Memorandum

City of Lawrence

City Manager’s Office

TO:              David L. Corliss, City Manager

CC:               Diane Stoddard, Assistant City Manager

FROM:          Roger Zalneraitis, Economic Development Coordinator/Planner

DATE:           November 11, 2010

RE:               Public Hearing for Plastikon Bonds

On October 26^th, the City Commission received Plastikon’s incentive request for assistance in the purchase of the Serologicals Building in East Hills Business Park.  Plastikon requested Industrial Revenue Bonds (“IRBs”) and an employee training incentive of $500 per employee, paid over 5 years by the City and County, with a maximum payment of $63,000 to Plastikon over those five years.  The Commission received a memo on the incentives, approved a Notice of Intent to Issue the IRBs, and forwarded the training incentive to PIRC for consideration. 

Tonight the Commission is being asked to conduct a public hearing for the IRBs.  Staff is also available to address any questions or clarifications regarding the bond process as necessary.

Public Hearing for Tax Exempt IRBs

Under federal law, the interest paid on the IRBs that Plastikon is seeking will be tax exempt.  This lowers the interest rate on the bonds and thus the borrowing costs for Plastikon.  The internal revenue code regulates issuance of tax-exempt bonds and requires that tax exempt bonds of this type receive a public hearing prior to issuance.  Tonight’s hearing meets this requirement, and public comment is welcome on the item.  No action other than conducting the public hearing is required.

Next Step

The City Commission will next be asked to take action on December 7^th with a first and second reading to issue the IRBs as well as approving the employee training incentive.  Staff will also at that time present a performance agreement to monitor compliance for the employee training incentive.  This will be followed by a County Commission hearing to approve the employee training incentive on December 8^th.

Action Requested

Conduct a public hearing in accord with internal revenue code requirements for tax exempt bonds.