City commissioners broke the state's open meetings law by holding a closed-door meeting to discuss granting more than million in incentives to a local company, the Kansas attorney general has found. But Attorney General Paul Morrison is willing to forgo prosecution if city commissioners agree to admit their wrongdoing and personally pay for two hours of professional training on the open meetings law.

City leaders on Monday became more aggressive in their defense of a controversial set of incentives given to Deciphera Pharmaceuticals.

Several commissioners continued to concede that there were flaws in the process related to approving the deal, but said they hoped the public would take a harder look at why the city was eager to keep the start-up cancer research company from leaving Lawrence.

“I really think it is the right thing to do,” City Commissioner Rob Chestnut said of the efforts to keep Deciphera. “If we were going to look out on the panorama of companies we wanted to attract, Deciphera would be right at the top of the list.

“It is a company that is fighting cancer, and it is producing the type of jobs we want to attract. It has all the characteristics of a company we want to attract.”

City leaders released new information about the company and the deal that wasn’t presented when commissioners approved the package in late October. Commissioners have scheduled time at their meeting this evening to answer questions from the public about the deal, which has sparked an investigation by the Kansas Attorney General’s Office on whether the city violated state open meetings laws. The deal also has created questions about whether Mayor Sue Hack violated conflict of interest laws by participating in a closed-door executive session on Deciphera, despite owning more than $5,000 in Deciphera stock.

Among the information released is that the company has 23 full-time employees, and the average salary in the company is $72,000 per year. The company employs 13 people with doctorate-level degrees.

“This isn’t a machinery-based business,” City Commissioner Mike Dever said. “It is about people and brains, and that is the type of business we want here in Lawrence.”

More details

In preparation for today’s meeting – which begins at 6:35 p.m. at City Hall – staff members crafted a memo providing a more specific breakdown of how the incentives package works. Among the details:

¢ The total amount of money the local “consortium” – made up of the city, the county, the Lawrence-Douglas County Biosciences Authority and Douglas County Development Inc. – will pay over the 10-year period is capped at $4 million.

¢ The local consortium will pay $1.5 million over 10 years to reimburse the Kansas Bioscience Authority for a $3 million grant it will make to Deciphera. The grant will be used to improve a vacant building in East Hills Business Park, which will become the headquarters and laboratory space for the company. The city will pay 31.25 percent of the $1.5 million, the county will pay 31.25 percent, the local bioscience authority will pay 25 percent and DCDI will pay 12.5 percent. The local bioscience authority is largely funded by the city and county.

¢ The local group will pay up to $500,000 to Deciphera if the company reaches certain employment goals. The company will receive payments if it reaches 50, 100, 150 and 200 employees during the 10-year period.

¢ The remaining $2 million of local consortium money will be spent to fund a tax refund program for Deciphera, and to provide funding for the Lawrence-Douglas County Biosciences Authority to conduct other bioscience efforts. Corliss has estimated that the tax refund program – which has been among the more heavily criticized parts of the deal – won’t cost more than $500,000 during the 10-year period. That could leave about $1.5 million over 10 years to go to the local bioscience group to build more lab space or conduct other projects designed to attract bioscience companies.

Tax refund

Several commissioners specifically defended the tax refund program, saying that it provided the city more protection than a typical tax abatement. That’s because the tax rebate program is tied to the company having a specific number of employees. The amount of the rebate is reduced if the company has fewer employees than expected. If it fails to meet employment projections for three consecutive years, no rebate is given.

The staff memo, however, did not address many of the questions related to the process the incentives package went through to be approved. For example, the tax refund program – which has never been used before in the city – was never discussed during an open City Commission meeting, although it was discussed during a closed-door executive session.

The refund program also did not go through the normal review process that a tax abatement would be required to go through. The idea of paying a company for the number of jobs it produces also is a new idea that was not discussed in open meeting. Corliss, on Monday, said he would wait until tonight’s meeting to discuss why the process was handled the way it was.

Extension of old deal

Several commissioners said the Deciphera deal didn’t get much public discussion because it was viewed as an extension of a deal approved in January with the Kansas Bioscience Authority. That deal committed the city to spend up to $1.25 million to remodel the East Hills Business Park building. That deal was discussed in open meeting, and was not objected to by the public.

Commissioners said that because the amount of money the city would spend was not any greater than the January deal, they felt comfortable replacing it with the new deal. But unlike the January deal, the new deal provides cash payments to a private company. Under the January deal, all the money was going to a quasi-public, nonprofit economic development organization.

Now, commissioners say they recognize that issues about the process need to be addressed.

“I think it is imperative that the community sit down and decide what we’re willing to do to keep and attract businesses,” Dever said. “This is the perfect time for us to sit down and decide.

“But with this deal, I just felt like we weren’t asking the community for any additional dollars. I felt like the community already had spoken out and said it was OK to invest this money. I had no idea there would be such push back from the community.”