Focus Area: Economy
Staff Contact: Jamie Robichaud / Kaili Stowers
Subject: Industrial Revenue Bond and Property Tax Abatement Policy Review
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Industrial Revenue Bond and Property Tax Abatement Policy Review
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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 met with the City Council on October 15 to discuss council priorities regarding property tax abatements through Industrial Revenue Bonds. Staff have composed and attached a Q&A Document answering the City Council’s follow-up questions from that discussion. A high-level summary:
• When was the last time we changed our minimum investment thresholds?
o The last time we changed our minimum investment thresholds was in 2018, when we amended the policy for 2019. Previously, the city had a sliding scale. The larger the investment, the longer the term of abatement.
• The council requested more detailed information about the historical mix of commercial vs. residential property and its assessed value. That data is attached in the Q&A document.
The main proposed change in the policy this year stems from Council’s discussion about prioritizing higher wages. To address this concern, staff is recommending an additional 5% abatement for projects that have an average wage of at least 110% of the Johnson County per capita income, which currently equates to $62,000.
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 policies with proposed revisions are attached. Additions/revisions are shown in colored text. A high-level review of proposed changes include:
• IRB
o Employment - Wages
§ 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.
§ 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.
o Design Criteria
§ Changing language from preferred to expected.
§ 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.
o Performance Agreement - Annual Report
§ 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.
§ Currently, this language exists in our performance agreements. To bolster its importance, we are proposing to add this language to our policy as well.
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Financial Impact:
None.
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Action Needed:
Review the policies. Based on City Council direction, staff will prepare the policies for formal consideration at the next City Council meeting.
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Attachment(s):
A. Red Line Draft Policy F-5 Industrial Revenue Bond and Property Tax Abatement
B. Clean Draft Policy F-5 Industrial Revenue Bond and Property Tax Abatement
C. Letter From EDC
D. Council Q&A Document