Note: This article has been updated from the version appearing in Friday’s print edition of the Morning Sun to include a statement from Evergy.
PITTSBURG, Kan. — When the Pittsburg City Commission approved plans for the Silverback Landing housing subdivision in September of 2018, it sounded like the city would be incentivizing a developer to build houses by agreeing to pay back costs for infrastructure necessary to support them once the work was complete.
Increasingly, however, the city has found itself covering the up-front costs of the project — often, it seems, simply by choice. Though in the case of electricity infrastructure it might seem that the city’s past disagreements with electricity provider Evergy could be affecting its decision-making process, both the city and Evergy have said this is not the case.
Most recently, this week the commission approved spending close to $100,000 to extend an underground power line to a wastewater lift station in the housing development, which is located in an area between Centennial Drive and Quincy Street, east of the Pittsburg State University campus.
"What we’re asking for is just approval to go ahead and extend the power line up to the lift station," Public Works Director Cameron Alden said in presenting the plan to the commission Tuesday. "It’s common for municipalities to extend utilities to a development site. We’ve done it in quite a number of other places around the community. The developer himself is having Emery Sapp construct — and they will be paying for — the lift station itself. So this is only for the power line to get to the lift station."
Although the power line could also potentially serve other nearby properties, including Pittsburg State University property, the lift station itself "is primarily just there to service the residential development," Alden said.
Commissioner Chuck Munsell asked Alden whether the city, when it puts in a new water line, charges people to connect to the line. Alden said this was correct.
Munsell said that because Mickey Vena of P&L Development, LLC, the real estate developer working on Silverback Landing, will ultimately be reimbursed for the cost of the lift station through the city’s Rural Housing Incentive District (RHID) ordinance for Silverback Landing, he would like to see Vena pay for the power connection to the lift station.
Mayor Dawn McNay asked if it was the city’s standard practice to charge real estate developers to connect utilities to their new developments in the city.
"No," Alden said. "I’d say we’ve got several cases, one in particular we’ve got on the [Meadowbrook] Mall West property there on the southwest corner of Centennial and Broadway or Langdon Lane there, the city paid with economic dollars to go ahead and extend sewer out there, I believe that was a little bit over $84,000, and unfortunately that lot still sits empty."
City Manager Daron Hall said it doesn’t necessarily make a difference whether the city pays for things like utility infrastructure work on Silverback Landing up-front or pays P&L back after the project is complete.
"I mean the taxpayers are paying for it either way," he said, adding that the city initially looked into splitting the cost of extending electricity to the Silverback Lift Station with P&L, as about two thirds of the distance where the line needs to be extended is not within the Silverback RHID and the remaining third is.
"This whole project is taxpayer subsidized, so even though he built the lift station, the lift station’s going to become ours and the taxpayers are going to pay him back for it, so it’s more administrative than anything," Hall said.
"The taxpayers are paying for it whether it’s him getting reimbursed later or now; we were just doing it in one shot."
Commissioner Cheryl Brooks asked — as she has in the past, including before she was elected to the commission — why the city was going beyond what was outlined in the originally approved RHID development agreement.
"For the Rural Housing Incentive District, what’s spelled out there is that is not a hard limit," Alden said. "The city or county or state or anyone can contribute additional dollars to that project. Those are just items that are eligible to become reimbursed through that program."
City Manager Hall offered another perspective on the issue.
"Another way of looking at it, Cheryl, is the district’s a way to protect the city and get people to spend their own money, developers, with the idea that we’ll pay them back later," Hall said. "So that whole concept is based on a list of costs that gets the developer to do the work they’re going to do. And we’ve been through this a couple other times at different phases of this project — ‘Well the RHID says this, and it’s in there, and anything in that district is all the cost of the developer’ — it’s just, that’s not how it is. I mean the reality is there’s other stuff in there, and on this one we’re making that call.
"Administratively it would be much more difficult to break the thing into thirds and say ‘OK Mickey, we’re coming up with 66%, Mickey you come up with another—’ but it’s a good question because we only have this development tool to entice people to spend their money here because nobody else was building."
Hall reiterated his view that it didn’t make much difference whether the city pays for the infrastructure work up-front or once it’s complete and the houses are built.
"So we’re just trying to make it simpler to do, but yeah, when you read that RHID language, you know, it says right there: ‘Everything in that district’s going to be paid for by that developer.’ That’s to get the developer to pay all those costs. It doesn’t mean nothing else can be done in that district, and it is — I think it’s confusing, and we’ve brought it up at least three times during this development where it’s confused people," Hall said. "But it’s the tool we’ve got."
Like Alden and Hall, Mayor McNay noted that the city’s elected officials are not legally prohibited from spending additional public money on the Silverback Landing project.
"But we always have the authority to do things like this," she said. "I mean there’s nothing that prevents the city from saying ‘OK, we’re going to foot the cost for that.’"
In response to a question from Munsell, Director of Public Utilities Matt Bacon said P&L was hoping to begin initial work on building homes at Silverback Landing, such as constructing foundations, in June.
Munsell also asked if, as was the case with electricity for the lift station, the city would have to pay for fiber-optic cable infrastructure in the development too.
"No," said Hall, "I mean I wouldn’t say anything’s off the table. But you know, so far we’ve had $10 million worth of fiber put in our community and it’s cost us about a couple hundred grand, so the fiber companies are aggressive, they want the houses."
Hall added that getting Kansas Gas Service to extend lines into Silverback Landing had been no problem.
"One of the biggest discussions was, you know, you brought up Evergy and they’re giving a $10,000 credit to the city," Hall said.
Earlier in the discussion of the Silverback Lift Station, Munsell had brought up the $10,000 credit the city is getting from Evergy because it has a commercial development policy.
"Well, you know, Mickey’s getting all of his costs paid back by Evergy," Hall said, "so I mean, we didn’t get that deal. I would’ve liked to have gotten that deal. This is the deal we have."
"All of his costs for the whole development?" Munsell asked.
"As he sells his lots back he will get credited his share of this electric line that he has to put in," Hall said. "So we asked for that deal and were told, um — anyway, you see the deal we got."
The City of Pittsburg has spent $143,000 so far on a feasibility study — which has been paused since January, Deputy City Manager Jay Byers said Thursday — of the possibility of electric municipalization, or buying out the local electric grid from Evergy, in other words. Last fall, details of the city’s disagreements with the power company also spilled into the open following the cancellation of a non-disclosure agreement after Pittsburg took issue with a survey of local residents commissioned by Evergy.
Byers said Thursday, however, that he didn’t think Pittsburg’s effort to look into the possibility of municipalization had anything to do with the city not being offered the same deal as P&L.
"I think it was just — and I can’t speak for Evergy, but our assumption was that that’s how they treat every city, but I don’t know. You have to talk with Evergy about that," Byers said.
"I mean, Evergy gives us a number, they say ‘It’s going to cost this,’ we pay," he added. "We don’t have any options there."
The Morning Sun reached out to Evergy to ask about the issue, and although it took several hours from an initial conversation with a media relations representative for the company to provide an official statement, it eventually did so Thursday afternoon.
"Evergy is working closely with the city to expand electrical infrastructure in this area," an Evergy spokesperson said in an email. "Two different policies apply because the city’s project is to connect a commercial facility and the developer’s is to connect residential homes. Under the commercial connection policy, the city is eligible to have some of its costs reimbursed over the next five years if additional commercial customers connect to the new line."
The city commission unanimously approved paying for the Silverback Lift Station power connection Tuesday following a motion by Commissioner Patrick O’Bryan, which was seconded by Munsell.