Focus Area: Economy
Staff Contact: Jamie Robichaud / Kaili Stowers
Subject: Consideration of Resolution No. 24-1075 adopting the Industrial Revenue and Tax Abatement (IRB) Policy.
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Consideration of Resolution No. 24-1075 adopting the Industrial Revenue and Tax Abatement (IRB) Policy.
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Summary:
The City reviews its Industrial Revenue Bond (IRB) and Property Tax Abatement Policy on an annual basis. These reviews are made to ensure that the policies keep in line with the City Council’s economic development goals as well as market trends. The Industrial Revenue Bond (IRB) and Property Tax Abatement Policy will expire at the end of the year without Council action.
Staff presented the proposed revisions to the Olathe Economic Development Council on November 5, at which time they voted to endorse the proposed changes. A letter from the EDC in support of staff’s proposed changes is attached.
The council discussed the proposed changes at the December 3 meeting and requested the following changes, which have been made in the proposed policy for adoption:
1) Section 11 - Assessed Valuation Objective - increased the council’s objective to increase commercial and industrial development to at least 40% of the total assessed valuation of property within the City.
2) Section 1 - Item C - Targeted Industries - added data centers as eligible for the additional 5% abatement.
The full summary of the proposed changes to the policy this year include the following:
• Employment - Wages
o Additional language to ensure the applicant provides reasonably accurate anticipated wage and employment information in its application and cost-benefit analysis information, allowing the council to make a better-informed decision.
o An abatement bonus adjustment of up to 5%, for a total of 55%, may be considered for projects that do not meet the targeted industry abatement adjustment but pay an average wage of at least 110% of the per capita income of Johnson County, as set by the most recent publication of the U.S. Census Bureau.
• Design Criteria
o Changing language from preferred to expected.
o Projects will be expected to exceed applicable environmental regulations and energy efficiency standards and be able to demonstrate how they exceed these standards during the development review process.
• Targeted Industry
o Targeted Industries is being updated to include Data Centers as a targeted industry eligible for an abatement bonus adjustment. This adjustment allows projects in targeted industries to qualify for up to a 5% bonus, for a total of 55% abatement, as outlined in the City’s Economic Development Strategic Plan. The Governing Body retains discretion to exceed the 5% adjustment for projects deemed to provide extraordinary benefit to the City.
• Performance Agreement - Annual Report
o Each year, companies under tax abatement must submit a compliance report to the City, detailing employment and wage data, community benefit compliance, and any additional requested information.
o Currently, this language exists in our performance agreements. To bolster its importance, we are proposing to add this language to our policy as well.
• Assessed Valuation Objective
o Section 7 of the policy is being revised to increase the target for commercial and industrial development from 30% to 40% of the total assessed valuation of property within the City.
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Financial Impact:
None.
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Action Needed:
Approve Resolution No. 24-1075 adopting the City’s Industrial Revenue and Tax Abatement (IRB) Policy
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Attachment(s):
A. Resolution No. 24-1075
B. Resolution No. 24-1075 Redline