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MMU agrees to buy MSDC 'spec building'

Tuesday, September 14, 2010

Marshall Municipal Utilities agreed Tuesday, Sept. 14, to purchase Marshall-Saline Development Corporation's "spec building" located in the industrial park.

The $440,000 deal will free MSDC from having to make principle payments on the empty building. When the spec building was built, MSDC set up the loan in an interest-only payment arrangement. Changes to banking laws have since increased MSDC's payment to include more than $20,000 of principle payments, said Kyle Gibbs, general manager of MMU and a MSDC board member.

"I think it's a good deal for everybody. It takes a tremendous load off of us," said MSDC Director Roy Hunter. "Our first principle payment would have been this year. Our principle is just a shade under $30,000."

Currently MMU pays $30,000 per year in membership dues to MSDC. That fee will be waived for ten years under this deal, equating to a savings of $300,000 for the utility.

The money used to pay for the building will come from MMU's electric reserve fund, which is currently invested at .5 percent interest.

After the deal closes, the net effect for MMU is a 6.8 percent annual return based on the saving of the $30,000 membership dues.

"MMU doesn't plan to upgrade the building to the level MMU needs to be able to use it," Gibbs said. "It is still for sale."

If the building sells within the next 10 years, MMU will be reimbursed the purchase cost and any income higher than that level will be returned to MSDC. If the building does not sell within 10 years, the building will belong solely to MMU.

The MSDC voted unanimously in favor of the sale -- with only Gibbs abstaining due to the potential conflict of interest.

The purchase includes about eight acres of land.

"This is a win-win situation," Gibbs said.

The sale will still need to be approved by the Marshall City Council.

Contact Pat Nolan at pnolan@marshallnews.com

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Or if MMU has a surplus of money, then why are they raising our rates? And another thing, if they wouldn't give MSDC $30,000/yr, maybe they wouldn't have to raise our rates. Where are our MMU board members on this issue?

-- Posted by mtownresident on Thu, Sep 16, 2010, at 4:11 PM

They (MMU) have the money to buy the building but they are asking for a tax increase? That makes no sense. Use the surplus money for the benefit of the citizens in this community not to bail out MSDC.

-- Posted by momaster on Thu, Sep 16, 2010, at 1:12 PM


sounds like they're not laying out any cash.

just NOT paying the annual $30,000 dues that gets them a seat on the MSDC board.

and if the building sells - they get the profit.

any sense to all that?

from somewhere out west


-- Posted by zeke on Thu, Sep 16, 2010, at 12:22 PM

Pat, Eric,

Regarding the article on MSDC, some questions of note:

(1) Since the time of their inception, what has been their return on investment as an organization? How much money have they collected in fees, etc. and what industries have come to Marshall as a direct result of their action?

(2) Do they have any successful examples of property they have invested in on spec? Do they have any other white elephants on their books that they have not shared yet with the community?

(3) What salaried persons do they have in their employ and what percentage of the fees, income the collect does that equate to?

(4) A short update on what projects are coming along. I can't recall the last time I've seen an update on their actions ... it has been a while... but from what I do recall of what they had in the pipeline, I do not see anything new hitting the area.

(5) What exactly do these guys do? How does one actively attempt to bring business into an area? What do they do to collect their salary?

(6) How is the MSDC chartered and who do they report do? If there was a desire to disband them (not that I am advocating such), who would do it and how would the process go?

Not that I am against this group; I recognize the difficulty of the current economic situation. That said, this whole issue with the never-finished spec building would indicate that maybe these guys have been on a free reign for too long and they should get some sunlight on their actions. It is annoying that MMU chips out a bunch of cash from the electric fund to buy a building; was that reserve maybe too large if they can afford to buy an unneeded building with it at the same time they are asking for a rate increase? That of course is another story needing to be researched.

Thank you for asking for input.

-- Posted by oceanlord49 on Thu, Sep 16, 2010, at 9:58 AM

The website mearly list the board members, and not who the companies are that donate money to the organization. And one more question, how are the "at-large" board members selected.

-- Posted by mtownresident on Thu, Sep 16, 2010, at 7:32 AM

MSDC has 2 major purposes. The first is to nurture our existing employers to keep them in Saline County, for which MSDC has been successful. The second is to attract new industry to Saline County which has not been successful, but not for lack of trying. We all hope that MSDC will be successful in attracting new industry, but it is an extremely difficult endeavor because every county in the USA is trying to do the same thing, and that is our competition.

-- Posted by izaak on Wed, Sep 15, 2010, at 9:16 PM

Smart Dog - you bring up alot of good points and questions. I completely agree with you, i feel the democrat should do some more research. One thing I would like to know is who are the members of the MSDC?

Here is another question for Eric, why doesn't this article show up when I click "Most Discussed" on the home page?

-- Posted by mtownresident on Wed, Sep 15, 2010, at 8:41 PM
Response by Eric Crump/Editor:
Pat has plans explore MSDC's situation in more detail. Let us know what questions you have & we'll ask.

Board members are listed at www.marshall-saline-dev.com/aboutus.php

I'm afraid I can't answer the question about which articles show up under "most discussed" but I can inquire about how articles are ranked.

Eric will delete any post that names names or states an opinion regarding past decisions by folks like MSDC. I am not disagreeing, as the site belongs to the Democrat, and therefore they get to make the rules.

I also do not pretend to be a MSDC historian, in fact, I was living somewhere else when MSDC and the industrial park was created. I believe it is the function of investigative reporting to provide facts and history to the readers, not me.

My personal opinion is that MSDC's creation was very well intended with the admirable goal of bringing manufacturing, and therefore jobs, to Marshall. I also believe that one of the founding board members profited significantly from the sale of the land that comprises the industrial park. Were laws broken? I doubt it.

Perhaps other bloggers can fill in some facts. Anybody know who owned the land the industrial park is on before MSDC? Was that person a founding boardmember of MSDC? I think I know the answer, but I could be wrong, and the goal of my comments is not to discredit any person associated with MSDC. They are fine and well intended people, but even well intended people can sometimes not see the forest for the trees and bad decisions result.

My smart-alecky comments (if Eric can make up words, so can I) are never aimed at individuals, usually at organizations and some of the decisions or conclusions that they produce.

-- Posted by Smart Dog on Wed, Sep 15, 2010, at 5:14 PM
Response by Eric Crump/Editor:
Criticism is fine. Comments get deleted because of the manner of criticism, not the target. If you read back a bit, we have allowed lots of critical comments directed at MSDC and any other organization or agency people want to criticize.

Smart Dog, please provide us with the history of the MSDC and who was the primary beneficiary, per your question, "the history and facts leading up to the creation of MSDC and who profited from its creation. I think it makes what has transpired since much more clear."

I don't dispute your question but am interested in your opinion and perception of their history/purpose and benefit(s).

-- Posted by Dave in MidMO on Wed, Sep 15, 2010, at 3:16 PM

"The Marshall Democrat-News invites readers to share their views and questions on any issue. Open discussions are often useful and enlightening. Criticism is acceptable as an important part of public conversations, but we expect everyone to treat others with respect. Experience suggests it is best not to post comments while angry. We reserve the right to delete comments that we think include personal attacks, are disrespectful, threatening, obscene or in other ways objectionable."

-- Posted by Eric Crump on Wed, Sep 15, 2010, at 1:38 PM

Marshall must be the only city in the world that has an "Industrial Park" full of seed and chemical companies. We, (meaning MSDC) has done everything it could do to prevent new industry from coming to Marshall. It is coordinated with the "Employers Council" to prevent new employers from coming to Marshall, as it would stand a very fair chance of providing new and higher paying manufacturing jobs to the citizens. This would, of course, upset the apple cart both financially and politically in Marshall. This could not be tolerated by the regime that has run Marshall for the last 100 years.

Our "public" utility has lost its mind, getting into the real estate venture business...not to mention it is buying a building that is already 10+ years old. Back out now folks, before you REALLY step on yourselves. As for the 6.8% return on investment, I have a bridge in New York I would like to sell you Kyle!

-- Posted by Who on Wed, Sep 15, 2010, at 11:13 AM

C'mon, thisguy, we live in a town where the honorary mayor got the city council to appoint her city manager. What makes you think our city officials are going to depart from the "good old boy network" any time soon?

We could discuss some of our other public institutions hirings and firings in this vein also. Past actions have demonstrated to me that apparently no one cares that we lean toward nepotism.

I think the best example of the problem we have is summarized as follows. Many folks I know can't believe that anyone would be upset by these kind of things. "Isn't that the way it works everywhere?" seems to be the common refrain.

So in Marshall, the well oiled machine that is insider dealing, has become systemic in that the average citizen believes that this is the way all public or private organizations should operate.

One of my personal favorites is how many phone calls from 'prominent citizens' anyone who is hiring for a professional level position gets in Marshall. Usually, support is for a friend or relative who is probably not qualified, but gets a glowing "they'd make a real good person for that job" based on pretty much nothing. However, the message sent is clear, "if you want my support in the future, you'll hire this person now." Sorry to offend those reading this that recognize themselves. Well, maybe not.

So, back on topic, I suggest that anyone truly interested actually take the time to review the history and facts leading up to the creation of MSDC and who profited from its creation. I think it makes what has transpired since much more clear.

My personal concern is not so much about any individual action that has occured, but that so many people think these activities are acceptable and in most cases desirable. It is part of what makes the community what it is. Good or bad? Not for me to say. I do know that it appears to me that other successful communities I have lived in generally did not operate as we do in Marshall.

-- Posted by Smart Dog on Wed, Sep 15, 2010, at 10:57 AM

UPS44ml22 I know about spec buildings and costs of buildings as I spent the first 25 years of my career overseeing construction projects for the 2 companies I worked for. My point was that $400000+ for a building in that state is to much money.

The first spec building out there was owned and built by a contractor out of Columbia. He was however not interested in building this new one so they had to do it themselves. From the beginning there has not been much of a plan for the industrial park. If the owner of Kays Engineering had not guaranteed jobs and worked with the city to apply for the grant there would not have been a street out there. Kays is also the one who worked to keep the entrance open by Division of Family services.

-- Posted by theobserver on Wed, Sep 15, 2010, at 10:49 AM

I think its a crying shame that MMU is coming out and saying how much this will help both parties out but what about us? We are the ones that have to pay for this kind of mess. They are going to buy a building they have no use for and still raise our rates! And what has MSDC done at all? Other than build buildings that sit empty or sell them to businesses that are already here. I think MSDC has failed at its task and needs to be replaced or dissolved all together.

-- Posted by lovesbacon on Wed, Sep 15, 2010, at 8:59 AM

Perhaps a better headline would be:

"MMU Saves MSDC From Bankruptcy"

'cause I'm thinkin' that's what is supposed to happen when you can't repay your debts.

I wonder if MMU would like to pay off some loans for me? If so, anybody want to loan me some money?

-- Posted by Smart Dog on Wed, Sep 15, 2010, at 8:35 AM

How many of these mistakes and how many "almost" business deals is MSDC going to make before we change the leadership or just disban they whole organization? In my job, with out results, you would have been gone years ago, yet this org. keeps tracking along with no accountability.

-- Posted by mtownresident on Wed, Sep 15, 2010, at 7:13 AM

In response to the post by theobserver about the building having no floor or no lights installed is by design. The floor and lights aren't in place due to the fact that a company that would be interested in buying the building would prefer it this way. This way they can install lighting and inground plumbing to suit their needs. Depending on the type of business they can put the restroom facilities where they want them, possibly install under floor hydronic heating, or they might need deep reinforced piers for heavy manufacturing equuipment or a thick reinforced floor. This way a company can make the building suit their needs.

-- Posted by ups44ml2 on Wed, Sep 15, 2010, at 6:45 AM


Could you provide some additional data on why the MSDC saw fit to get into the building spec business a decade ago? If I read the details above correctly, the MSDC has been staring at that barn for 10 years now; if their original plan for the structure vaporized a decade ago, there has surely been a lot of time since then to attempt to figure out what to do with it. Why did they build this thing (on our nickel) to begin with?

Also I guess I am surprised that an outlay of $440K for a building that they do not need and will not use, in exchange for waiving a fee for ten years totally $300K, results in a 6.8% annual return. In that case, there are many empty and unused buildings in town they could buy and probably run that return figure up over 10%. OK, the previous sentence is a bit of tongue-in-check, but the question stands.

As a side note, does the MSDC have any other white elephants on which they are holding title on that have not come to the surface yet? Maybe the taxpayers should know about these as well?

Thank you.

-- Posted by oceanlord49 on Tue, Sep 14, 2010, at 10:29 PM

I wonder how much of our coming fee increases is going towards this purchase? If the business decision was a bad one then why is my city bailing them out....at my expense? Other businesses have to adjust/adapt or survive/fail.

-- Posted by Dave in MidMO on Tue, Sep 14, 2010, at 4:35 PM

Thank you to MMU for bailing out our industrial development corporation.

-- Posted by Smart Dog on Tue, Sep 14, 2010, at 3:34 PM

I have two different thoughts on this.

1)Do you ever wonder why they pay $30,000 a year to something that does not produce? Most places would slash funding until the entity started to produce.

2)That metal buiding is a pig in a poke. It has no floor, the light fixtures laying in the floor are so outdated you would be lucky to get someone to haul it off.

-- Posted by theobserver on Tue, Sep 14, 2010, at 3:24 PM

Great job MSDC! You actually accomplished something for once.

-- Posted by mtownresident on Tue, Sep 14, 2010, at 3:19 PM

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