Public Incentives Review Committee                                                     

Meeting Minutes

April 20, 2006, 4:00 p.m.

 

PIRC Members Present:  Mayor Mike Amyx, Commissioner Mike Rundle, Brenda McFadden, Rich Minder, Bob Johnson

 

PIRC Members Absent:  Kirk McClure, Mike Maddox

 

City Staff Present: David Corliss, Frank Reeb

 

Others Present: Rob Chestnut, Bruce Boyer, Delbert Phlipot, Beth Johnson, Jamie Blaylock

 

 

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Mayor Amyx called the meeting to order and noted a quorum was present.  

 

Mayor Amyx briefly reviewed the agenda and asked if there was any comment about either the December 2, 2005 or January 19, 2006 PIRC meeting minutes. 

 

There was no comment, at which time Mayor Amyx called for a motion to approve the meeting minutes.

 

It was then moved by McFadden, seconded by Rundle, to approve the December 2, 2005 and January 19, 2006 PIRC meeting minutes.  Motion carried unanimously.

 

Mayor Amyx asked Frank Reeb to provide an overview of the 2005 Tax Abatement Report.

 

Reeb stated that the report was the same format as the past four years.  He said the data from the report came from two sources.  The first source was from the questionnaires received from the businesses receiving tax abatements.  He said there were 13 businesses that received tax abatements in 2005.  Reeb said that of those businesses that were sent questionnaires, only API Foils did not send back a completed questionnaire.  He said he did not send questionnaires to Serologicals, Microtech, and Martin Logan because the abatements for those businesses ended in 2005 but prior to the original ten year terms.  Reeb said the second source of information came from the Douglas County Appraiser’s Office.

 

Reeb then briefly reviewed the various tables presented in the 2005 Report.  He said Table 1 contained key information regarding each tax abated company, including the amount of the abatement, its expiration date and the 2005 appraised values of property subject to the abatement.

 

Reeb asked the committee to note that the API Foils abatement ended as of 12/31/05 and that likely explained why API Foils did not submit a questionnaire.  He said he did talk with representatives of that company and they asked him if they still needed to submit a completed questionnaire.  Reeb said he told them yes since it would be good to see information for the last year of the abatement. 

 

Reeb also pointed out that the portion of the DST Systems abatement abating 100% of the tax on the personal property purchased from Sallie Mae ended on 12/31/05. 

 

Reeb noted that in 2005 the Board of Tax Appeals issued orders for tax abatements for Prosoco and Serologicals and information about those abatements was included in Table 1. 

 

Reeb then directed attention to the Table 1 endnotes specifically regarding the abatements ending for Martin Logan, Microtech and Serologicals.

 

Reeb said Table 2 contained employment data for each business.  He said the table provided a five year history beginning in December 2001 to December 2005 and was helpful to identify employment trends over that period of time.  The table has the projected employment information as stated on the tax abatement application.  Finally, the last column represents the number of employees above or below the projection as of December 31, 2005.  Reeb noted that the survey questionnaire asked respondents to report employment totals as of December 31 and that a company may have had higher employment totals earlier in the year that would not be reflected in the table. 

 

Reeb said three or four companies did not meet employment projections.  He said DST Systems had the greatest difference in what was projected and actual employment as of the end of 2005.  He said, as the endnote for Prosoco explained, depending on how the positions were counted, Prosoco may or may not be below the projections. 

 

Reeb also pointed out the endnotes at the bottom of Table 2 in that two businesses, Packerware and Sauer Danfoss had other employees in addition to those included in the Table.  Specifically, PackerWare/Berry Plastics reported employment of 62 full time temp to hire employees as of 12/31/05 and Sauer-Danfoss had 67 full time contract employees.

 

Minder asked whether DST Systems included any part time employees on the abatement application. 

 

Reeb said no. 

 

McFadden said while DST Systems may be 29 employees below the projected level, it was worth noting that it had 87 part time employees in addition to the 146 full time employees.  She asked whether the net effect of total employment for DST was the same because of the number of part time employees above the projected number.

 

Minder asked if the cost/benefit analysis was flexible enough to take into consideration some number of part time employees as the same as a lesser number of full time employees. 

 

Reeb said it probably did not. 

 

Rundle said because of benefits for full time employees the cost/benefit analysis did not have that flexibility. 

 

Johnson said it was probably safe to assume that 1 full time employee did not equal 2 part time employees on the cost benefits analysis because of the benefits for full time employees. 

 

Reeb explained the wage information for each business in Table 3.  He said Table 3 contained specific wage information by occupation for each business.  He said the benchmark data for this table came primarily from the 2005 Kansas Wage Survey conducted by the Kansas Department of Labor and for the Lawrence Metropolitan Statistical Area.  He said in a few cases where there were not enough reported occupations for the Wage Survey, a four digit SOC Code mean wage benchmark was created specifically for this report by the Kansas Department of Labor. 

 

Reeb said this wage information was probably the most difficult to obtain because most businesses did not track their employees by these types of SOC Codes.  He said he realized it was time consuming for each business to put this information together and he thanked those companies for doing so as it seemed, from a collective standpoint, better than in years past. 

 

Reeb noted that after each company’s wage table, there was bulleted summary information provided.  He noted that the Table did not include categories where only one or two employees were reported in order to keep that information from being individually identifiable.

 

Johnson said, however, that there were two occupations for AMARR where there were only two persons in the occupation.

 

Reeb noted those two and said it was an oversight.  He thanked Johnson for pointing those out and said they would be removed before the document was forwarded to the Commission. 

 

Johnson asked what the PIRC had done with the information in this Report and how was it used to determine whether the businesses were complying. 

 

Reeb said there was a multi stage review process.  He said the first stage was to determine whether the business met a 90% threshold.  He said that 90% number came from spreadsheets that PIRC member Kirk McClure developed for capital investment, employment numbers, and wages.  He said it did not necessarily equal substantial compliance but was a starting point.  He said if the business met the 90% threshold that that was the end of the review.  If the business did not, then the PIRC wanted information from the company about why it did not and when it might increase its numbers.  That information might come from a letter request for information and/or asking business officials to come to a PIRC meeting and explain its situation.  

 

Reeb said Table 4 was a summary of taxes paid on property related to the abatements.  He noted that it was taxes related only to the abatement and does not contain additional company tax information.

 

Reeb said Table 5 was a summary of those companies that have had industrial revenue bonds (IRBs) issued on their behalf and also a related tax abatement.  He said there were now only three such companies because Microtech, while still having IRBs, no longer had a tax abatement. 

 

Reeb said Table 6 contained information from the survey about local expenditures made by each company.

 

Johnson asked if the term “Locally” as used in Table 6 column two covered the same geographic area as the term “Lawrence” as used in Table 6 column one.

 

Reeb said yes. 

 

Johnson said in that case it might be better to use the same terms.

 

McFadden suggested making the headings consistent. 

 

Reeb said he would make that change before submitting the Report to the City Commission.

 

Reeb said Table 7 contained survey information about company achievements, involvement in the community, job training and other information.

 

Johnson asked if there was any formal paperwork for ending an abatement. 

 

Reeb said each business needed to send information to the County Appraiser’s Office in the spring of each year certifying that the property was still used for the purposes noted in the abatement application and as stated in the Board of Tax Appeals Order abating the tax on the property.  As a related part of that process, he said the City Clerk’s Office also had to send a similar certificate to the Appraiser’s Office evidencing that the City was not aware of any change in the use or ownership of the property.  At the end of the abatement, there would be no such certificate from the City Clerk’s Office or the business and if the County Appraiser’s Office had not yet added the property back to the tax rolls, this process would trigger the need to do so. 

 

Corliss said in addition, if the tax abatement was related to an Industrial Revenue Bond, there would be formal City Commission actions noting the end of the bonds and deed paperwork for any real property that would get recorded at the Register of Deeds. 

 

Johnson asked if, as a part of this process, the PIRC sent out any complimentary letters thanking the businesses for continuing to meet their obligations and for providing the requested information. 

 

Reeb said that did not currently happen. 

 

Johnson said we were quick to note when companies did not meet projections and had sent out letters in the past.  He said the PIRC should consider sending out complimentary letters as well.

 

Rundle said the City and County did coordinate with the Chamber of Commerce to say thank you in a general sense through thank you lunches and events such as that. 

 

Amyx said the City Commission recently proclaimed a week as Volunteer Week in the City.  He said when you look at these businesses and all of the things their employees did, a thank you could never be enough. 

 

Amyx asked what actions the PIRC had to take with this Report.

 

Reeb said by policy the PIRC needed to forward the Report to the City Commission by May 1.

 

Amyx asked if the Report would be on the City Commission’s April 25th agenda.

 

Corliss said no but would be on the May 2nd agenda.

 

Amyx asked if there was any other business for the PIRC. 

 

Reeb said at the December 2nd PIRC meeting, the PIRC directed Reeb to send letters to several businesses asking about capital investment, employment numbers, wages or a combination of some or all of those three.  He said he sent letters to Allen Press, Sauer Danfoss, Packerware and DST Systems.  Reeb said he received responses from all but DST Systems.  He said he reminded DST that it had not responded when he sent the questionnaire and again after he received the completed questionnaire.  He said the PIRC may want to decide how to proceed on that letters. 

 

Amyx requested that Reeb send another letter to DST. 

 

Johnson asked about the letter responses and if, in Reeb’s opinion, the company’s provided valid reasons to explain their situations. 

 

Reeb said yes.  Reeb explained that a couple of years ago, the PIRC had initial concerns about Sauer Danfoss and requested information from Sauer Danfoss officials.  The company explained there were external factors that caused it to not meet projections and the PIRC accepted those reasons and moved ahead.  He said the letter responses from the businesses were similar to those types of reasons. 

 

Amyx said it appeared there was no reason to go any further with those businesses. 

 

Johnson agreed.  He said it might be appropriate to modify the questionnaire in the future to include an opportunity for a company to explain why it was not meeting projections. 

 

Reeb said that change could be made.

 

It was moved by Johnson, seconded by Minder to forward the 2005 Annual Tax Abatement Report, as amended, to the City Commission.  Motion carried unanimously. 

 

Moved by Johnson, seconded by Minder to adjourn.  Motion carried unanimously.  The meeting ended at approximately 4:50.