PIRC meeting 11/16/09

City of Lawrence

Public Incentives Review Committee

April 26, 2010 minutes

MEMBERS PRESENT:	Scott Morgan, Cindy Yulich, Brad Burnside, Brenda McFadden, Mike Gaughan (by phone), Dennis Highberger, and Mike Amyx
MEMBERS ABSENT:	None
STAFF PRESENT:	David L. Corliss, Diane Stoddard, Roger Zalneraitis , Ed Mullins
PUBLIC PRESENT:	Hank Booth, Beth Johnson, Bruce Boyer, Nancy Kelly, Delbert Phlipot

Mayor Amyx called the meeting to order at 3:01 p.m.

Zalneraitis stated the first order of business is to approve the 11/16/09 meeting minutes. Highberger requested one minor change. Yulich made motion to approve 11/16/09 minutes as amended, McFadden seconded. Motion passed 7-0.

Zalneraitis handed out a copy of the draft tax abatement report for 2009 and went over the changes that were incorporated. These changes included a new executive summary, several new tables, and a reformatting of the social impact section. Morgan requested that future reports also include benefits companies are having for the school district. Highberger requested that future abatement reports show the number of new jobs created as a result of the abatement, in addition to the total number of jobs. Mayor Amyx asked for public comment and hearing none, Highberger made the motion to authorize the 2009 Tax Abatement Report be forwarded to the City Commission to receive, McFadden seconded. Motion passed 7-0.

Zalneraitis handed out a copy of the Economic Development Policies and Mayor Amyx asked him for updates. Zalneraitis stated that in regards to tax abatements, the City doesn’t have a tool to address higher paying jobs and would like to see an incentive program that enables companies to receive a percentage higher rebate back if they meet certain criteria. McFadden expressed concern about the word “significantly”. She believed it was too open for interpretation. Zalneraitis explained some situations where a firm might be considered to have good wages even though the wages may or may not be below average for their respective industries. It would be difficult to qualify in advance what a “significantly” better wage is without first knowing the local economic conditions and job opportunities being offered.

Morgan asked if a list would be created that would give the Commission a chance to see if the companies were meeting its goals. Highberger said that we would like to see the language tightened a bit. Gaughan also expressed concern about some of the language. He said he felt the language made the abatement appear to be an entitlement instead of an option for the City Commission to consider.

Morgan asked if Zalneraitis could draft some language and bring it back to the committee. He suggested a list that included economic conditions and other business factors. Corliss asked if the interest was to have it more quantified. Amyx stated that he thinks the committee is looking for language that is going to be put in place that gives the committee a reason to approve the extra percentage, “if you meet this, then you may receive this” philosophy. Highberger stated that his observation of how it has worked in the past is that companies are looking for entitlements and he expects that will be used in every case and does not feel it should be a subjective process. Corliss stated is it a judgment or checklist? Corliss stated one way is that a firm that pays an average wage of over 20% above median. McFadden suggested additional language about base salaries or other outside benefits. Morgan suggested job occupations. Zalneraitis asked if Morgan meant job occupations or industry wages, as job occupation is generally more difficult information to obtain. Morgan said he meant industry wages.

Amyx asked for public comment. Bruce Boyer with Prosoco stated that Prosoco has more SIC codes than anyone and wants to know why the City cares that the SIC code is if they City is looking at pay. The market is driving the SIC codes but if the company is paying more than above average wages, why care? Amyx stated the goal is to raise the average wage, but the idea is to have a justification that the City Commission will use for criteria and flexibility in how the abatement will look.

It was moved by Morgan, seconded by Yulich to change the Economic Development Policy, subject to additional language to address factors such as the economy, industry wages, and other business environment factors. Motion passes 7-0.

Zalneraitis handed out information on the IRB Policy and gave some background information on the current policy. (Morgan had to leave the meeting) Zalneraitis stated that the new policy offers three substantive changes to the old policy. First, it has a simplified procedure for firms seeking only an IRB and no property tax abatement. Second, it has guidelines for considering retail, and third, guidelines also for housing.

Highberger asked what the target industries were that were implied in the IRB policy. Zalneraitis said they were the target industries from Horizons 2020, which include bioscience, manufacturing, distribution, and aviation. Mullins asked if financial capacity was still required for IRB applicants. Zalneraitis said that it was. Mullins then asked if there would be different treatment for LLCs. After some discussion, it was agreed that LLCs would be subject to the same financial capacity review as other firms.

Amyx asked for public comment. There was none. Highberger made a motion to send the draft IRB policy to the City Commission for a final hearing, Burnside seconded. Motion passes 6-0.

Zalneraitis handed out a memo and a proposal for a new city CID (Community Improvement Districts) policy, and provided background information on CIDs . He explained that CIDs were similar to Transportation Development Districts (TDDs), except that CIDs covered almost all possible costs associated with a project and allowed for additional sales taxes of up to two percent instead of one percent. He noted that the policy was passed by the State legislature only last year, and at this time it appears that four other cities have CID policies: Hays, Salina, Shawnee, and Olathe. These four cities seemed to address four areas in particular: what type of financing can be used, what type of costs can be funded, the minimum size of the project, and the fees associated with the project. Zalneraitis said that for the City policy, there would be no General Obligation bonds allowed; that Special Obligation bonds would have to have at least some special assessment financingl; that any cost could be covered but in general not all private costs would be covered; that there would be no minimum project size; and that there would be a $2,500 application fee.

Amyx asked whether GO Bonds could be issued for CID projects. Zalneraitis said no. Corliss provided an example of where and how CIDs could be used, and noted that they would not capture any of the incremental taxes. These were essentially districts whereby an applicant was taxing himself.

Highberger asked about the 55% property owner approval. He was concerned about property owners having a sales tax imposed on them when they did not agree to the establishment of a CID. He also expressed concern about property owners who do not approve of a CID having to pay for private improvements to someone else’s property. Would like to see a 100% property owner approval in those cases. Stoddard noted that the reason the threshold was lowered for CIDs was to encourage them to be used for infill development. Corliss noted that special assessments could be done by the City for public improvements with only 51% approval. He doubted City Commission would ever levy a sales tax on property owners who did not want to pay it. After further discussion, it was agreed to add two provisions to the CID policy limiting the use of sales tax and limiting private property improvements to situations where 100% of property owners agreed to the establishment of a CID.

Highberger asked about the criteria for a CID in section two. Retail seemed to vague. McFadden asked if the word “unique” for retail was enough. Highberger said he would prefer to see similar language to the IRB policy. Zalneraitis agreed to add such language.

Amyx asked for public comment. There was none. McFadden moved to recommend the amended CID policy to the City Commission for approval, Burnside seconded. Motion passes 6-0.

Yulich made a motion to adjourn the meeting at 4:45, Burnside seconded. Motion passes 6-0. The meeting was adjourned.