Danville warehouse purchase questioned during City Commission meeting

Danville officials spent much of Monday’s City Commission meeting addressing concerns about the city’s recent purchase of the old Boyle Industrial Storage Co. building and warehouse on Third Street.

Danville resident Wilma Brown gave a presentation near the beginning of the meeting, during which she asked city officials a number of questions, including if they had conducted an appraisal of the building, a structural study and a feasibility study. City Manager Ron Scott said the last study regarding the building was published in 2005.

She also expressed concern that Mike Montgomery, City Commissioner Ryan Montgomery’s father, was listed as a point of contact for anyone interested in leasing the building.

“That has the appearance of questionable business dealings,” Brown said.

Later in the meeting, Ryan Montgomery apologized for not disclosing that his father was listed as a point of contact “to help a friend.” He said, “My father has no financial interest in this building. I have no financial gain. He now has to spend money to move his business (M&M Electric) out of the building.”

Commissioner Kevin Caudill said he regretted the situation was not more “transparent,” but he still believes the city had to keep much of the BISCO deal out of the public’s eye in order not to jeopardize the city’s bidding position.

After reaching a “consensus” in a July 23 executive session, the commission authorized Scott to proceed with the bidding process. The city had previously rented part of the building since 2004 and learned in July that the entire 100,000-square-foot building would be available for purchase through an auction process.

Scott and Mayor Bernie Hunstad signed a document authorizing Nina Kirkland to bid on the city’s behalf at the auction. However, Hunstad did not publicly disclose until Brown questioned him on Monday that his wife, Susan, works for Kirkland.

“There’s always a perception of wrongdoing,” Brown said.

Kentucky Revised Statutes state in Section 61.815(c) that “no final action may be taken at a closed session.” Jeremy Rogers, an attorney with the Kentucky Press Association’s Freedom of Information hotline, said this morning that it appears Danville commissioners violated that law during their July 23 executive session.

“It was fine for them to discuss the issue and probably fine for them to come to a consensus,” Rogers said. “But they are still required to go into open session and have their votes recorded in public.”

Rogers said there is no such thing as a valid secret vote, even for topics such as the BISCO building that legally can be discussed in executive session.

“It is detrimental to the public’s right to know,” Rogers said of the July 23 executive session. “It raises questions about the legitimacy of the vote.”

City Attorney Stephen Dexter said during Monday’s meeting that he gave city officials legal advice through the entire process and believed that the commission did not violate any laws or ethical guidelines in purchasing the BISCO building at a final price of $1,237,550.

The city issued a check for $123,750 on Aug. 10, the date of the auction, to Rector-Hayden Realtors, according to information obtained under an open records request. That check is a standard 10-percent deposit toward the cost of the building and is included in the final purchase price, Scott said.

But Brown and others also raised concerns regarding whether the final price tag of the building would be worth the cost to taxpayers. The building will provide a long-awaited new home to the city’s public works department and also likely store equipment and vehicles for other departments such as police and fire.

Scott said it would have cost the city about $2.1 million, not including the cost of land, to build a new building half the size of the BISCO facility. The city manager estimated even with site development costs to the recently acquired warehouse, the cost should not exceed $1,737,550. In other words, the city would have paid about $30 per square foot for new construction and stands to spend about $17.37 per square foot for the future public works building.

“The city did make efforts over many years to pursue all possible alternatives,” Scott said.