Land proposal returns for council review

Hillsboro?s ?mystery business? scenario has reared its head again.

Less than two months after withdrawing an option to purchase 3.7 acres of city-owned property in Hills?boro Heights for an unnamed Fortune 500 company, the same land agent submitted an identical purchase agreement for the same property.

The city council, at the end of a long discussion that included input from the owners of two businesses that could be adversely affected by the potential new business, decided at its July 15 meeting to send a modified version of the agreement back to the agent as a counter-proposal.

If the agent agrees to the city?s revised agreement, the city would be legally bound to sell the property or potentially face a lawsuit, according to city attorney Josh Boehm.

As before, the name of the Fortune 500 company was not identified during the meeting, though frequent references were made to Wal-Mart as the agent?s likely client.

During the discussion, it was stated that Mayor Delores Dalke remains the only city official who knows the name of the client company, and that the mayor is still bound to secrecy by a confidentiality agreement.

At one point, a comment by Dalke did open the door to the possibility of other corporate clients.

?I don?t believe that (the client company is) the same company,? she said. ?He could be buying this and thinking where he?s going with it?and end up selling to somebody else.?

Mystery client

The holding company dealing with the city is Southeast Kansas Develop?ment, LLC, which is owned by Ben Hawkins, a partner in a larger company called Hawkins Edwards Inc., based in Spokane, Wash.

When the original agreement from SKD was submitted in March, Clint Seibel, the city?s economic development director, said the client company would be selling fuel, groceries and pharmaceuticals at the location.

That ignited speculation in the community about the corporate identity of the enterprise, with a downsized version of a Wal-Mart store rising to the top of many lists.

The two business owners attending Tuesday?s meeting, Eric Driggers of Green?haw Phar?macy, and Paul Barnes of Heartland Foods, both said they are confident the mystery company is Wal-Mart.

?It?s kind of been tip-toed around, but everybody pretty much knows who we?re talking about,? said Barnes, who distributed a handout to council members about the impact of a Wal-Mart business coming into a community.

?Everybody thinks that?s a great thing, but if all you?re doing is replacing existing businesses, then I really don?t think you?re doing much good. You?re hurting the people in town who are running those businesses, and all the people who work for those businesses.?

Driggers offered a similar sentiment.

?I think what?s been presented to the city is underestimating the impact they?re going to have on businesses and the community,? he said. ?What happens with the jobs that they?re supposedly bringing to town is a net loss for the businesses that are here.

?It is definitely a major concern for several businesses and also the residents are concerned, too.?

Driggers had been listed on the agenda for the council?s July 1 meeting with a proposal to purchase essentially the same property in Hillsboro Heights that Hawkins had contracted for previously.

Driggers withdrew the proposal prior to that meeting. He said at the July 15 meeting that he and his wife were still considering the best place to relocate their business. He added that he did not want to purchase the Heights property simply to block its purchase by another party.

Council frustration

Frustration with not knowing who the client company is surfaced several times during the discussion.

Councilor Byron McCarty said he could understand the need to keep the name of a business a secret if it was moving to Hillsboro from a nearby community.

?But I can?t quite understand why they would not want us to know who was coming here unless they thought it would upset people,? he added. ?I really don?t like that idea. Why would they be afraid to let people know why they are coming here, and who is coming here??

Council Bob Watson asked why Hawkins canceled the first contract rather than ask for an extension.

Seibel said he had a conversation with Hawkins soon after the withdrawal.

?I asked him two questions: No. 1, how come they picked Hillsboro. The accolades were everywhere and (he) said this was the greatest place,?? Seibel said. ?I figured he was trying to butter me up for something, but I didn?t quite know what.

?Then I asked the next question: Why did you pull out? Then he danced around the bush. I never got an answer; he wouldn?t tell me.

?So, I don?t think we can answer that question,? he said. ?We tried to get answers to it, but we didn?t get them.?

Wal-Mart warnings

Both Driggers and Barnes said allowing a Wal-Mart-owned store in Hillsboro would pose a significant threat to their businesses and others.

As for his own business, Driggers said pharmacies are volume-driven, and insurance companies already are pushing customers toward Wal-Mart as part of their preferred network of suppliers by offering incentives such as eliminating the co-pay that many independent pharmacies need to provide a high level of service.

?It?s not a matter of playing on a level field,? Driggers said. ?(Wal-Marts) don?t have the same staff we have. They don?t have an office manager, they don?t have nurses, they don?t have staff assistants.?

The preferred-network issue is only getting bigger, Driggers added.

?We already have a loss of business to McPher?son and New?ton (Wal-Marts) because of those co-pays. It?s only going to get worse if they?re just down the block.?

No option to reject

When asked by Driggers if the city could simply reject the agreement submitted by Hawkins, Boehm and City Admini?strator Larry Paine said the city is in a difficult position.

On the one hand, it doesn?t want to hurt local businesses; but on the other hand, it must follow the law in regard to the sale of publicly owned land.

While a private land?owner seller could reject an offer from a potential buyer, Paine said, a public-sector entity is legally obligated to accept such a proposal as long as it substantially follows the conditions outlined in previous land-sale agreements.

?My experience on the public-sector side is that if you have property for sale it?s there for all comers,? Paine said. ?If they basically cover the two criteria that you have?is it zoned properly, and are they paying the price you?re asking?then you sell it.?

Counter points

Paine and Boehm suggested the council?s most appropriate response would be to send a counter-proposal contract to Hawkins that would better reflect consistency with the city?s previous land contracts.

The council eventually voted 4-0 to develop a counter-proposal that would:

? eliminate the paragraph stipulating another 90-day feasibility study, thus requiring SKD to immediately purchase the property for the sum of $55,000.

?Basically, what the feasibility period was designed for is for them to come and do surveys, geo-technical work, look at the land, (and) figure whether there would be utility issues that need to be done with that property.

?When they were under contract several months ago, they did their site survey, they surveyed the property. We provided them the information about where the utilities are, and the only real concern (for the city) was having the lot split.?

? change a provision that states the city ?shall immediately purchase the property? from the buyer if construction has not begun on the project within 24 months, to ?may? purchase the property from the buyer.

? eliminate a paragraph stating that the closing would occur no later than 30 days after a 90-day feasibility study. The feasibility study was essentially completed after the original agreement had been approved, Paine said.

? eliminate a confidentiality clause stating that the city ?use reasonable effort to keep this agreement confidential.? Paine said the clause refers to the contract terms, not the identity of the client company.

Because a public contract is always available for public perusal, he added, keeping the terms of the contract confidential is a non-issue.

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