Focus Area: Economy
Staff Contact: Jamie Robichaud / Kaili Stowers
Subject: Public Hearing and Consideration of Resolution No. 24-1067 for Business Garage Authority for $3,200,000 for issuance of industrial revenue bonds for the construction of a 33,000 square foot garage/flex office building at 15571 S Mahaffie St.
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TITLE:
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Public Hearing and Consideration of Resolution No. 24-1067 for Business Garage Authority for $3,200,000 for issuance of industrial revenue bonds for the construction of a 33,000 square foot garage/flex office building at 15571 S Mahaffie St.
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Summary:
The City has received an existing business application for $3,200,000 in industrial revenue bonds for the construction of a 33,000 square foot light industrial building in the Mahaffie Business Park. This project is an expansion of an existing facility on the same parcel of land and will be located on a portion of the 3.3 acre parcel. This project is a single-series of bonds that will be issued to cover the building.
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 first phase of this project included construction of 24,000 square feet of space for spec industrial flex. This project will add an additional 33,000 square foot facility, creating the addition of 14 flex units serving start-up and small to intermediate businesses. Spaces will range between 1,200 and 3,000 square feet.
The total request for the single-series of bonds under the resolution should not exceed $3,200,000 in industrial revenue bonds for the construction of a 33,000 square foot light industrial flex facility on a portion of a 3.3-acre parcel. The resolution request of industrial revenue bonds for the project consist of:
• $3,200,000 to construct the building
• The project will create 84 new jobs over the next 10 years.
• As this is a speculative project these job numbers and salary are both conservative estimates for the purposes of this application.
• Estimated average salaries of the new jobs:
§ $40,000 in year one, growing to $51,000 in year ten
• A total of approximately $29.8 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:
• All jurisdictions = $34,900 annually / $349,000 10-year total
• Olathe = $6,950 annually / $69,500 10-year total
• Upon retirement of the tax phase-in, the City will receive approximately a total of $13,900 in annual property tax revenue once the property tax phase-in expires.
The cost-benefit ratio of this project for the City is 6.59 with payback expected to take approximately 2 years.
The cost-benefit ratio of this project is below.
• City of Olathe
o 6.59
o Payback expected to take 2 years.
• Johnson County
o 9.15
o Payback expected to take 3 years.
• Olathe School District
o 1.00
o Payback expected to take 10 years.
• Johnson County Community College
o 2.59
o Payback expected to take 5 years.
• State of Kansas
o 510.96
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:
Two motions are needed:
1. Make a motion and vote to close the public hearing
2. Make a motion to consider approval of Resolution 24-1067
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Attachment(s):
A. Executive Summary
B. Application and Firm Data Sheet
C. Project Cost Benefit Analysis
D. Site Aerial
E. IRB Historical Cost Benefit Ratios
F. Resolution 24-1067