Focus Area: Economy
Staff Contact: Jamie Robichaud/Kaili Stowers
Subject: Report on Request by Aspen Funds, LLC and assigns for a master resolution tax abatement and issuance of industrial revenue bonds and tax phase-in for the development and construction of the first phase project (Building 1), a 217,685 square foot speculative industrial facility located near the southeast corner of Hedge Lane and 167th Street.
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Report on Request by Aspen Funds, LLC and assigns for a master resolution tax abatement and issuance of industrial revenue bonds and tax phase-in for the development and construction of the first phase project (Building 1), a 217,685 square foot speculative industrial facility located near the southeast corner of Hedge Lane and 167th Street.
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Summary:
The City has received a master resolution application for $140,350,000 in industrial revenue bonds for the construction of 1,092,315 square feet total of industrial and warehouse facilities in a business park setting. The project is located on 98-acres at the southeast corner of 167th & Hedge Lane. This will be a multi-series of bonds to be issued to cover land, the building and furniture, fixtures and equipment costs for each series project. The Applicant has also submitted an application for the first series building to be construction in the development.
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 2-1075).
The first series request under the master resolution has requested bonds not to exceed $28,600,000 for a 217,685 square foot facility on a 11.84-acre parcel of the overall project. The first series request of industrial revenue bonds consist of:
o $645,774 to acquire land
o $27,954,226 to construct the building
• The first series project will create 164 new jobs over the next 10 years and the entire project will create 732 new jobs upon build-out.
o Average salaries of the new jobs:
§ $48,000 in year one, growing to $74,464 in year ten
o A total of approximately $94 million in new wages in year 10 of the abatement
• Property taxes over the 10-year period with estimated 50% property tax phase-in on the first phase of this project:
o All jurisdictions = $257,537 annually / $2,575,375 10-year total
o Olathe = $52,462 annually / $524,625 10-year total
o Olathe’s current annual property tax revenue from the property is $207.
o Upon retirement of the tax phase-in, the City will receive approximately a total of $104,925 in annual property tax revenue once the property tax phase-in expires.
The cost-benefit ratio of this project is below:
• City of Olathe
o 1.75
o Payback expected to take 5 years.
• Johnson County
o 3.19
o Payback expected to take 3 years.
• Gardner-Edgerton School District
o 1.01
o Payback expected to take 10 years.
• Johnson County Community College
o 1.54
o Payback expected to take 6 years
• State of Kansas
o 175.12
o 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 master resolution and first-phase project are scheduled for the May 6th City Council meeting.
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Attachment(s):
A: Executive Summary
B: Master Resolution Application
C: Building 1 Application
D: Master Resolution Firm Data Sheet
E: Building 1 Firm Data Sheet
F: Cost Benefit Analysis Building 1
G: Cost Benefit Analysis Master Resolution
H: Site Aerial
I: IRB Historical Cose Benefit Ratios