Transcript of the Testimony of Gary Duncan

Date: November 20, 2013 Volume: I Case: In Re: Joplin Critical Investigation

Printed On: December 1, 2013

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Gary Duncan

In Re:

Joplin Critical Investigation

Page 1

IN RE:

JOPLIN CRITICAL INVESTIGATION

SWORN STATEMENT OF

GARY DUNCAN

Taken on Wednesday, November 20, 2013, from 3:59 p.m. to

4:22

p.m., at the law offices of Juddson H. McPherson, LLC, 626 S. Byers, in the City of Joplin, County of Jasper, State of Missouri, before SHARON K. ROGERS, C.C.R.650, a Certified Court Reporter and a Notary Public within and for the County of Jasper, and State of Missouri.

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In Re: Gary Duncan

Joplin Critical Investigation

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APPEARANCES

MR. THOMAS E. LORAINE Loraine & Associates, LLC 4075 Osage Beach Pkwy., Suite 300 Osage Beach, MO 65065

tellaw@loraineandassociates.com

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S T I P U L A T I O N

IT IS HEREBY STIPULATED AND AGREED that this Sworn Statement may be taken by steno-mask type recording by SHARON K. ROGERS, a Certified Court Reporter, and afterwards reduced into typewriting. It is further stipulated that the signature of the witness is hereby waived, and that said Sworn Statement of said witness shall be of the same force and effect as though said witness had read and signed Sworn Statement.

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I N D E X

Page/Line

DIRECT EXAMINATION BY MR. LORAINE

5-4

E X H I B I T S

(sic) - typed as spoken (ph.) - phonetic

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Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. Q. GARY DUNCAN Having been first duly sworn and examined, testified as follows: DIRECT EXAMINATION BY MR. LORAINE: Q. Mr. Duncan, we've chatted a little bit in the hall here. I'm doing some investigation and

as I understand it you're the present Chairman of the 353 Planning Development Corporation? Yes. And you've been on board in that particular capacity for six months? There abouts, yes. So your involvement with the development of the mechanisms with the 353 and how it ties in with Wallace-Bajjali and all of that was in place before you came? That's correct, before I went onto the JRC. So you're really not familiar with how all that developed? Not from the perspective of the 353. All right. Let me ask you have you ever been

a Councilman? No. Nor will I be. What is your historic connection with

I see.

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In Re:

Joplin Critical Investigation

Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. A. Q. A. Q. A. Q. A. the City? I've lived here since 1975. I've been on a

couple of City committees way back, and then because of my work I just wasn't very involved, I didn't have the time. I was on

the CART committee when it was formed by virtue of my job which was President and CEO of Freeman Health System. What is that? CART? Well, let's go through, what is your Freeman Health System? What is that?

Freeman Health System is a three hospital health system plus a large community mental health center that covers this region. And that was all here before Wallace-Bajjali entered the picture? It's been here for years. And I retired from

that at the end of December 2011 and so my membership then on the CART stopped and my successor because the Freeman rep on the CART. Tell me what the CART is. I don't know if I can tell you what the acronym is, but it's the organization that

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In Re:

Joplin Critical Investigation

Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Q. came out of the tornado to bring citizen involvement into what we should do in the City in terms of development. Anything from

how should the street development go, what projects should be done, what do citizens really want to see changed as we're building Joplin back is sort of the gist of it. There

were the usual suspects, the CEOs from the utility company, the banks, the hospitals and so forth that were there, politicians both local and state, and to try to come to some consensus about what we ought to do, but it was kind of a citizen deal. interesting. It was kind of

So it's kind of a blueprint,

but not a guideline of what people would like to see, so I was involved with that. No money, though? A. No. Do they have They don't have any money?

How do they even meet? facilities to meet?

They just meet at a restaurant meeting room or something like that. Somebody has given

enough money to meet and have coffee and donuts, but I think that's just coming from the businesses that are involved in it.

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Page 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Q. Q. A. Q. A. Q. So that's pretty much a voluntary organization? It has no real legal impetus

or force behind it? I can't answer that, but it's certainly not a part of the City. I mean if it is maybe it's

51Z3, I have no idea, but it doesn't have any legal standing in the City as far as I know. It would be kind of like advisory? Yes. So from the standpoint of the redevelopment of the area you've certainly been involved on that aspect of the CART, but as far as the 353 since August? July, probably. What is your observations? Do you have any

knowledge of how City Manager Rohr fits into the operation of the 353 Corporation? Just by observation at the meetings. I've

never had a conversation with him outside the meeting and he says almost nothing in our meetings. Occasionally if Wallace-Bajjali is

there and maybe there's a question or something he might say something, but I can't think but once or twice he even made a comment in that meeting.

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Page 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. As far as Wallace-Bajjali, do they have any persuasive abilities with 353, or does that work? Do they work for you or do you work

for them, or tell me how that connection is. Okay. They were hired by the City, they have

a contract with the City, and they go out they have formed what they say are the 19 projects and they've sort of put those in sort of a chronology and I guess doability, I suppose. So they come to the 353 and say

we're going to buy land for this project, and really I think the first project was just like individual parcels because there was a thing called, I don't know these acronyms, Joplin Housing something, something, where hopefully we can sell those individual bases and they get a break of about $30,000.00 if they come into it. They have to meet income

guidelines and that sort of thing so I think initially before I got on it there was a lot of individual properties for homes to be built. And then the project began for a

nursing home at 26th and McClelland/Maiden Lane, then a project at 26th and Connecticut. Most of the land has been purchased since

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Page 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. I've been on has been for the 26th and McClelland, which is the nursing home project with Wallace-Bajjali and O'Reilly's out of Springfield, O'Reilly Automotive, I guess, and they also do nursing home type, I guess senior housing kind of things. So we've been

buying land out there and then we were buying land at 26th and Connecticut. Most of that

was bought by the time I got on. Is that for the show or theater or whatever it is? Theater/library combo, and then loft over retail, and a grocery store allegedly. Who sets the priorities on these 19 or 20 projects? Is it Wallace-Bajjali?

I can't tell you that from my experience on the 353. From attending City Council

occasionally I think the City sort of approves them as they go. In other words

they approved the whole package, but nothing was improved. back. Somebody is driving this. Wallace-Bajjali is driving it. Wallace-Bajjali. Is the City Manager part of They have to bring everything

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Page 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Q. Q. A. Q. A. Q. A. that driving factor? (Shaking head) You don't know? I don't know. I think so, but I'm not in

those meetings and I don't attend Wallace-Bajjali meetings. I'm trying to figure out how this all relates is what I'm trying to do. The City Manager obviously was strong in getting a master developer and having gone to some of the Council meetings just because I was interested even before I was on 353 Wallace-Bajjali, Dave Wallace made a lot of presentations to the City Council, to the CART group all over, and usually Mr. Rohr is there. And it's pretty obvious that he's

supportive of what Wallace-Bajjali is doing. If he wasn't he wouldn't be here probably. Your observation is they're working very close together? They're working together, yeah, absolutely. What's the financial situation of the 353 as we speak? We have lots of assets and no cash. Assets

being land. I forget how many parcels, I'm

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Page 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. A. not really sure, it's about 80, I think, but I'm not sure on that. There are other

revenues that will be coming in off tax credit relatively soon, by the end of the year, but we've used the 8 million dollars that was - when the bonds were let by the City based on the TIF and what the TIF would support, the taxes from the TIF would support they thought they were going to raise bonds I think, I don't know 22 million or something, but a total like 42 and they couldn't raise it all at once because you don't have a tax that's coming in until you get stuff built then if you generate the taxes. But it ended

up out of TIF bonds we had about 8 million dollars, so there was a million borrowed from 8 banks by the 353. all put together. buy land. It was a deal the banks So we used that money to

When the TIF bonds came in we got

the 8 million and we paid them back. Totally? Totally. Because it was just swap for swap.

And then in the process we have borrowed another 3 million to complete some deals. From whom?

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Page 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. A. A. Q. Q. A. From Arvest Bank. And then when the tax

credit money comes in from the State of Missouri, which will be between now and the end of the year, that loan will be paid back. So right now you're in deficit, but you have some plan of escaping that? Yes, absolutely. Now what about on a going forward basis? you afford to purchase the land at an indiscriminate time frame? As much land as Can

somebody wants you to purchase? I don't think so. So it's a matter of dollars? Oh, yeah, it's a matter of dollars and it's a matter of what basically so far has been generated to the TIF through the taxes, sales tax and property tax. Are any of these taxes setting? A. Do they end?

There's a 23 year time line on it.

From today going forward? Not from today. Probably the TIF, I'm not

sure of the date, it would have been late last year, I think. Okay. So we've got 22 years?

It could finish early.

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Page 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. A. Q. Q. But there's nothing being supported in the 353 with any taxes that are sunsetting such as sales tax or something that might have already been passed? I'm sorry, could you ask that again? I understand there's some tax sources, sales tax for sewer bonds, there's certain taxes that have been -No, no, no, these are on property tax and sales tax. And that's City sales tax? Correct. So it will not sunset? No, it's not a special -A special tax, okay, good. That answers me.

How many members are on your board roughly, if you know? Well, I can count them up. but I'm not sure. That's just historically how many there was or there's no reason for that number, I assume? Is there something by law that says I think it's 7,

they've got to have 7? We have a set of bylaws, but I have an orientation. It's a relatively set amount

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Page 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Q. A. because we replace people. And I don't know if it's within 3 to 5 to 7 or what, but right now I think there's maybe 6, but anyway it's 6 or 7. No City officials sit on that board? They don't sit on the board. meeting. Who are those City officials other than the City Manager? We have a Council representative. When I They sit in the

went on it was Mr. Scearce because Mr. Rosenberg had had some health issues, but Mr. Rosenberg is the actual rep and he's there. And then Troy Bolander who is over engineering, planning, that side of it. So he's actually a City engineer of some sort? Well, he's not an engineer. He's over those Then

departments, the Street Departments.

there's a couple of his staff are usually there that are planners that help write grants and blah, blah, blah, blah, blah. Tony Robyn, I think that's the way you pronounce it, is a City employee, reports to Mr. Bolander, and he actually does the

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Page 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Q. A. Q. Q. agendas and gets the minutes out, blah, blah, blah, and then there's a stenographer there that actually just tape records the proceedings. Will you be in charge of - I mean who is looking over the fact that we don't want to go into deficit spending with this company? Who is doing that? We are. You? Well, the board. Okay. The board. And you report directly to

the City on that, the City Council on that matter? Or is that incorrect?

I'm going to answer you I want to think about that for a minute. We could very well come

up, if they brought in a land purchase, we could say we're not buying, period and the Council would back it. I don't think the In fact, a

Council would overrule that.

couple of Council members said you've got more power than you think you've got, which is scary. on land. But we literally make the decision Now if we said no there could be a

lot of arm twisting, I suppose, but

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Page 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. A. Q. technically if we say we're not spending the money then it doesn't get spent. So you really have some control then, you believe you have some control over what is purchased? Yes. I'm sorry, there's one other person

there from the City, the City Attorney is always there. Now I had complaints from the City Attorney that he's not been involved in a lot of the Wallace-Bajjali meetings, but you don't know of that? Yeah. But he is in yours? Yes, and he's very helpful. Because we have

a lot of technical stuff that we're looking at in terms of real estate contracts and all that and none of us are real estate attorneys so he's very helpful. So you don't have independent counsel, you rely on City counsel? We don't have independent counsel. I suppose

we could get it, but we don't have money to pay them. All right. No. Do you know of anything that you

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Page 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. A. Q. A. Q. A. Q. A. should tell me in regards to Mr. Woolston's involvement in real estate purchases and being on the Council? No, because I couldn't tell you who the realtors are either for the buyer or seller well, for the seller. Who picks the title company? Wallace-Bajjali. You probably are authorized to do that? You're the buyer? We could, yeah. Why don't you? Well, first of all it came up right as I came on the Council, because the person that has been bringing this up and I went on at the same time. Who is that person? Phil - he's a former Councilman and former Mayor. Phil Stinnett.

Phil Stinnett? Phil Stinnett. And he brought up the title

issue that there was an unfairness about the title issue, and that being that one of the major title companies in town, his words, were not being used and it was directed at

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Page 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Wallace-Bajjali. And no one else really had

an issue with it because we couldn't have told you what title company was being used. And this last meeting we had, which would have been the second Tuesday of this month, we decided that if the buyer or the seller does not have a title company they want to use then Wallace-Bajjali will rotate. Well,

then the issue of course becomes who are the really local type of companies and who aren't. Well, that's just a maras. Because

we've got a couple of big title companies that aren't necessarily locally owned anymore, but everybody uses. So we said the City, you tell us who are the qualified, certified, or whatever they call them title companies and just rotate them. Now in that

last meeting the company that was at issue had been used, they came up on a real estate contract which was pointed out, so I don't see there's a big hairy issue. problem is a lot of times -Let me tell you what the problem is. the problems is title companies have different rates, okay? Say, for example, One of Because the

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Page 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Q. their standard rate might be $4.00 per thousand and you've got a 30 million dollar deal. If you pay $4.00 per thousand your

bill is X amount of dollars. Right. If you have that either bid ahead of time or you have it negotiated you might have a substantially less bid which then might be 88 cents a thousand. Well, the different of

$3.20 per thousand goes to extra cost to the City. Why would that not be an issue?

Well, we had this discussion with the City Attorney in the meetings and part of the problem is that, I'm telling you what I heard, I'm not telling you because I'm a realtor, but part of the problem is when you're doing a development like this where you have a lot of continuous pieces of property you're trying to buy you run into a lot of issues and so one of the things you run into people who absolutely want to use a title company. Give you an example, we had a

deal with one of the local hospitals that was going to give us land. Well, one of the title company guys is on their board. They want to

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Page 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Q. use -Sure. That's because there's money involved.

And the only thing I'm pointing out for you to think about through the 353 Corporation is how do I save money, and one of the things you can do is have projects bid and the buyer is usually in control of. That's typical

title work and I used to own a title company. I mean it's typical title work for the buyer to say who I'm going to pay my commission to to get this. It has to be a reputable

company obviously because you don't want them to go belly up on you, but assuming they're a reputable company, authorized to do business in Missouri, you can either bid it or give it out on a rotating basis and let the chips fall where they want. But to save bucks you can bid it. And if you bid it and it comes

in at a buck a thousand as opposed to 4 bucks a thousand you've saved $3.00 per thousand for the end purchases which is your company, the 353. Uh-huh. Seems to me to make sense. I just point that

out because I don't know that you're aware of

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Page 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. A. that, but those issues have already arisen here. They have, I'm sure, and in the discussions we've had the City is there, the City Attorney is there, actually the City Finance Director is at all of our meetings, so they've been involved in those discussions. They don't even bid out for a year, they go kind of piece by piece by piece. be going nuts if we did that. Well, we'd

And there was

discussion of, well, let's throw a bid out for a year and that's it. Well, the argument

is, yeah, but what if we've got a seller that says, huh-uh, I want to use this person because they're on my board or whatever, then you hang up the deal. I mean there's been a And I don't

whole discussion around that.

know that it isn't that anybody doesn't want to save money or play favorites. We've tried

to come down to say make it as amendable to the title companies as we possibly can because we don't need realtors or title people out there working against us. Absolutely. It's tough enough. Once people kind of get

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Page 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Q. A. the drift of what you're buying it's amazing how the prices go up. Yeah, I'm sure that's true. So there's all of that in there. But

certainly I don't care who they use and as I've told them you want to bid it I'll vote to bid it. I just mention it because it's come up in these discussions and I'm looking why money isn't being saved. That's one of the things

I'm looking at and there's not enough money, you know, so why we wouldn't want to save money? That seems to be reasonable to me. Is

there anything else that you know about any of these issues that I need to chat with you about? I don't know about City Council issues period because I'm not involved in that. Woolston thing, I have no idea. The I couldn't

tell you who the realtors are on those land contracts I've looked at. I suspected that was true, but I wanted to talk to you anyway and I want to follow all leads. Yeah, we're more interested in the appraisals

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Page 24 1 2 3 4 5 6 7 8 9 (SWORN STATEMENT CONCLUDED) A. Q. and what we're paying and that kind of stuff. Absolutely. Thank you, Mr. Duncan, I

appreciate your help. You're more than welcome.

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REPORTER'S CERTIFICATE

STATE OF MISSOURI ss. COUNTY OF JASPER I, SHARON K. ROGERS, Certified Court Reporter in the State of Missouri, do certify that pursuant to the foregoing Stipulation the witness came before me on the 20th day of November, 2013, was duly sworn by me, and was examined. That examination was then taken by me by

steno-mask recording and afterwards transcribed; said Sworn Statement is subscribed by the witness as hereinbefore set out on the day in that behalf aforesaid and is herewith returned. I further certify that I am not counsel, attorney, or relative of either party, or clerk, or stenographer of either party or of the attorney of either party, or otherwise interested in the event of this suit.

_________________________ SHARON K. ROGERS, CCR-650

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