Memorandum
City of Lawrence
City Manager’s Office
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TO: |
David L. Corliss, City Manager |
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CC: |
Diane Stoddard, Assistant City Manager |
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Casey Toomay, Assistant City Manager |
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FROM: |
Britt Crum-Cano, Economic Development Coordinator |
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DATE: |
March 24, 2015 |
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RE: |
2014 A nnual Report: Economic Development Support & Compliance |
Staff has completed a 2014 Annual Report: Economic Development Support & Compliance, to be forwarded to the Public Incentives Review Committee (PIRC) for review and recommendation to the City Commission. This annual report examines the progress of companies receiving tax abatements from the City of Lawrence and includes information on other active economic development programs currently sponsored by the City, including NRAs (Neighborhood Revitalization Areas), TIFs (Tax Increment Financing districts), TDDs (Transportation Development Districts), and other support programs.
The below are highlights from the 2014 report:
Tax Abatements:
Five Lawrence companies had active tax abatements in 2014: Amarr Garage Doors, PROSOCO, Grandstand Sportswear and Glassware (Screen-It Graphics), Sunlite Science & Technology, and Rock Chalk Park. All met their compliance measures as per performance agreements signed with the City. [1] In summary, the companies have made over $10.6 million in real property and over $10.3 million in personal property investment, created 330 full-time positions (166 projected), and paid an average full-time wage of over $37,918 ($30,800 projected). This average wage is approximately $7,481 higher than the average full-time, private sector wage in Lawrence ($30,437 per year) and $12,188 higher than the annual 2014 wage floor rate of $25,730.
Based on the portion of property receiving an abatement, the three companies receiving a tax abatement paid a combined $399,900 in property taxes out of a total $581,200 due in 2014 (approximately $181,300 abated).
Industrial Revenue Bonds (IRB):
Five companies had active Industrial Revenue Bonds at the end of the year: Bowersock, PROSOCO, Inc., 9th & New Hampshire LLC-South Project, Rock Chalk Park, and Neuvant House II. IRBs are a conduit financing tool with the companies being entirely responsible for principal and interest payments on the bonds.
Neighborhood Revitalization Areas (NRA):
The City of Lawrence authorized three new NRAs in 2014: 1106 Rhode Island Street, 1101/1115 Indiana Street, and 900 Delaware Street. Since these projects either had not started or were under construction during the year, they were not due a rebate in 2014. Of the six active NRAs, three are due rebates for taxes levied in 2014: 720 E 9th Street, 1040 Vermont Street, and 810/812 Pennsylvania Street/Cider Building.
Tax Increment Financing Districts (TIF):
The City currently has three TIF districts: The Downtown 2000 TIF district, The Oread TIF district and the 9th & New Hampshire TIF District.
· The Downtown 2000 Redevelopment TIF District was created to support the development of the parking garage at 10th and New Hampshire and other cultural, commercial, office, and apartment developments. At the end of 2014, approximately $3.94M million remained outstanding on the bond debt (approximately $8.6 million).
· The Oread TIF District was created to help fund public improvements supporting the multi-level lodging, hospitality, and business venue at 12th and Oread. Public improvements to streets and infrastructure, including a parking garage, were financed initially by the developer and are reimbursed annually through both TIF and TDD revenues generated within the district. The district began generating TIF revenues in 2009.
· The 9th & New Hampshire TIF District was created in 2012 and includes two project areas: South and North. As of the end of 2014, the South Project area was finalizing construction and construction had not yet proceeded on the North Project area.
Transportation Development Districts (TDD):
Currently, the City has three authorized TDD districts: The Oread TDD District, Free-State (Bauer Farms) TDD District, and the 9th & New Hampshire TDD District. In all TDD districts, public improvements are financed initially by the developer and are reimbursed annually via a one percent transportation district sales tax on retail or taxable services occurring within the district.
· The Oread TDD District (located at W. 12th Street & Oread Avenue) began generating sales tax revenues in 2009.
· The Free-State (Bauer Farm) TDD District (located at West 6th Street and Wakarusa Drive) began generating sales tax revenues in 2009.
· The 9th & New Hampshire TDD District was created in 2012 and includes two project areas: South and North. As of the end of 2014, the South Project area was finalizing construction and construction had not yet proceeded on the North Project area.
Other Economic Development Programs:
The City also participates in non-traditional support programs to help initiate and support economic development within the community. The programs supported in 2014 include:
· Economic Development Services—Bioscience & Technology Business Center (BTBC), Lawrence Chamber of Commerce and KU Small Business Development Center.
· Neighborhood Infrastructure—East Lawrence Historic District, Phase III (timed with 9 Del Lofts project)
· Shared Infrastructure & Fee Rebates—Rock Chalk Park
· Development Grant—1106 Rhode Island Street Rehab
Historic Assistance and Investments
New to this year’s report is Historical Assistance and Investment information, which provides a breakdown of assistance provided by year and program. As a whole, companies participating in the major economic development programs received a total of $889,000 in assistance for 2014 ($181,300 in tax abatements, $65,000 in Neighborhood Revitalization Area rebates, $460,500 in TIF property and sale tax reimbursements, and $182,200 in TDD sales tax reimbursements). It is important to note that NRA, TDD, and TIF programs are set up as “pay-as-you-go” programs in which the project first generates funds from which the rebate or reimbursement is made. Taxing jurisdictions do not front assistance for these programs.
In addition, a comparison of direct private and public capital investment is presented. For 2014, records show that for every $1 in direct public sector investment, approximately $5.40 in direct private sector capital investment was realized.
Recommended Action
City commission to receive the 2014 Annual Report: Economic Development Support & Compliance and refer to PIRC for review and recommendation.
[1] KU would normally enjoy a 100% property tax abatement on their property for the duration of ownership. However, given the structure of the Rock Chalk Park project with KU Athletics entering into a long term lease with a private developer to construct the facilities, an automatic property tax exemption was not possible. A property tax abatement was utilized to assist KU in pursuing this project. Due to the unique nature of the project and its primary benefits related to assisting KU Athletics and drawing visitors from outside the community rather than job creation, no job creation performance or wage requirements were imposed.