There may be two privately owned properties used by the state that are tax-exempt in Frankfort but should not be, according to City Commissioner Eric Whisman.
Whisman brought up the issue to his fellow commissioners as a new business item during the Frankfort City Commission work session Monday night.
He said the two buildings in question are the Mayo-Underwood Building, which opened last month, and the Sower Complex, located off the East-West Connector Road.
What do you think of City Commissioner Eric Whisman's suggestion that the city should challenge the tax-exempt status of two state office buildings built through public-private partnerships?
“For several months I have been digging,” Whisman said. “I’ve talked at great length with the Attorney General’s Office about a concern of mine, and I think it’s finally time to address it for the public’s concern.”
Whisman said that if the Mayo-Underwood Building and the Sower Complex do not qualify to be tax-exempt, the city could be losing out on millions in tax revenue annually.
“Magically, there’s $2.6 million of revenue to the city every single year that could be potential tax-generating for projects that we desperately need to do,” Whisman said.
He said the buildings are privately owned on privately owned land, but the offices in these buildings are rented by the state. Under the so-called public-private partnerships, the buildings will become state-owned at the end of long-term leases.
Whisman said the commission needs to come together and decide as a body to make a formal inquiry to the attorney general to make sure that these buildings qualify for tax exemption.
Commissioners Scott Tippett, Katrisha Waldridge and John Sower said they somewhat agree with Whisman, but they want to be careful about how they approach the matter with the state.
“I am with you in spirit,” Tippett said before expressing concern that Whisman taking it to the Attorney General’s Office might lead the state not to build property in Frankfort and to take its business to other cities.
“Yes, in theory, that should be taxed, but there’s another side of that story. And its political,” Tippett said. “And those other communities would absolutely love to have a capital construction project from the state, and they would probably say you can keep your occupational tax. And that’s just a fact.”
Waldridge said she agreed with Whisman that there is probably money the city is missing out on, but she said the commission needs to find a way to work with the state. She also said it wouldn’t be wise for Whisman to move forward on the issue without the commission’s support.
Sower agreed with Waldridge and added that the timing of this isn’t ideal since there’s a new gubernatorial administration moving in next month.
City Manager Keith Parker agreed, adding this would require partnering with Frankfort Independent Schools and other taxing entities since it also impacts them. Parker said he is in favor of meeting with the new administration and approaching the subject gently.
“The timing is very important,” Parker. “You know, there’s a lot going on, and we don’t need to rock the boat when we’re getting a lot things good for the city.”
The commission also had a first reading of an ordinance that would establish a large area of Downtown Frankfort as an entertainment destination center.
The Kentucky Alcoholic Beverage Control (ABC) determined which areas of downtown that would be in the ordinance if it passes, City Solicitor Laura Ross said.
Those areas include Wapping Street, West Broadway Street, St. Clair Street, Wilkinson Boulevard, West Main Street, Lewis Street and more.
In July, commissioners expressed support for the plan, which would allow the city to apply for a permit from the ABC allowing open alcohol containers on streets and sidewalks within a set parameter during specific times for certain events.
According to the ordinance, the city manager’s office would be responsible for granting or denying an application from a business that wishes to serve alcohol in open containers during a particular event. If the application is denied, the decision can be appealed to the city commission.
If approved, those businesses would have to use special cups for alcoholic beverages during the event.
Earlier this year, the proposed ordinance received abundant support from community groups, including the Frankfort/Franklin County Tourist and Convention Commission, Downtown Frankfort Inc., the Frankfort Area Chamber of Commerce and Kentucky Capital Development Corp.
Two other ordinances also had a first reading:
• An amendment to increase the salary schedules for Schedule Q to match a cost-of-living increase and remove the mandate that pay rates for part-time and seasonal employees be hourly.
• An amendment to create the positions of deputy director of engineering and design engineer and to amend the pay grade for the following positions: city solicitor/attorney, HR director, city clerk, assistant police chief, deputy director of operations, assistant fire chief, deputy director public works, purchasing agent/deputy director and parks and recreation deputy director. The ordinance would also change the job title of IT Manager to IT manager/deputy director.
Parker said the pay grade increases would affect future hires. Whisman asked to see what the pay is now and what it would be if the amendment passes.
After a presentation from the Franklin County Health Department on the dangers of electronic cigarette usage and the rate of e-cigarette use among teens in Franklin County, Director Judy Mattingly asked the city commission to consider amending its smoking regulation ordinance to include banning the use of e-cigarettes in public buildings.
Mayor Bill May said that amendment is already in the works and will be presented to the city commission for a first reading soon. The commissioners expressed support for the ordinance and tried to move to approve the ordinance during the meeting but could not do so since a first reading has not happened.
Commissioners Waldridge, Tippett, Whisman and Sower were present for the entire meeting. May, however, left halfway through the meeting. He later told The State Journal he was not feeling well.