Memorandum
City of Lawrence
City Manager’s Office
TO: David L. Corliss, City Manager
FROM: Diane Stoddard, Assistant City Manager
Cynthia Boecker, Assistant City Manager
Michael Tubbs, Management Analyst
DATE: January 10, 2008
RE: Economic Development Survey Information
Over the past several months, we have worked to assemble information related to the economic development activities of other communities. Specifically, we have completed the following:
Survey of Big 12 and major Kansas cities:
Attached is a matrix summary of the city survey. We found the following general trends:
Various other incentives used by cities surveyed include:
Various funding sources used by cities surveyed include:
Most cities we surveyed had several separate policies related to specific economic development tools, such as a tax abatement policy or IRB policy. Several of the cities had overarching economic development incentive policies that provided guidelines and/or processes for granting all types of incentives, including cash. Two cities that come to mind here are Wichita and Manhattan.
Tax Abatement Policies:
Attached is a matrix summary of the tax abatement policies for Lenexa, Olathe, Overland Park, Lawrence, Manhattan, and Wichita/Sedgwick County. Cities in Kansas have the authority to issue tax abatements either through a mechanism provided by an amendment to the Kansas Constitution, which limits tax abatements to entities involved in manufacturing, research and development, and warehousing goods for interstate commerce, or in conjunction with IRB financing. Tax abatements granted in conjunction with IRBs can be provided to a broader range of projects, such as office development. The maximum tax abatement in Kansas is ten (10) years. We have compiled a listing and associated map showing a listing of active and inactive tax abatements by county in northeast Kansas. We found the following general trends with the abatement policies we analyzed:
· Most have clearly articulated goals.
· Most policies have a “standard abatement” and adjustment criteria that increases the abatement if the company meets certain goals or objectives, such as locating in a certain area of the community, certain capital investment or job creation targets, etc.
· Most policies require performance from the applicant that is reviewed on an annual basis.
· Most specified that quality job creation with above average wages was a goal, but few actually identified a wage floor. Lawrence’s policy is more detailed than most.
· Very few had processes such as the Public Incentive Review Committee (PIRC), but several had a rigorous internal process, such as review by city staff and/or committees of the City Council.
Transportation Development District Policies:
Attached is a matrix summary of TDD policies from Lenexa, Olathe, and Overland Park. Very few cities within the area had formal policies. TDDs are a tool that enables property owners to petition for the creation of a district within which special assessments or a special sales tax up to one percent (1%) is collected for the purpose of funding transportation-related infrastructure in the area of the district. We found the following general trends:
Tax Increment Financing Policies:
Attached is a matrix summary TIF district policies. Very few cities have TIF policies. TIF is a mechanism to finance public improvements from the incremental increase in either property tax and/or sales tax resulting from a development. We found two (2) examples of TIF district policies; Lenexa and Olathe. We found the following general trends:
City of Lawrence Policies:
The City of Lawrence has a tax abatement policy and an IRB policy. Also attached for the Commission’s information are the prior two abatement policies from the City of Lawrence. The abatement policy outlines the requirements associated with receiving a tax abatement and the process to have one approved and ongoing performance requirements.
The City of Lawrence does not have either a transportation development district policy or a tax increment financing policy.
The City of Lawrence utilizes the University of Kansas’s Institute for Policy and Social Research to conduct cost/benefit analysis related to tax abatement requests. The model used currently is in need of being updated and reviewed. One area that needs to be modified, for example, is accounting for the change in Kansas law exempting machinery and equipment used in manufacturing from property tax assessment.
Attachments: