yet unappropriated portion of the General Fund to the Administrative Department Land Purchase Account for the purchase of 19.5 acres of land from Farmers Rural Electric Cooperative Corp. that it agreed in July to buy through an auction, pending some final details; and
– transfer $7.6 million from the Sanitation Landfill Fund to the Capital Projects Fund for the purchase of land, engineering services, analysis and evaluation for land acquisitions.
In September, the council approved after closed sessions in two successive meetings the purchase of almost 162 acres at 1573 Cleveland Ave. that had been owned by the Leonard and Bernadine Johnson Living Trust for nearly $6.15 million, contingent on certain details. MCS Properties LLC had the option to purchase the property at that time.
Mayor Henry Royse told Glasgow News 1 after Tuesday’s meeting that the Johnson family had wanted to sell that land as well as a smaller parcel along U.S. 31-E south of Glasgow together, but MCS really just wanted the U.S. 31-E piece, so the company was willing to sell the Cleveland Avenue land after it closed on the purchase of both. That part had never been explained in an open meeting.
More specifically, according to the proposed ordinance, $6.3 million would go to the Purchase of Land Account, $800,000 to the Professional and Technical Account, and $700,000 to the Contractual Improvement Account, all within the Administration Department budget.
As he was reading the document aloud, City Attorney Rich Alexander paused to note that the FRECC purchase was done, as the closing had occurred Sept. 3.
During the meeting, Councilwoman Marna Kirkpatrick said that she would be voting against the budget amendments because she had been completely against the larger property purchase from the beginning and the people she’s spoken to about it are against it as well.
“I am not an accountant or on the Finance Committee, and I don’t mind being the dumbest person in the room, but I do my homework and I have worked on this for several, several days,” she said. “I have questions that you’re going to answer. I love serving the citizens of Glasgow, but I as well as them need confidence in being able to rely on city government for transparency and truth.”
She said the perception is that “we are involved in shady, back-door deals,” so she wanted to know, for starters, what procedure was followed for the purchase.
Kirkpatrick said it was her understanding that the FRECC purchase had been completed, which City Treasurer Stephanie Garrett confirmed, but the Johnson property was still just under contract.
To the latter, Garrett responded that the city does have a contract, and now due diligence has been completed for the property and they are in the process of closing on the deal, but the check hasn’t been written. The treasurer said the purpose of this ordinance is to show the transactions accurately in the financial records.
Royse said after the meeting that the closing is expected to be no later than Dec. 1.
Kirkpatrick asked again about the procedure followed and inquired as to whether an appraisal had been done. Garrett said they do have an appraisal and noted the two closed sessions that occurred before the decision to purchase. She said she didn’t recall the appraisal amount off the top of her head, but Kirkpatrick was welcome to go to her office and they could look it up for her, so Kirkpatrick asked Royse whether he knew it, and he did not.
“I just know the appraisal exists. I know it appraised for at least what we’re giving for it,” he said.
The Kentucky Open Meetings Act allows a public agency to go into closed session for “deliberations on the future acquisition or sale of real property by a public agency, but only when publicity would be likely to affect the value of a specific piece of property to be acquired for public use or sold by a public agency.”
Kirkpatrick said “everyone’s” telling her that the per-acre price is “unheard of,” and she said she doesn’t know “who the players are in this” but citizens are highly concerned, upset and want answers.
She asked some further questions about the amount left in the Administrative account and why the money needed to be moved from one place to another before asking, “Is it just a line-item for auditing purposes?” Once Garrett confirmed that, Kirkpatrick, who has been a council member for several years, said that’s what she thought the case was.
Kirkpatrick followed that up with questions about how much money is required to be in the landfill fund and how much is in there now.
“I can’t read the budget; I’m not an accountant,” Kirkpatrick said.
Garrett again said she would need to look it up, but she knew it wasn’t the figure Kirkpatrick mentioned, and she again invited Kirkpatrick to drop by the office.
Councilman Terry Bunnell, who chairs the council’s finance committee, said the budget doesn’t have actual balances in it that would be accurate at this point.
Kirkpatrick said it seemed they should know those balances before they took this vote, and Garrett repeated her invitation.
Kirkpatrick said, “Honey, what I’m saying is if we’re voting on moving funds tonight, I feel like we should know what that balance is, because there has to be money left in the landfill.” Garrett assured her there is enough there.
Kirkpatrick said she didn’t know how they, as a council, could vote on this without having those figures in front of them.
Councilwoman Chasity Lowery said that was the purpose of their receiving the meeting packets a few days in advance, so they can make those inquiries in advance of the meeting.
“Stephanie is always completely open when we come in and ask those questions,” she said.
Lowery said she thought perhaps Kirkpatrick was confusing the Sanitation/Landfill Fund with the Landfill Closure/Postclosure Fund, in which the city is required to maintain a particular balance to ensure the property is maintained appropriately after it is no longer receiving new material, but Kirkpatrick, who has seemed to mix up those things in the past, said that was not the case here.
She said she wanted to make sure they have enough to cover any equipment needs, for example, and Garrett said they don’t have to have any set amount in this fund, and they have already made the major purchases, which included several pieces of heavy equipment for that department for this fiscal year, which began July 1.
“We made sure everything was purchased before we done any of this …,” the city treasurer said, adding they should be good on equipment for the next few years now.
Kirkpatrick said sometimes even new vehicles tear up, and Garrett said that’s true, and if that happens, they have money for the repairs.
Kirkpatrick said that was really all she was asking.
“I’m not trying to throw a wrench in your business. All I’m asking is a balance and how much we should have in the landfill account,” she said.
Councilman Patrick Gaunce told her that, if it was any consolation, he had fought Garrett as much as anyone over the landfill account, “and I promise you, she will not let the levels go below anything …; she’s got plenty of money in the postclosure, she’s got plenty of money in the landfill. I promise you. We’ve had that discussion.”
He also told her that he thought anyone who said that wasn’t a good price for that land probably hadn’t bought any in the last 10 or 15 years.
Kirkpatrick said that may be correct, but it doesn’t answer her questions.
Gaunce also suggested she perhaps should have checked with Garrett earlier.
Royse said, “Here’s the thing; we’ve already voted to buy the land.”
“We can back out,” Kirkpatrick interjected as he spoke.
“No. Contractually, we can’t back out,” the mayor said. “We’re just putting money in the right place to finish the transaction, and that’s what this is about.”
Bunnell said he thought they were at roughly $12 million for the landfill balance, so they would still have several million dollars in there after this transfer.
“So what we’re doing is we’re making an investment in ourselves when we agreed to purchase this property,” he said.
“Don’t say ‘we,’” Kirkpatrick said. “I wasn’t in that we.”
Bunnell said he meant the council, and they were making an investment toward long-term solutions.
Kirkpatrick then asked the mayor to clarify exactly what the intent is for the property.
Royse said they couldn’t talk about earlier because they were still doing due diligence in gathering information about the land, and that has just been completed, but drawings have been prepared to illustrate some different options the city could choose, and a “public meeting” is scheduled to which the entire community is invited to come see those and submit questions. This meeting is to take place from 6 to 8 p.m. Dec. 3 in Council Chambers.
After this, Bunnell rattled off information about three separate properties that have been or still are for sale and their per-acre prices, all of which were considerably higher than what the city is paying for the Johnson property.
“$38,000 is cheap,” Gaunce said.
Bunnell said he had spoken with someone from a different city earlier Tuesday.
“We were having a discussion about city opportunities and growth and investment in cities, and when this came up and I told him what our price per acre was, they said, ‘I can’t believe it’s that inexpensive,’” he said, adding that that same party discussed some things they had invested in in their community and remarked they weren’t sure where they would be today if they had not made investments in the future.
“This is a good investment for us. It’s a good long-term planning tool. It’s a catalyst,” he said.
Councilman Max Marion said he was against this purchase in the first place, but he thought they should have tried to bargain a little more on the price.
He said some people were concerned about how it went from one party that didn’t have it for long to the city, apparently referring to the MCS transaction.
Council members Kirkpatrick and Marion voted against the ordinance. Councilman Joe Trigg was absent.
With the same members voting in opposition as with the previous proposed ordinance, the rest of the council agreed Tuesday to the first reading of an ordinance providing for the issuance of up to $5.4 million in bonds to be used “to renovate, improve, and equip park facilities to be owned and operated by the City for the benefit of its citizens” – essentially, for part of the cost of the overhaul of American Legion Park.
Christian Juckett, a bond attorney with Rubin & Hays who prepared the ordinance, and Chip Sutherland, a public finance banker with Baird, were on hand to answer questions.
Juckett explained that, essentially, this ordinance would be like a loan agreement for the city, defining the terms involved.
Anticipating that it may concern some, he acknowledged a paragraph in the document that states that, “To the extent budgeted funds are not available for said purpose, [the ordinance] orders and provides for the levy of an annual tax in an amount sufficient to pay the principal of and interest on the bonds,” adding that this is standard language that the state law requires to be included, but the money is budgeted.
Bunnell asked what kind of interest rate was anticipated, and Sutherland said he is projecting it is likely to be in the 4 percent to 4.25 percent.
After the 6-2 vote, with no further discussion, Sutherland also pointed out that this is only the first of two readings, and approval of both is required before any ordinance is enacted, including the one with the budget amendments previously discussed.
He said the second reading is scheduled for Nov. 25, and the bond sale is scheduled for Nov. 26. In the interim, they will be publishing a preliminary statement to let interested financial institutions know the sale is happening.
The city currently has no other bond debt.
Two related matters were also further down on the agenda, and the mayor opted to go ahead and address them while Juckett and Sutherland were still available at the podium. They were municipal orders, one of which adopted certain guidelines and procedures to comply with rules of the Securities and Exchange Commission and the other adopted certain procedures in connection with the issuance of tax-exempt obligations and other related matters in connection with the bond sale.
The municipal orders were approved unanimously among the council members present.
These two items alone took almost exactly 30 minutes of the meeting that was roughly 70 minutes long in total. The other discussions are reported separately by Glasgow News 1.
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NOTE: Meeting agendas with relevant documents are available at this link on the city’s website.
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