Focus Area: Economy
Staff Contact: Jamie Robichaud/John Page
Subject: Report on a request by 167 Logistics Centre West, LLC for an increase of $6,000,000 for issuance of industrial revenue bonds for the construction of a 438,314 square foot industrial/warehouse building on approximately 22.55 acres of land on the northeast corner of 167th Street and Monticello Road.
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Report on a request by 167 Logistics Centre West, LLC for an increase of $6,000,000 for issuance of industrial revenue bonds for the construction of a 438,314 square foot industrial/warehouse building on approximately 22.55 acres of land on the northeast corner of 167th Street and Monticello Road.
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Summary:
The City has received a request to increase the industrial revenue bond amount for a previously approved Tax Phase-In project under a resolution of intent 167 Logistics Centre West, LLC. The original application requested an approximate 10 year / 50% property tax abatement for $42,000,000. Due to costs increase the applicant is requesting the amount be increased to $48,000,000.
A new cost benefit analysis has been run with the increase amount request with the following job, wages and cost benefit to the community highlighted below. This project will be generating new jobs and wages for the community and the cost benefit report illustrates that this project exceeds the targeted cost benefit ratio.
• The project request of $48,000,000 in industrial revenue bonds will cover;
o $3,000,000 to acquire land
o $36,000,000 to construct the building and other costs
o $9,000,000 to cover furniture, fixtures, and equipment
• The project creates 275 new jobs over the next 10 years.
o Average salaries:
§ Year One: $52,000
§ Year Ten: $62,145
o Approximately $17,089,800 in new annual wages in year 10.
o Approximately $136,845,900 in total new wages over the next 10 years
• The current property taxes over the 10-year period with estimated 50% property tax phase-in on this project:
o All jurisdictions = $412,147 annually / $4,121,470 10-year total
o Olathe = $79,540 annually / $795,400 10-year total
o Olathe’s current annual property tax revenue from the property is $4,878.
o Upon retirement of the tax phase-in, the City will receive approximately a total of $159,080 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 2.46
o Payback expected to take 3 years.
• Johnson County
o 3.09
o Payback expected to take 3 years.
• Spring Hill School District
o 1.01
o Payback expected to take 10 years.
• Johnson County Community College
o 1.53
o Payback expected to take 7 years.
• State of Kansas
o 216.19
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 votes are needed:
1) Make a motion and vote to close the public hearing
2) Make a motion and vote to consider approval of Resolution No. 24-XXXX
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Attachment(s):
A: Executive Summary
B: Application
C: Firm Data Sheet
D: Letter Requesting Increase
E: Project Cost Benefit Analysis
F: Site Aerial
G: IRB Historical Cost Benefit Ratios
H: Resolution No. 24-XXXX