Focus Area: Economy
Staff Contact: John Page / Jamie Robichaud
Subject: Public hearing and consideration of Resolution No. 24-1021 on a request by Safari Belting Systems, LLC for industrial revenue bonds and tax phase-in of a single series project for the construction of a 75,000 square foot manufacturing, assembly, and distribution facility on two parcels totaling 12-acres located at 607 W. Old 56 Highway.
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Public hearing and consideration of Resolution No. 24-1021 on a request by Safari Belting Systems, LLC for industrial revenue bonds and tax phase-in of a single series project for the construction of a 75,000 square foot manufacturing, assembly, and distribution facility on two parcels totaling 12-acres located at 607 W. Old 56 Highway.
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Summary:
The City has received an existing business application for $19,375,000 in industrial revenue bonds for the construction of a 75,000 square feet total of industrial and warehouse space in the 56 Commerce Center development. The project is located on 12-acres at 607 E. Old 56 Highway. This will be a single series of bonds will be issued to cover land, the building and furniture, fixtures and equipment costs for the project.
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). This project will allow the quickly growing Olathe company to expand to a new facility and remain within the City of Olathe.
On March 15, 2016, the City Council adopted Resolution No. 16-1025 determining the intent of the City to issue industrial revenue bonds in an amount not to exceed $36,060,000 to Opus Development Company, L.L.C. In 2017, the City Council adopted Ordinance No. 17-58 which issued $16,524,000 in industrial revenue bonds to Opus. The Assignor (Opus) desires to assign $19,375,000 of its interest in the original Resolution to the Assignee (Safari).
The total request for the single-series of bonds under the resolution should not exceed $19,375,000 in industrial revenue bonds for the construction of a 75,000 square foot manufacturing and distribution facility on 12-acres of land. The resolution request of industrial revenue bonds for all of the projects consists of:
• $1,600,000 to acquire land.
• $12,975,000 to construct the buildings.
• $4,050,000 for furniture, fixtures & equipment.
• $750,000 to cover other development costs including site work and soft costs.
The project will create 57 new jobs over the next 10 years.
• Average salaries of the new jobs:
o $69,012 in year one, growing to $75,478 in year ten.
• A total of approximately $24.9 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 = $144,075 annually / $1,440,750 10-year total.
• Olathe = $28,750 annually / $287,500 10-year total.
• Olathe’s current annual property tax revenue from the property is $2,200.
• Upon retirement of the tax phase-in, the City will receive approximately a total of $57,500 in annual property tax revenue once the property tax phase-in expires.
The cost-benefit ratio of this project for each jurisdiction is as follows:
• City of Olathe
o 1.84
o Payback expected to take 4 years.
• Johnson County
o 1.86
o Payback expected to take 6 years.
• Olathe School District
o 1.00
o Payback expected to take 10 years.
• Johnson County Community College
o 1.19
o Payback expected to take 9 years
• State of Kansas
o 212.76
o Payback expected during construction period.
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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. 24-1021
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Attachment(s):
A: Resolution No. 24-1021
B: Executive Summary
C: Application
D: Firm Data Sheet
E: Project Cost Benefit Analysis
F: Site Aerial
G: IRB Historical Cost Benefit Ratios
H: Resolution No. 16-1025