Focus Area: Economy
Staff Contact: Jamie Robichaud / Kathryn Messer
Subject: Report on a request by Lineage Logistics, LLC and assigns for an issuance request for industrial revenue bonds and tax phase-in for a single-series bond issuance for a project in a business park with a master resolution. The project will entail the construction of an approximately 400,000 square foot industrial facility on a 65-acre parcel located near the northeast corner of 175th Street and Lone Elm Road.
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Report on a request by Lineage Logistics, LLC and assigns for an issuance request for industrial revenue bonds and tax phase-in for a single-series bond issuance for a project in a business park with a master resolution. The project will entail the construction of an approximately 400,000 square foot industrial facility on a 65-acre parcel located near the northeast corner of 175th Street and Lone Elm Road.
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Summary:
The City has received an IRB application for $310,000,000 in industrial revenue bonds for the construction of a 400,000 square foot refrigerated warehouse facility in the business park under development by Commercial Reposition Partners 17, LLC (master resolution abatement also under consideration). The project is located on a 65-acre parcel in the 146-acre development on the northeast corner of 175th Street and Lone Elm Road. This will be the first single-series of bonds to be issued to cover land, the building and other costs for the inital project, under the master resolution.
The Applicant requests a 10-year / 80% 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 24-1075).
The request for the single-series of bonds under the master resolution should not exceed $310,000,000 in industrial revenue bonds for the construction of a 400,000 square foot refrigerated warehouse facility on a 65-acre parcel in the business park development. The single series request of industrial revenue bonds for the project consist of:
• $8,200,000 to acquire land
• $157,000,000 to construct the building
• $134,000,000 for furniture, fixtures and equipment in the building
• $10,800,000 to cover development costs including site work and soft costs
• The total project will create 200 new jobs over the next 10 years.
• Average starting salaries of the new jobs:
§ $58,240 in year one
• A total of approximately $110 million in new wages over the life of the abatement
• Property taxes over the 10-year period with estimated 80% property tax phase-in on this project (dependent on an appraisal of $60 million*):
• All jurisdictions = $356,000 annually / $3,560,000 10-year total
• Olathe = $69,900 annually / $699,000 10-year total
• Olathe’s current annual property tax revenue from the property is $0. The property will be annexed into the City of Olathe.
• Upon retirement of the tax phase-in, the City will receive approximately a total of $349,700 in annual property tax revenue once the property tax phase-in expires.
The cost-benefit ratio of this project is below:
• City of Olathe
• 0.45
• Payback expected to take more than 10 years
• Johnson County
• 0.47
• Payback expected to take more than 10 years.
• Spring Hill School District
• 0.25
• Payback expected to take more than 10 years
• Johnson County Community College
• 0.31
• Payback expected to take more than 10 years
• State of Kansas
• 32.85
• Payback expected to occur during construction.
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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 September 16th meeting.
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Attachment(s):
A: Executive Summary
B: Application
C: Firm Data Sheet
D: Project Cost Benefit Analysis
E: Site Aerial
F: IRB Historical Cost Benefit Ratios
G: Resolution No. 25-XXXX