Agenda Item No. III-2City of WichitaCity Council MeetingFebruary 9, 2010TO:

Mayor and City Council

SUBJECT:

Extension of EDX Tax Exemption (Sharpline Converting, Inc.) (District IV)

INITIATED BY:

Office of Urban Development

AGENDA:

New Business

Recommendation

: Approve the extension.

Background

: On March 5, 2005 City Council approved a tax abatement through the EconomicDevelopment Exemption program (EDX) for Sharpline Converting. Sharpline Converting has a verylarge and diversified product mix. The products range from automotive aftermarket to custom graphicsfor Original Equipment Manufacturers (OEM) customers. The custom graphics are the largest part of Sharpline’s business. These products include graphics for recreational vehicles, boats, aircrafts, andsporting goods. The automotive aftermarket is also a large part of the Company’s business. These products include both graphics and roll striping and these are done for over 1,200 customers. TheCompany has also ventured into three dimensional graphics and have recently filed a patent on arevolutionary 3D Badging process that will give Sharpline a competitive edge in the 3D market.Sharpline Converting committed to increasing employment by 56 new jobs over five years, at an averageannual salary of $30,700. The expansion project includes construction of a 30,000 s.f. addition and purchasing new equipment. Sharpline is requesting approval of the second five-year period of abatement.

Analysis

: The majority of the Sharpline sales are exported outside of the State of Kansas. Sharplineincreased their employment above the commitment by 2007; however, market changes and the economicdownturn have brought the employment down below the commitment.A measure of Sharpline’s initial five-year project commitments and outcomes are as follows:

2003 Commitment January 25, 2010 Status

Construct and equip a 30,000 s.f. expansion Expansion is completeCreate 56 new jobs in five years Created all jobs, currently 100 jobs below thecommitmentStaff conducted a site visit in October 2009. Sharpline has purchased a small company in Florida that produces similar products. The company brought the book of work and some employees to Wichita.They company is also experiencing some economic recovery, however, not at the level that wasexperienced in 2007. The company anticipates reaching the job creation goal again prior to the end of theten year period.Staff has developed some thresholds to evaluate extending property tax abatements for companies that arenot in compliance. The measures include the peak job creation number, capital investment made ascommitted, and meeting the established return on investment minimum of 1.3 to one. The analysis alsotakes into account the WSU annual Current Conditions Index as a measure of how the current economicconditions impact a company’s ability to perform. Sharpline has met two of the three conditions.