Beware zombie bills as General Assembly session closes in Frankfort
As a legislative conference committee meets this week in Frankfort before the end of this year’s General Assembly session on Tuesday, some are fearing the Frankenstein-ian revival of legislation that was once thought dead.
One such bill is HB 240, which would allow a court to require a bond from non-governmental parties that appeal zoning decisions. If such an appeal were unsuccessful, the bond would be forfeited and go to the successful party, even if such an appeal was taken in good faith and not frivolous.
Somewhat surprisingly, the bill easily passed the state House, with only a handful of Louisville Democrats voting against it. The bill sponsors argued it would force those appealing to have “skin in the game” and not file frivolous claims. The bill was blocked in a Senate committee in a bipartisan 4-4 vote, with several Republican senators voting against it out of concern that the legislation would infringe on the constitutional right to appeal.
Tom Fitzgerald, director of the Kentucky Resources Council, testified before the committee, saying that forcing non-governmental entities to pre-pay such a bond “would place a financial hardship on most individuals and neighborhood associations, and would have a chilling effect on even meritorious claims, by pricing an appeal out of the reach of many individuals and neighborhood groups.”
Besides violating a constitutional right, Fitzgerald says the bill is unnecessary because other remedies already exist for weeding out frivolous appeals that are in bad faith. In addition to tipping the scales for developers, it also would give wealthy individuals greater access to the appeals process while crowding out the less-wealthy.
Though the bill failed in the Senate committee, Fitzgerald fears it will be attached to another bill in the conference committee and whisked through by the General Assembly in its final days. Unfortunately, that’s all too common in Frankfort.
Although this zombie bill is still showing signs of life, Senate President Robert Stivers officially declared one notable piece of legislation dead for the current session: HB 1, the local option sales tax, championed by Mayor Greg Fischer, Gov. Steve Beshear and business coalitions across the commonwealth. On to 2016.
Louisville investment company to launch new mutual fund
Waycross Partners is a Louisville-based investment advisory firm/hedge fund. It’s pretty small, with $35 million under management and a similarly small portfolio of investment vehicles that are generally only available to the wealthy.
Soon, however, Waycross will launch a new mutual fund that will be open to anyone with just a few thousand bucks.
The fund is called the Waycross Long/Short Equity Fund. It’s managed by Waycross Managing Partner Benjamin Thomas. It mirrors the strategy of another fund Waycross has had since 2005, also called the Waycross Long/Short Equity Fund. Confused yet? Don’t be. The elder fund is, generally speaking, only available to a class of high-net-worth investors called accredited investors, and was not open for sale on public markets.
Accredited investors are individuals that earn over $200,000 a year, have a joint income of $300,000 in each of the last two years, or have a net worth of more than $1 million. By contrast, Waycross expects the new mutual fund will have a minimum investment of $2,500.
The new fund will be open April 29, and Waycross believes it could have $35 million invested by the end of 2015.
Why do it now? Thomas says six months ago, he was approached by investors who wanted him to do a mutual fund version of the Long/Short Equity Fund. He didn’t say who these investors were, but the suggestions came from a number of clients and some family offices.
The fund will invest in publicly traded equities — nothing exotic — and can be long, buying it so it appreciates, or short, with the expectation it will fall. Mirroring the elder investment vehicle’s strategy, Thomas expects the new fund’s biggest position will be Humana, on the long side, and they expect to be short United Healthcare, for example. Thomas believes this will minimize the risk for investors.
Waycross also expects the fund will be long Apple and Kroger. (Waycross can’t say definitively what the fund will hold, as regulators require the firm to only speak in terms of expectations until it is officially on the market.)
And who is the fund’s target demographic, besides someone with a little less to invest?
“I would say anybody that wants to have some upside participation in the equity stock market, with stock market-like returns, with bond market volatility,” Thomas says. The fund’s ticker will be WAYEX.
Thomas says it’s a timely product and that people have wanted security, but bond market yields are so low that investors feel compelled to find returns elsewhere. “This is a good hybrid investment vehicle for those people,” he says.
Thomas says he can’t reveal the performance of the senior long/short fund, as it’s technically considered a limited partnership by the Securities and Exchange Commission.
Waycross expects the new fund to have annual fees that will top at 2.15 percent. This could be considered a bit on the high side. Forbes, for example, won’t recommend a mutual fund that has over 1.5 percent in annual fees.
If the name Waycross sounds familiar, it may be because former Kentucky Senate candidate and current Republican candidate for governor Matt Bevin is one of the firm’s owners. Thomas says Bevin has no day-to-day management responsibility there.