Archive for Thursday, October 18, 2012

Baldwin City Council approves incentive pact with dinner car owners

Baldwin City Hall

Baldwin City Hall

October 18, 2012

The Baldwin City Council put in place Monday the last piece needed to bring a dinner train to Midland Railway.

In August, the council authorized City Administrator Chris Lowe to negotiate an agreement with the owners of the Fremont Dinner Train, which has operated for 24 years in Fremont, Neb. That agreement was presented Monday to the council and approved on a 3-1 vote. Councilwoman Bonnie Plumberg was absent, and Councilman Jason Mock voted against the agreement.

Under terms of the agreement, the city will give what will be known as the Kansas Belle Dinner Train a $5,000 grant. The city also will provide a three-year, $15,000, low-interest loan to the company. The loan payments will be forgiven on an annual basis if the dinner train’s owners can demonstrate from Kansas sales tax records that they have collected more sales taxes for the city than the yearly loan repayment amount.

The agreement requires the dinner train to increase ridership, and therefore sales tax revenue, each year. Six-thousand riders and $5,000 of sales tax revenue are needed for 2013 to forgive the repayment. That increases to $6,000 in sales tax revenue or 7,000 paying passengers for 2015, the last year of the loan agreement.

“It is my belief that the loan agreement sufficiently protects the city’s investment and has a strong likelihood of providing significant benefit to the city’s sales tax receipts. Moreover, if the business does not achieve a level of success sufficient to generate more sales tax than is being loaned under this agreement on an annual basis, the city has a security interest in recouping this investment,” Lowe wrote in a report to the council on the agreement.

The agreement also requires the business to relocate its office to Baldwin City. Lowe told council members Monday that would assure Baldwin City would get its share of sales taxes from fares.

There is no employment threshold for the dinner train in the agreement. However, Lowe noted that the dinner train “will provide for several full-time equivalent positions for its office and service operations.”

Lowe told the council the agreement would be signed with the closing of other agreements the dinner train has arranged to finance its move to Baldwin City. The target date for the closings is Friday, he said.

Mock said he voted against the agreement at the urging of residents.

“A lot of people are upset because they didn’t necessarily feel it was the city’s place to step in and do that,” he said. “A lot of existing businesses need some help.”

Mayor Ken Wagoner conceded the arrangement was new to Baldwin City but said it was simple and easy to understand.

Bruce Eveland, manager and co-owner of the dinner train, asked for city help in August as the last piece needed to relocate the business. A memo presented at that meeting listed public and private financing arrangements that paved the way for the dinner train’s move. Among the public elements was a $5,000 Baldwin Economic Development Grant, a $25,000 Entrepreneurship Communities loan from the NetWorks Program, which makes money available for business opportunities in smaller Kansas communities, and a $54,000 heritage grant from Douglas County to help build a short spur line to park dinner cars when not in use.

Comments

Stacy Napier 1 year, 6 months ago

This sounds a whole lot better than a hand out like the city is used to giving, but why not make the whole thing a loan. Also I hope the county collects the property tax on the cars that will now be located in the city. Seems they were not doing that on the other privately owned cars on the railroad.

Glad we finally have and intellegent City Manager.

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