Focus Area: Economy
Staff Contact: Jamie Robichaud / John Page
Subject: Report on a request by LECC Building 5, LLC and assigns (Building 5 in Lone Elm Commerce Center) for an issuance request for industrial revenue bonds and tax phase-in of a single series project. The project will entail the construction of a 204,880 square foot industrial facility on 20-acres located in the northwest corner of Lone Elm Road and 167th Street.
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Report on a request by LECC Building 5, LLC and assigns (Building 5 in Lone Elm Commerce Center) for an issuance request for industrial revenue bonds and tax phase-in of a single series project. The project will entail the construction of a 204,880 square foot industrial facility on 20-acres located in the northwest corner of Lone Elm Road and 167th Street.
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Summary:
The City has received a new business application for $23,000,000 in industrial revenue bonds for the construction of a 204,880 square foot speculative light industrial and warehouse facility in the Lone Elm Commerce Center development. Lone Elm Commerce Center currently houses a warehouse for Chick-fil-A, Wesco distribution facilities and Lineage Logistics. The project is located on 19.74-acres at north of 167th Street, west of Lone Elm Road. This will be a single series of bonds will be issued to cover land, building, and associated development costs for the project.
The Applicant requests a 10-year / 50% property tax phase-in in conjunction with the issuance of the City’s industrial revenue bonds. This project is applying under the City’s tax abatement policy. (Policy F-5, Resolution 23-1080).
The total request for the single-series of bonds under the resolution should not exceed $23,000,000 in industrial revenue bonds for the construction of a 204,880 square foot light industrial facility on 19.74-acres of land. The resolution request of industrial revenue bonds for the project consists of:
o $2,652,804 to acquire land
o $20,347,196 to construct the buildings
• The project will create 154 new jobs over the next 10 years.
o Average salaries of the new jobs:
§ $38,000 in year one, growing to $58,950 in year ten (as this building is speculative, these average salaries are estimates)
o A total of approximately $57.9 million in new wages over the 10-year abatement
• Property taxes over the 10-year period with estimated 50% property tax phase-in on this project:
o All jurisdictions = $187,290 annually / $1,872,925 10-year total
o Olathe = $37,950 annually / $379,500 10-year total
o Olathe’s current annual property tax revenue from the property is $55.
• Property taxes over the 10-year period with estimated 50% property tax phase-in on this project:
o All jurisdictions = $187,290 annually / $1,872,925 10-year total
o Olathe = $37,950 annually / $379,500 10-year total
o Olathe’s current annual property tax revenue from the property is $55.
o Upon retirement of the tax phase-in, the City will receive approximately a total of $75,900 in annual property tax revenue once the property tax phase-in expires.
The cost-benefit ratio for this project:
• City of Olathe
o 1.73
o Payback expected to take 5 years.
• Johnson County
o 2.81
o Payback expected to take 3 years.
• Gardner Edgerton School District
o 1.00
o Payback expected to take 10 years.
• Johnson County Community College
o 1.47
o Payback expected to take 7 years.
• State of Kansas
o 114.40
o Payback expected during construction period.
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Financial Impact:
See attached materials for more detailed fiscal impact information.
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Action Needed:
Accept report. A public hearing and resolution regarding the project will go before the City Council at its August 20th meeting
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Attachment(s):
A. Executive Summary
B. Application
C. Firm Data Sheet
D. Project Cost Benefit Analysis
E. Site Plan
F: Site Aerial
G: IRB Historical Cost Benefit Ratios
H: Resolution No. 24-XXXX