CITY COMMISSION AGENDA ITEM

Department:	City Manager’s Office		Commission Meeting Date:  5-1-2018
Staff Contacts:	Britt Crum-Cano, Economic Development Coordinator Diane Stoddard, Assistant City Manager
Action Requested:
Receive recommendation from the Public Incentive Review Committee on the issuance of Industrial Revenue Bonds for the new Lawrence Humane Society facility to be built at 1805 E. 19^th Street. Adopt Resolution No. 7249, a Resolution of Intent for issuance of up to $7,500,000 in Industrial Revenue Bonds for the Lawrence Humane Society to obtain a sales tax exemption on construction materials for the new Humane Society facility, if appropriate.
Executive Summary:		The Lawrence Humane Society (LHS) is planning the construction of a new animal shelter at 1805 E. 19^th Street in Lawrence, Kansas to replace the existing aged and obsolete shelter located on the same parcel. The facility will provide approximately 22,000 square feet of new space and be built on the Lawrence Humane Society’s four (4) acres of land at 1805 E. 19^th Street in Lawrence, Kansas. Project construction is anticipated to start in May 2018, with the facility being operational in the summer of 2019. Total construction costs for the project are estimated at $7.5 million, with approximately $3.8 million subject to sales tax. Once in place, the new shelter will accommodate all LHS operations, providing a veterinary clinic, adoption center, space for community education and interaction, and animal housing that incorporates industry best practices.  The new facility will allow for improved efficiencies in operations and services, accommodate the development and enhancement of new animal welfare programs and services, broaden community education, and help meet long-term goals and objectives. Staff received an application from LHS on April 9, 2018, requesting Industrial Revenue Bond (IRB) financing to access a sales tax exemption on project construction materials. The applicant is requesting $7.5 million in industrial revenue bonds to cover total project costs.  Of that amount, approximately $3.8 million is estimated to be subject to sales tax. Although LHS is a designated nonprofit animal shelter, this designation is not one of the 14 designations (schools, hospitals, religious organizations, zoos, etc.) automatically eligible for a Project Exemption Certificate by the State. At their April 17, 2018 meeting, the City Commission referred the request to the Public Incentives Review Committee (PIRC) for review and recommendation.   PIRC reviewed the request at their April 23, 2018 meeting and voted 6-0 with one abstention, to recommend City authorization of IRB Financing for the project so it can obtain a sales tax exemption on construction materials.  The request is now ready for the City Commission to receive PIRC’s recommendation and, if appropriate, vote to authorize IRB Resolution of Intent No. 7249.  Approval of the resolution of intent will allow the State to issue a Project Exemption Certificate (PEC) for exempting sales tax on the project’s construction materials.
Strategic Plan Critical Success Factor		Collaborative Solutions
Fiscal Impact (Amount/Source):		The costs of incentives are restricted to a sales tax exemption on construction materials for the project.  Assuming a total project cost of $7,500,000 and using the most recent (January 2018) Kansas Department of Revenue countywide sales tax ratios, staff estimates the total value of exempted sales taxes to be approximately $348,000. Of this total exemption, the City is estimated to forego approximately $88,600 in sales tax revenues and the County is estimated to forego a little over $14,000 in sales tax revenues. The State would forego approximately $250,000 in sales tax revenues.
Attachments:		Staff Memo Applicant Request Letter and Application Project Brochure Draft 4-23-18 PIRC Meeting Minutes IRB Resolution of Intent No. 7249

Reviewed By: (for CMO use only)

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