Another phase of funding

Another phase of funding by David Lias The Vermillion City Council agreed Monday to honor a request by the Vermillion Development Company for $15,000 of bed, board and booze tax funds.

The money will be used, as needed, to help pay for the training of employees of Vermillion's newest industry, Phase 2 Solutions.

"We anticipate that $15,000 may be incurred in that (training) process," said John Paulson, president of the VDC board of directors. "We'd like to request the city to authorize up to $15,000 from the BBB fund to assist in that."

Paulson added that the VDC also will be requesting $5,000 from the Clay County Commission.

Phase 2 Solutions is a solution provider for a variety of companies desiring inbound customer service, outbound acquisition of both retail and business subscribers for wireless, cable, medical, distance learning and business management services.

The company, based in Arizona, will create up to 250 jobs in Vermillion. Its home is the former Gateway building.

Phase 2 employees are being trained in a vacant elementary school in North Sioux City. The training is made possible by a plan that was quickly forged in October by state and local officials.

"It's possible that the city's contribution may be less than $15,000," Paulson said. "We're just trying to make sure that we don't need to come back and make a supplemental request. Hopefully the accomplishment of the recruiting of a company to replace Gateway as quickly and as timely as possible by this transaction will be viewed favorably by you."

"At some point before this all happened, were you planning on finding some other funding source or were you just assuming that you would come up with some (funds)?" Alderman Kevin Annis asked. "I thought maybe the governor's office was doing something. I'm kind of confused. Is this a surprise, or did we know it was coming?"

"I was involved somewhat with the negotiations, and I don't think it was a surprise as much as it was the flurry of activity to work with Phase 2," Mayor Roger Kozak said.

"The Governor's Office of Economic Development was certainly there, with $1 million-plus I believe.

"This was sort of one of those last minute things, one of those last little hurdles to get across," he said. "If we could just get those employees trained, we could get a real quick start-up. So I think on good faith, John and Craig (Atkins, executive director of the VDC) and the others said we can make it happen. So there was an element of risk. We didn't want it to become a deal-breaker."

Kozak said he had a phone conservation with Paulson about the potential need for local funds to help pay for the Phase 2 employee training.

"I said 'I don't want to risk several hundred jobs on a few thousand dollars.' So I encouraged him to go ahead and try to put the package together," Kozak said.

Kozak described the end result � a virtual seamless transition from the closing of Gateway to the start-up of Phase 2 in Vermillion.

"We literally didn't close that plant. Oct. 29 was the date Gateway was finished," he said. "Nov. 1, I believe, the doors were opened with 40 some (Phase 2) employees."

The VDC will provide the city with the bills it incurs for training. They will be paid first by the $5,000 in county money, and then, as needed, with the $15,000 city allocation.

by David Lias

Plain Talk Editor

The Vermillion City Council agreed Monday to take action that will hopefully appease property owners along Chestnut Street who are growing frustrated.

The council agreed with a motion made by Alderman Jere Chapman calling for property owners to receive a copy of the city's appraisal and a valid purchase offer, and to give them an opportunity to accept it or make a counter offer by Dec. 14.

Included in the valid offer will be:

* A plat that shows which property will be purchased for the street improvement project, and where Chestnut Street will be located.

* The appraisal.

* The dollar amount of the offer.

* A real estate closing date of Feb. 20, 2002.

if the offer is accepted.

The city's dealings with the Vermillion's citizens � whose land is needed to reach the goal of widening and placing lighting and a hard surface on what's now a gravel road � have been anything but smooth.

Last May, a letter was sent to the property owners informing them that the city had completed an appraisal, and the property owners were given an offer for payment of the amount of damages stated in the appraisal.

Subsequent to that, it was determined that a piece of information that was referenced in the letter � the dated copy of the plat � was inadvertantly left out of the May 25 letter � so a second letter was sent on July 11 restating the offer and including the plat that was omitted on May 25.

In that letter, it was said that a copy of the May 25 letter was enclosed. The city, however, omitted the letter in that second mailing.

City Manager Jeff Pederson said after learning that the second mailing didn't include the letter, he contacted City Attorney Martin Weeks to see if that would pose a problem.

Pederson said Weeks "was of the opinion that the absence of the copy of the first letter in the second mailing was not insufficient to render the offer as not valid, so it was the city's understanding at that point that there was a valid offer having been sent out."

On Oct. 19, the city corresponded with the affected property owners by mail once again. This letter was a re-statement of the offer of July 11, and an offer to deliver to them a copy of the city's appraisal.

"My recollection was that the property owners were told that with the second letter, there was something wrong with it," Alderman Jere Chapman said. He added that he agreed with Weeks that the city's error with the second letter may not have rendered the city's offer invalid.

Chapman said he recalled that at a special meeting held in late July with property owners Neil and Lynette Melby, the city council told them "there was something missing with that letter. Were the property owners ever told that in the city attorney's opinion there was still a valid offer on the table?" Chapman asked.

"I think the effect of the Oct. 19 letter was to restate the offer," Pederson said. "Had we not believed it was a valid offer, I don't think we would have sent that letter."

Weeks said that if this matter were ever looked at by a court, the court would review all of the correspondence. The first letter without a plat would have been deficient, he said, but the second letter helped alleviate that problem by including a copy of the plat.

"It shows everything quite clearly, I think, on the plat," Weeks said. "Jeff had brought to my attention that there was some concern about the fact that they (the property owners) didn't feel as though they had an offer in the proper form, and I thought that it was (in the proper form), and I still think it was."

Weeks contacted the South Dakota attorney general's office to check whether the city's action constituted a valid offer to the landowners.

"I really don't know what doubt there would be in anyone's mind. Those that claim they haven't had an offer � I haven't seen anything in writing or otherwise in which they state exactly what it is they're lacking. I think we have made a valid offer," Weeks said.

Property owner Jeanette Stone, who couldn't be present at Monday's council meeting, made it clear in a letter dated Nov. 16 to Pederson that she doesn't believe an offer has been made.

"I received your letter dated Nov. 7 concerning the city's offer to buy land from me," she wrote. "I was not aware there was an offer on the table. We had been given two offers in the past but were told to disregard them because they were incomplete."

"These property owners were told to disregard the last letter and were told that a complete packet would be forthcoming," Chapman said. "It never happened, the way it sounds, and on Oct. 19 we put in a final offer thinking maybe they were just sitting on it. They were waiting for that offer to come.

"When they (the Melbys) came to that (July) meeting, they already had that second letter in their possession," Chapman said. "They were told to disregard that second letter. I do recall that."

"I recall that, too," Alderman Barbara Yelverton said. "I remember at that meeting they were told to disregard that second letter and that everything would be sent out."

The Vermillion City Council agreed last December to seek bids for the street improvement project. It was estimated at that time the work may cost as much as $1.3 million.

The portion of street under scrutiny is approximately one-half mile in length, and provides a link between Dakota and University streets.

The estimated $1.3 million price tag for the project will be funded by $600,000 of city sales tax revenue, the state of South Dakota, and Vermillion's share of Federal Surface Transportation Program funds.

The lion's share of the cost � approximately $900,000 � will be used to construct a retaining wall south of Chestnut Street between the railroad tracks. The wall is required by the railroad before the city can fill in the slope by the tracks to widen the street to 28 feet.

The project's design also calls for cutting into the bluff on the street's north side. The maximum cut is 11 feet at the back of the proposed curb at a point approximately 200 feet east of Dakota Street.

"Before Neil and I met with the council in special session, we had already received both letters," Lynette Melby said. "The first one was extremely incomplete. When we questioned the city about that, we were told to toss it, so we did."

The Melbys then received the second letter, which referenced documents that were not included in the correspondence. Shortly after receiving the second letter, the couple met with the city council in July.

In that meeting, the Melbys told the council they had received correspondence from the city, but each letter had been missing some documents.

Lynette Melby said they never questioned the fact that they didn't hear from the city immediately after the July special meeting, because, she said, Mayor Kozak told them there would be no hurry because the council was occupied with budget sessions.

"During that time, we negotiated street lights, we negotiated truck issues (jake brakes), we talked about several different issues," Lynette Melby said. "So we never questioned why we never got this complete offer yet, because we thought it was still coming."

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