Memorandum
City of Lawrence
City Manager’s Office
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TO: |
Tom Markus, City Manager |
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CC: |
Diane Stoddard, Assistant City Manager Casey Toomay, Assistant City Manager |
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FROM: |
Britt Crum-Cano, Economic Development Coordinator |
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DATE: |
December 6, 2016 |
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RE: |
City Commission Meeting: IRB bond ordinance for 826 Pennsylvania Street project. |
Please see List of Attachments at the end of this memo.
Background:
On November 1, 2016, the City Commission approved Resolution of Intent No. 7174 to issue Industrial Revenue Bonds (IRBs) for the 826 Pennsylvania Street project. The resolution of intent is a strong signal that the city intends to eventually issue the bonds for the project. Additionally, it enables a sales tax exemption certificate to be provided for the project. The next step in the process is the authorization of the issuance of the bonds. This is accomplished with the bond ordinance. Additionally, the Mayor will need to sign various bond documents for the bond closing. The ordinance also authorizes the Mayor to sign these documents.
IRBs are a form of conduit financing and City of Lawrence is not responsible in any way for repayment of these bonds nor is it exposed to any financial liability of any kind. In this case, the 826 Pennsylvania Street project is utilizing this mechanism to access a project sales tax exemption certificate, which will enable the project’s construction materials and eligible labor to be exempt from sales tax. The estimated range of savings to the project will be around $185,800, depending upon the actual project costs.
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Summary of Estimated Sales Tax Savings: 826 Pennsylvania Street IRB |
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City |
Tax Rate |
Estimated Sales Tax Amount |
Total |
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City Sales Tax |
1.55% |
$31,823 |
$43,585 |
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City Portion of Countywide 1% Sales Tax |
0.57% |
$11,762 |
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County |
Tax Rate |
Estimated Sales Tax Amount |
Total |
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County Portion of Countywide 1% Sales Tax |
0.36% |
$7,412 |
$7,412 |
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State |
Tax Rate |
Estimated Sales Tax Amount |
Total |
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State |
6.50% |
$133,451 |
$133,451 |
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Other |
Tax Rate |
Estimated Sales Tax Amount |
Total |
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Other County Municipalities Portion of Countywide 1% Sales Tax |
0.07% |
$1,357 |
$1,357 |
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Total |
9.05% |
$185,805 |
$185,805 |
Requested Action:
Approve first reading of Ordinance 9316 authorizing the issuance of up to $3.6 million in industrial revenue bonds (IRBs) and authorize the Mayor to execute the necessary bond documents for the 826 Pennsylvania Street project.
List of Attachments: 826 Pennsylvania Street IRB