Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> March 3, 2010


The<MeetNo2> 2nd meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> March 3, 2010, at<MeetTime> 4:00 PM, in<Room> Room 129 of the Capitol Annex. Representative Dottie Sims, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Carroll Gibson, Co-Chair; Representative Dottie Sims, Co-Chair; Senators Vernie McGaha, and Damon Thayer; Representatives Royce W. Adams, Charlie Hoffman, Tom McKee.


Guests:† Roger Thomas, Joel Neaveill, Angela Blank, Jennifer Hudnall, and Michael Tobin, Governorís Office of Agricultural Policy.


The January 6, 2010, minutes were deferred because of the lack of a quorum.


LRC Staff:† Lowell Atchley and Susan Spoonamore, Committee Assistant.


The presiding co-chair, Representative Sims, invited Mr. Roger Thomas, Executive Director, Mr. Joel Neaveill, Chief of Staff, and Mr. Michael Judge, Director of Operations, Governorís Office of Agricultural Policy, to appear before the committee and report on the Agricultural Development Boardís (ADB) tobacco settlement grant and loan actions from the previous month.


Funded projects reviewed during the committee meeting included: Two Brothers Garden Center and Nursery; Capstone Auction Service; Washington County Cattlemenís Association; Jessamine County FFA Alumni Association; A&S Livestock; Western Kentucky University Research Foundation; Lewis County Conservation District; Rowan County Fiscal Court; and The Beef Connection.


Responding to Co-chair Sims, the GOAP officials identified the owner of Capstone Auction Service as Mr. David Neville. Mr. Judge said Mr. Neville had been active in hosting meetings in the Shelbyville area to generate interest in the project, which will be a produce auction. The endeavor is expected to impact 180 farm families in 18 counties, according to their testimony.


As the meeting continued, the GOAP officials explained in greater detail the A&S Livestock project in Russell County, which was approved for $16,000 in Russell County funds and $5,000 in Adair County funds to provide a dead livestock incineration service for Russell and surrounding counties. The committee witnesses explained how the operation got started, how the carcass pickup and incineration process will work, and future plans, which may include a value-added product from the incineration process. Responding to Senator McGaha, they said the ADB does not normally fund operating expenses for a project, but they noted the applicant can use its funding for capital expenses.


They indicated to Representative Hoffman that a federal regulation requiring the removal of the brain and spinal cord from livestock carcasses before undergoing rendering will not apply to the incineration process.


As the meeting progressed, Co-chair Gibson commented on the WKU Research Foundation project. The foundation received $249,300 in state tobacco settlement funds to renovate an existing building into a cheese processing facility what will provide dairy producers in the area some assistance in adding value to their farm operations.


Mr. Judge explained to Senator Gibson that the WKU foundation will match salary and benefit funds with grant funds that will be used in remodeling, construction and sewer hookups. WKU already has purchased equipment for the project. Mr. Judge indicated to Senator Gibson that the ADB had not funded a similar project to the scale of the WKU project. Mr. Thomas mentioned an earlier project at the University of Kentucky that would assist food processors in creating and marketing their products.


Co-chair Gibson expressed his concerns about the potential impact of the project on cheese-making factories in the private sector, but also could see the worthiness of the WKU project.


Christi Marksbury, the GOAP project analyst for the endeavor, explained the relationship between the WKU foundation and dairy producers. Initially, producers will be asked to attend cheese processing workshops and will be required to create marketing plans for their cheese. According to testimony, a goal will be to offer local dairies the opportunity to receive training in cheese-making and possibly pursue that further.


As the meeting continued, the Rowan County Fiscal Court project prompted Senator McGaha to offer a suggestion regarding how to save funds. Under the project, the applicant will use $16,000 in Rowan County tobacco settlement funds to offer a welding program to local producers. The courses will be taught by Kentucky Community and Technical College System (KCTCS) instructors. Rather than hiring KCTCS instructors, Senator McGaha suggested, local technology center welding instructors could be hired at a lower rate. He urged the GOAP to consider at that option. Mr. Thomas indicated they would.


The GOAP officials responded to questions later on The Beef Connection project. The ADB approved a $500,000 zero-interest loan to The Beef Connection project, which would entail the applicant providing cattle management and marketing data to beef producer members. Responding to Co-chair Sims, Mr. Judge identified the owner as Mr. Robert Sand. At last report, he said, 128 members had signed up for the project.

According to Mr. Judge, responding to Senator McGaha, the applicant would be providing equity on the loan, but they were still awaiting the submittal of that equity.


The GOAP staff reviewed three additional projects, two that were denied funding, Little Kentucky River Winery and Tracy Curtsinger dairy processing, and a pending project, Grasshoppers Distribution.


Responding to Senator McGaha, the GOAP staff indicated they would obtain some additional information regarding Kentuckyís grape production and state winery grape utilization.


Mr. Thomas responded to Co-chair Gibson that the Grasshoppers organization, a Jefferson County product distribution network, is proficient at getting produce from farms to consumers, but needs work on its business model and business practices.


As the meeting ended, GOAP officials made note of an update showing farmersí market projects that had received tobacco settlement funds since 2001.


Documents distributed during the committee meeting are available with meeting materials in the LRC Library. The meeting adjourned at approximately 5:30 p.m.