City votes to transfer Fasco lease
The Cassville City Council voted to transfer the lease for the industrial building on Sale Barn Road from Fasco Industries, Inc., to RBC Horizon, Inc., during a special council meeting on July 19.
Don Cupps, city attorney, suggested the aldermen approve documents to release Fasco from the building lease and assign it to RBC Horizon, Inc., of Wisconsin.
"I think you should delve into this a little more and figure out if you are required to extend the agreement as it is," said Jerry Watley. "I feel the city should make some money on this. I strongly object to the council passing this immediately. I don't think the city should be pressured into something that it might regret later."
The current lease will expire on Sept. 30, 2009. According to the lease, RBC Horizon, Inc., will be required to pay the city $9,000 in rent per year for the remainder of the lease. Fasco has paid the rent through September of this year.
The low rent lease was established in 2000 as an incentive to entice Fasco Industries to continue to operate the plant in Cassville.
RBC Horizons, Inc., could choose to purchase the industrial building at a cost of $10. If the property was purchased, the company would be liable for all real estate property taxes on the building.
"They should either be charged more rent or purchase the property," said Watley. "If they purchase the property, they will be required to pay county property taxes. As the largest payer of property tax in Barry County, I feel I have the right to expect others to pay their property tax too."
Currently, the lessee is taxed at a lease hold rate instead of an ownership rate, said Cupps. The lessee is required to pay property taxes on equipment and improvements made on the building.
"Leases are transferable with the landlord's permission, and permission cannot be unreasonably withheld," said Cupps. "The landlord is entitled to make sure that who the lease is assigned to performs according to the lease. If the city was being asked to assign the lease to someone who couldn't pay it then it would not be unreasonable to withhold permission.
"The council entered into this agreement with Fasco two or three years ago," said Cupps. "What the council should or shouldn't have done is a moot point now. At this point, I believe the transfer should be approved."
"I think Fasco stays because of the people of Barry County, the work ethic and the good quality products that those people produce," said Watley. "I think they are going to stay here even if you raise the rent."
Alderman Herb Primrose suggested the council approve the transfer of the current lease with no changes and reconsider the lease agreement in two years when it expires.
"We should give them a comfortable landing right now," said Primrose. "We can look at it again in two years."
The aldermen voted to assign the lease to RBC Horizons and authorized Mayor Tracy Holle to execute the landlord estoppel agreement, which says that the lease is intact and has not changed.
"Jerry, you made a very important point," said Holle. "We see that point and know that we can improve upon this when the lease comes up."
Earlier this month, Tecumseh Products Company and Regal Beloit Corporation issued news releases announcing that Regal Beloit will acquire Tecumseh's Fasco operations for $220 million. RBC Horizons, Inc., is a new corporation created by Regal Beloit in conjunction with the sales agreement.