CITY COMMISSION AGENDA ITEM

Department:

City Manager’s Office

Commission Meeting Date:  11-6-18

Staff Contact:

Britt Crum-Cano, Economic Development Coordinator

Action Requested:

Adopt on first reading, Ordinance No. 9573, authorizing the issuance of Industrial Revenue Bonds, in the amount of $10,200,000, for the KCI Lawrence 153, LLC (VanTrust) Phase I project located on Block B, Lot 1 in Lawrence VenturePark.

Authorize the Mayor to sign the performance agreement between The City of Lawrence, Kansas and KCI Lawrence 153, LLC related to the Phase I project in Lawrence VenturePark.

Executive Summary:

At their July 18, 2018 meeting, the City Commission approved participation in the Catalyst program for KCI Lawrence 153, LLC (formerly VanTrust Real Estate, LLC) on a Phase I development project to be located on Block B, Lot 1 in Lawrence VenturePark. During the meeting, the Commission adopted Resolution of Intent No. 7211 to issue industrial revenue bonds up to $10,200,000 and to grant a 10-year property tax abatement at either 50% or 70% (if project built to LEED silver equivalency standards) for Phase I of the project.

The next step required in the IRB process is the authorization of the issuance of the bonds through approval of a bond ordinance.

PILOT Schedule

At the July 18, 2018 meeting, staff foreshadowed the future bond ordinance would contain a fixed PILOT (payment in lieu of taxes) payment schedule equivalent to either a fifty percent (50%) or seventy percent (70%) 10-year property tax abatement.  The seventy percent (70%) abatement level would be offered if LEED Silver equivalency was met.

KCI Lawrence 153, LLC has now completed Phase I and submitted supporting documents to indicate the building was built to LEED silver equivalency standards, earning the project the equivalent of a 70% property tax abatement.

Staff worked with the Douglas County Appraiser and KCI Lawrence 153, LLC in proposing the below fixed PILOT payment schedule at the 70% abatement equivalency.  Thus the PILOT payments shown below are 30% of the projected taxes due.  Note this schedule shields the USD capital outlay mill levy from the abatement.

Tax Abatement Year	Calendar Year	Total PILOT Due	PILOT $/SF
1	2019	$65,911	$0.43
2	2020	$78,907	$0.51
3	2021	$87,275	$0.57
4	2022	$88,863	$0.58
5	2023	$90,481	$0.59
6	2024	$92,127	$0.60
7	2025	$93,804	$0.61
8	2026	$95,511	$0.62
9	2027	$97,250	$0.63
10	2028	$99,020	$0.65

Requested Action:

Adopt on first reading, Ordinance No. 9573, authorizing the issuance of Industrial Revenue Bonds, in the amount of $10,200,000, for KCI Lawrence 153, LLC Phase I project located on Block B, Lot 1 in Lawrence VenturePark and authorize the Mayor to sign the performance agreement between The City of Lawrence, Kansas and KCI Lawrence 153, LLC related to the Phase I project in Lawrence VenturePark.

Strategic Plan Critical Success Factor

Economic Growth and Security

Fiscal Impact (Amount/Source):

The fiscal impact to the City is positive.  With ownership of Lot B1 in Venture Park, KCI Lawrence 153, LLC is now responsible for paying special assessments on the property (~$865,000, includes interest).  In addition, the City will receive a portion of the fixed PILOT payments over the abatement period.  Using the 2017 mill levy rate (136.747) and taking into consideration the shielded USD capital outlay mill levy, the City’s portion of PILOT revenue is estimated at approximately 25.8% of the total. After the abatement expires, all taxing jurisdictions will realize higher property tax revenues from the improved property.

Attachments:

Resolution of Intent No. 7211

Bond Ordinance No. 9573

Draft Performance Agreement

Reviewed By: (for CMO use only)

☐TM ☒DS ☐CT ☐BM