Written by Don Ratzlaff Tuesday, 08 January 2013 15:43
The Hillsboro City Council approved a proposal at its Jan. 7 special meeting that will enable the City of Hillsboro to serve as a conduit for private donations for the purpose of supporting economic development projects.
Under the arrangement, cash donations can be made through the Hillsboro Community Foundation and be used by Hillsboro Ventures Inc., an arm of Hillsboro Development Corp., as a locally controlled revolving loan fund.
HCF cannot designate donations directly to HVI because the latter is a 501(c)(4) organization.
City Administrator Larry Paine said the process would begin with a donor contributing funds to HCF, which would issue a tax receipt and then distribute the funds to the City of Hillsboro as a 501(c)(3) nonprofit organization.
The city would then receipt the money in its Industrial Fund, and expense it to HVI. Once the funds are designated for a particular project, the loan would be repaid to HVI for use in future projects.
Paine said the proposal was reviewed and approved by legal counsel for the Greater Kansas City Community Foundation as well as the city’s auditor before it was presented to the city council.
Paine said a specific situation prompted the unique arrangement, but it was premature to discuss the project publicly.
Mayor Delores Dalke asked what happens to the donated funds if the intended project “falls apart.”
Clint Seibel, the city’s economic director and executive director of HVI, said the donated funds will remain with Hillsboro Community Foundation until a new request is approved by the foundation board.
Seibel said with the new arrangement in place, the city now has two revolving-loan funds to draw upon for economic development: the one created through HVI and the other through the city’s participation in the Kansas E-Community tax-credit program.
The council spent significant time discussing the city policy’s for financing public improvements within the city—specifically the amount of “security” a housing developer must have in place for a default on special assessments.
Special assessments include the cost of installing streets, water, electric and sewer. The 1998 resolution specified that a developer must guarantee 35 percent of the special assessments.
At that time the resolution was approved, the Willow Glen subdivision was being considered. The project developers later defaulted and eventually the remaining empty lots to the city as compensation. The city is currently trying to sell the lots.
Paine suggested that the council raise the percentage of security to 50 percent, thus lowering the financial risk to the city.
The ideal, he said, would be that a developer provide 100 percent security and remove the city from risk.
But that would also make it cost prohibitive for a developer to finance a project in a small town because it usually takes many years to sell a sufficient number of lots.
Dalke said a related practice that needs review is which infrastructure components are to be included in special assessments. In almost every case in the recent past, she said, the city itself has installed the water and electric because those two utilities generate revenue for the city.
In some housing developments, sewer and streets were included and others not.
The council authorized Paine to gather policy information from nearby cities in Hillsboro’s population range for the sake of review and comparison at a later date.
In other action, the council:
• approved another one-year lease agreement with Star Equipment and Bobcat Inc. that gives the city the use of new skid loader for 250 hours for a fee $3,926 plus the cost of oil changes and lubrication.
At the end of the year, the used skid loader is returned to the company for resale and a new lease arrangement can be considered. Paine and the council agreed such an arrangement is financially advantageous to the city.
• authorized the hiring of Roger Ashley as a new volunteer firefighter to fill one of two openings in the local department.