By J.R. SPARKE
Contributor to Reflector-Chronicle
HERINGTON — An offer to receive quit-claim deeds to 21 undeveloped lots in a residential housing sub-division in Herington will be discussed during a special-called meeting of the Herington City Commission at 6 p.m. Tuesday, June 25.
Ross Boelling of Tonganoxie, managing partner for Iron Horse Development LLC, told commissioners during a regular semi-monthly meeting Tuesday that development of the Logan Pointe sub-division had stalled and that is was time to resolve the matter. He noted that he and several mostly local investors agreed that offering to issue quit-claim deeds to the undeveloped lots was the best way to achieve this.
Boelling, who grew up in Herington, said there was approximately $190,000 in back taxes owed on the property dating from 2009. He added neither he nor the investors were in a position to pay any of that amount.
Information received from the Dickinson County Treasurer’s office indicated a tax sale on the property would probably be scheduled later in the year, Boelling said. This could be avoided if the city took possession of the property through quit-claim deeds.
In a May 31 letter marked as confidential, Boelling wrote to Herington City Manager Ron Strickland concerning the matter. He specifically mentioned that the City of Herington had provided significant help with the Logan Pointe project.
Boelling said in the letter the IHD business plan for the sub-division had been predicated on the ability to sell the majority of 28 lots in Phase 1 of the project in the two-years prior to the start of special assessment taxes. The goal was to pay off the property purchase price debt from Phase 1 sales revenue and begin Phase 2.
The business plan was based on identified housing pressures in Herington due to needs identified in the Herington Comprehensive Plan and a Kansas Department of Commerce study, the age of existing homes in Herington, anticipated expansion of employment in Herington by the Union Pacific Railroad and projected area housing needs from expansion at Fort Riley, Boelling noted in the letter.
Phase 1 was completed in August 2008, which coincided with a major downward turn in the national economy and a subsequent crash in the housing market, Boelling wrote. As a result of the negative economic pressures and a shift in Fort Riley expansion plans, IHD was unable to meet the goal of its business plan.
“The extended length of the recession/depression, combined with price pressures caused by the age and (corresponding) deflated pricing of the Herington housing market, plus changes in Fort Riley plans, prevented our projected volume of sales,” Boelling told Strickland in the letter.
In the letter to the city manager, which was made available to the city commissioners, Boelling said six lots have been sold and a quit-claim issued for another on which a spec house was constructed.
He said IHD had attempted a variety of marketing and sales activities to “move” the lots. Those included securing the services of one local realtor, one Junction City realtor and multiple local realtors during a period of many months.
“Iron Horse Development LLC is a small company with sixteen, most local Herington, investors,” Boelling said in the letter. “Logan Pointe is our only business activity and our only income is from Logan Pointe lot sales. Therefore, we find ourselves without sufficient available or anticipated monies to pay our current tax liability.”
The decision to offer the remaining lots to the city through quit-claim deeds was made during a May 9 meeting of IHD investors, Boelling said in the letter.
“Our partners have lost our entire investment of time and money in this project, and several still have remaining personal debt as a result of keeping things operating this long,” Boelling said in his written communication with Strickland. “While this is not the outcome anyone desired, our partners agree that in the long-term, Herington will benefit from this subdivision.”
He added, “ We cannot thank the City of Herington enough for your support throughout the duration of this project and we fully and reluctantly understand what this means to our partners and to the City of Herington. I can assure you that we have been diligent in our efforts to make this project a success and are reluctant to admit failure.”
Commissioner Fred Olsen said he was very saddened about the IHD matter and expressed his appreciation to Boelling and the other investors for their efforts.
There was a general consensus of interest among the commissioners in accepting the quit-claim deeds offer. However, they wanted to know the exact extent of financial responsibility for the city.
It was noted that the $190,000 amount included special assessments, which had been put in place by the city. If the city takes possession of the undeveloped lots, the special assessments would not be included.
Boelling said the amount would significantly less.
Mayor Robbin Bell directed Strickland to research the matter and determine the best plan of action for the city.
City Attorney Brad Jantz also will be working with Boelling on the quit-claim deed process.
The commission is facing a July 1 deadline for taking action on the matter due new state regulations regarding such issues taking effect on that date.
In another matter related to Logan Pointe, commissioners forgave the special assessments on property owned by John and Kelli Thissen at 1462 Gehrke Court. This was in accordance with the terms of a resolution adopted by the governing body on Nov. 6, 2012.
Commissioners were divided on an ordinance to allow utility vehicles, including golf carts, to be driven on city streets on night. An existing ordinance had prohibited this.
On a 3-2 vote, an amended ordinance was approved. Commissioners Chuck Miller and Olsen and Mayor Bell voted in favor of the amended ordinance, while Commissioners Beth Wade and D.J. Neuberger cast “no” votes.
Mayor Bell noted that only licensed drivers are allowed to operate the utility vehicles and that the vehicles must be properly equipped with headlights, brake lights and turn signals. City-issued permits also are required.
A six-month extension also was approved before action is taken concerning the removal of conceal-carried weapon ban signs from state, county and municipally-owned properties. The removal requirement is included in legislation passed during the most recent session of the Kansas Legislature.
Tuesday’s commission turned “fowl” for several minutes while Herington resident Ed Seastrom pleaded his case for an amended ordinance to allow the keeping of a limited numbers of chickens inside the city limits.
Seastrom recently received a letter from the city notifying him was in violation of a local ordinance because he was keeping chickens. He was given 30 days to remedy the situation. It was noted other residents received similar letters.
Following Seastrom’s presentation, he was given an extension until Aug. 31. It is anticipated the commission will continue to consider the matter and make a decision regarding an amended ordinance at that time.
Marc Toomey, another Herington resident, also spoke in favor of amending the current ordinance. He keeps chickens as pets.
In another matter, commissioners approved ordinances requiring completion of aquatic nuisance species education courses by boaters and fishermen at the Herington Reservoir, Lake Herington and Father Padilla Memorial Park Lake. Fines will not go into effect until the day after Labor Day.
A resolution canceling a water watch issued earlier this spring was adopted by the commission.
Commissioner Neuberger expressed his displeasure with information presented by Mike Ryan, Herington Municipal Hospital CEO, and HMH Chief Financial Officer Pat Moyer at the June 4 meeting of the governing body. The commissioner was absent from the session, but had done some follow-up research.
He was critical of the interpretation of property ownership and of the five-year capital improvements plan presented by hospital representatives. Neuberger said neither the health care facility nor the city could afford to fund it.