Kanab, Utah's Weekly Newspaper, Serving Kane County, Utah & the Arizona Strip
Calendar of Events
Southern Utah News Front Page: November 22, 2017
Locals interested in Best Friends Bond Public Hearings
By Caralee Woods and Dixie Brunner
During the morning public hearing on November 20, information regarding the process of Kane County issuing $25 million in tax-exempt bonds for Best Friends was presented.
Paul Atherr, Chief Operating Officer of Best Friends, Jason Burningham, financial advisor representing Best Friends, and Randy Larson of GilmoreBell, representing Kane County, spelled out who is responsible financially and what the money would be used for.
Atherr described the new building plans Best Friends will undertake, most of which are designed to improve animal care and training, as well as visitor orientation. Water supply distribution and laundry facilities to handle 55,000 loads a year will also be addressed.
It was further explained that the bonds will be repayable in 15 years. The benefits to the county are both short- and long-range. To the degree possible, local labor and materials will be used. Over the next five years, Best Friends would be adding 40 to 70 jobs, most of which are administrative salaried positions.
Commissioner Dirk Clayson said making the decision for the county to issue the bonds considers three categories:
1) Technical details on contracts and other legal paperwork must ensure there is no pass-through liability to Kane County taxpayers.
2) Strategic issues, which take into account that Best Friends is the largest employer in the county. In learning their needs, the county will build a stronger working relationship with Best Friends; partnering with Best Friends allows Kane County to be a part of the decision making process as Best Friends experiences growth. Clayson pointed out that, “In the past, another large business, Stampin’ Up!, left the county, and we don’t want to lose Best Friends.”
3) How does this affect demographics in the county? Clayson said “Local cultural traditions are being replaced as our youth leave and don’t return because there aren’t good jobs here. Better paying jobs are needed to sustain our families and culture.”
Commissioners Jim Matson and Lamont Smith said they continue to look at the details of the transaction, and will decide later whether to support this action.
During the public hearing several people asked questions and made comments:
• Dusty Reese spoke of concerns of the Kane County Farm Bureau. “Farmers and Best Friends don’t always agree. The Farm Bureau wants more administrative jobs for Best Friends, but not more volunteers. We are worried that Best Friends will negatively affect our ability to farm and ranch.” Atherr said that new jobs created by the building expansion will be almost exclusively administrative. • Marilyn Lawson said, “We have concerns about issuing bonds through the county when Best Friends already has the ability to get their own funds. It seems we’re getting involved with an entity that has no security other than anticipated public contributions.” This was answered by state law, which prohibits the county from paying on this type of bond under any circumstances.
• Herb Alexander asked, “Who is buying the bonds?” It was explained that institutional investors are the buyers. Alexander said he was in favor of issuing the bonds.
• Judy Habbeshaw asked, “Are bonds sold before giving the money to Best Friends?” The answer is yes; bonds will not be issued unless there is a buyer(s) for the bonds. After the buyers step forward, an institutional trustee, typically a bank, will then distribute money as it is needed and approved. • Ben Aiken said, “I welcome the diversity Best Friends brings us. I’m definitely in favor of the bonds, but let’s make sure the county has enough affordable housing to support the growth.”
• Joanna McFadden said, “There are other non-profits in Kane County. How do you decide whether to issue bonds for them?” Clayson said it would be a matter of whether it was fair to other like entities; is the entity significant enough for bond holders to want to invest in them; and how does it benefit the county?
Burningham added that if a 501(c)3 isn’t strong enough to get its own loan, they also couldn’t get bonds issued.
6 p.m. Public Hearing
Editor’s note: This hearing was a second public opportunity to learn about and express concerns/opinions on the conduit revenue bond issue. Kane County and Best Friends both offered the same presentation before public comment, thus that won’t be repeated. It’s important to note, no county decision has been made yet! From here, Best Friends’ banking reps will seek long term investors to secure the bond over the terms of the loan’s life.
“Before any bonds can be issued, Best Friends will come back to the county,” explained Randy Larsen, Kane County’s legal counsel concerning the conduit revenue bond. “The county is not yet in a position to say yes or no. For legal purposes, this type of bond ‘cannot’ ever be paid back by the county! Also, this is not a limited resource to the county. They could do another; there is no legal limit on issuing another bond.”
The following are some comments from the lightly attended evening session:
• Re: Cultural issues. Commission Chairman Dirk Clayson commented, “I would say a problem in our community is there’s been a rift between this community and Best Friends. We need to find common ground and move forward.”
• “We must look at the impact on taxpayers,” said hearing attendee Dave Martinson. He questioned BF’s growth and subsequent impacts on county infrastructure such as roads.
• Among other questions, Kanab resident Monica Crouteau asked whether there would be more land purchases with the bond funds and whether Commissioner Clayson had any real estate dealings concerning Best Friends. If so, was that a conflict of interest? The commissioner responded that his understanding is none of this money will be used to purchase land. Clayson added that he has never represented Best Friends or its principals in any real estate transactions.
• “This bond issue will not only help Best Friends, but it will help the county,” said Paul Atherr, Chief Operating Officer for Best Friends. Atherr said he and the board assessed BF financials, and believe (with county approval), that this would be the best avenue to finance the enormous project. He said they’ve been in business for 34 years, and that 95% of their operation is run on charitable contributions. “Revenues are nearly $100 million a year, and we spend nearly $95 million a year. Five million dollars a year is what we have left. While we can’t and choose not to pay it (construction project) all at once, I’m confident that this bond is well within Best Friends’ ability to pay off within 15 years!”
• “My concern is that Best Friends has created a big mistrust in the community,” said Mark Gordon. He worried cowboy heritage would be pushed out and replaced with Best Friends.
• “I worry about the culture of Kanab changing,” said Pat Martinson. “I feel this bond helps them grow faster. How does the bond help Kanab?” Atherr responded that the multiplier economic impact is significant – 35,000 visitors – stays, food, etc.
• “The biggest issue I have is cultural,’ said rancher Shane Stotlar. He felt Best Friends is unfriendly to agriculturalists. “I don’t want to see more environmentalists move in here. I don’t want to see BF judge our way of life here. We don’t want to lose it.”
“We will go down with our last breath to protect our historic and cultural heritage,” pledged Commissioner Clayson.
• “Conduit financing is complicated,” said Kelly Stowell. He asked whether all costs (legal and other) would be covered. The county’s legal counsel responded that all associated costs would be borne by BF.
• Loral Linton questioned county liability and whether Best Friends was in competition with the private sector since they had bought real estate in town. Atherr responded they had staff renting the places they owned, and that all visitors and volunteers stayed in hotels or vacation rentals.
• Meghan Smith said she had grown up here among the mistrust concerning Best Friends. “Over time, I’ve come to appreciate their impact here. I appreciate the counter culture it brings to this community. They are a large employer. I hope my comments offer a different perspective.”
• One angry attendee questioned Atherr about expensive property BF rents in SOHO New York, and whether that was good stewardship for BF donors. “The donors who support us, know the relevance and impact of New York City, and the benefits of that property,” responded Atherr.
• Former Kanab City Mayor Karen Alvey spoke passionately in support of Best Friends and the conduit bond. “We’ll never be status quo!” She stressed there were other communities that didn’t have this great opportunity for increasing jobs. She also said the increased sales tax would benefit schools, hospital, roads, etc. “I have personal knowledge that these are good jobs,” said Alvey, who has a family member employed there. “They have health benefits, and provide good wages.”