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Minutes for SB185 - Committee on Commerce
Short Title
Authorizing utility franchises for redevelopment districts which encompass a federal enclave.
Minutes Content for Tue, Feb 13, 2018
Chairperson Lynn opened the hearing on SB 185 and requested Revisor Chuck Reimer to provide an overview of the bill.
Chairperson Lynn recognized Senator Dan Goddard who provided testimony in support of the bill. He said the bill authorizes utility franchises for redevelopment districts which encompass a federal enclave such as a closed military installation. Since these redevelopment districts and redevelopment authorities, if established by a Board of county commissioners, do not currently have the power to establish a utility franchise, they are hampered in their economic development efforts even though they have basically the same infrastructure and responsibilities of a municipality. The franchise fees are capped at 6 percent and there are restrictions on the use of funds listed in the bill. The net effect of this bill is removal of a barrier to economic development in Kansas. (Attachment 4)
Senator Olson referred to line 13 of the bill concerning the construction, operation and maintenance of water lines and water treatment facilities and asked if the county commission or the water utility would be in charge of the water lines at the Sunflower Plant. Senator Goddard responded it would be the water utility. Senator Goddard said there was a difference between the Great Plains Development Authority (GPDA) and Sunflower Plant in that Sunflower has not established a redevelopment authority and redevelopment district. Senator Olson said he wanted to be sure an artificial cap was not put in place. Senator Goddard said the water and sewer utilities at the former Kansas Army Ammunition Plant are owned and controlled by the redevelopment authority. The electric service is provided by Westar Energy. There is no natural gas service at the facility.
Senator Givens requested an example of a franchise fee that Senator Goddard would anticipate would be issued. Senator Goddard responded the franchise fee could be on electric and water service.
Chairperson Lynn asked what precipitated the redevelopment authority. Senator Goddard said the redevelopment authority was created in 2006 and was preceded by a local planning authority. Once the redevelopment authority was established, the board of directors was appointed by the county commission and a redevelopment district was established. The property did not transfer to the redevelopment authority until December, 2012.
Chairperson Lynn asked what was manufactured at the site. Senator Goddard said munitions were produced at the plant by the company Day and Zimmerman. At one time, the plant employed 10,000 to 12,000 workers.
Senator Faust-Goudeau asked if there was now any military involvement at the site. Senator Goddard responded the only military involvement has to do with the environmental cleanup process.
Chairperson Lynn recognized Michael Johnston, GPDA, who provided testimony in support of the bill. GPDA is a quasi-governmental entity chartered by law by the Labette county commission. Its mission is the economic development of what was formerly the Kansas Army Ammunition Plant near Parsons. Since the Army suspended its operations at the plant in 2005, the Defense Department's Office of Economic Adjustment has made annual payments to help cover the administrative costs associated with managing and developing the property. The authority has been notified by the Office of Economic Adjustment that this is the final year of those administrative payments. SB 185 would authorize the Labette county commission, by resolution, to impose a franchise fee not to exceed 6 percent on utilities that provide service to customers within the redevelopment district. Since natural gas service is not currently available on the property, this fee would apply primarily to electrical service. This revenue would go to the GPDA to assist in the costs of developing and maintaining the property. While GPDA currently provides and charges for sewer and water service throughout the redevelopment district, it also provides a roadway network and gate security for the property at no cost to tenants. With the impending withdrawal of federal administrative funding support, revenue from this source would be valuable in the ongoing efforts to develop and add jobs. He introduced Daniel Mann, CEO, GPDA, who was available to answer questions. (Attachment 5)
Referring to the written only neutral testimony provided by Day and Zimmerman, Senator Baumgardner asked whether GPDA had addressed the company's concerns about the lack of communications from the GPDA regarding a plan to provide the plant with reliable and continuous utility services and the purpose of SB 185. Mr. Mann responded GPDA has been in contact with Day and Zimmerman concerning the water issues and will continue to do so. In the past three years, GPDA has invested nearly half a million dollars on the water treatment and distribution system. There are plans to spend an additional $1 million on water tower and water line improvements. A grant was awarded from the Economic Development Administration to complete this work. Based on the consumption level of the plant, GPDA has no concerns about being able to provide the water requirements of Day and Zimmerman.
Senator Olson asked if GPDA acquired the water rights from the old munition plant. Mr. Mann responded the water rights were obtained through the Department of Defense. The water rights were split with 70 percent to GPDA and 30 percent to Day and Zimmerman. GPDA owns the land along the river, the water intakes, the treatment facility, and the distribution systems. The systems were put in place in 1941.
Senator Holland asked if GPDA expected Day and Zimmerman to remain at the facility for a long period of time. Mr. Mann said Day and Zimmerman performs contract work. Employment levels fluctuate based on the contracts being serviced. In July, 2013, 4,000 acres of property were transferred to Day and Zimmerman.
Senator Holland asked if the 6 percent cap meant that GPDA could charge a franchise fee of up to 6 percent of what Day and Zimmerman is billing their customers annually. Mr. Mann responded affirmatively and stated GPDA had done its best to address Day and Zimmerman's concerns.
Senator Alley asked if Day and Zimmerman have any utilities on their acreage. Mr. Mann said GPDA provides utilities to Day and Zimmerman on their acreage.
Chairperson Lynn asked if GPDA has a plan which includes communications with Day and Zimmerman. Mr. Mann said GPDA meets with Day and Zimmerman on a regular basis to review services provided.
Senator Goddard said he was confident any lack of understanding concerning GPDA's plans will be addressed with Day and Zimmerman.
No testimony was submitted in opposition to the bill.
Written only testimony neutral to the bill was submitted by:
Day and Zimmerman, Philadelphia, Pennsylvania (Attachment 6)
Chairperson Lynn closed the hearing on SB 185. The meeting was adjourned at 8:58 a.m. The next meeting is scheduled for February 14, 2018.
