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IV-1 City of Wichita City Council Meeting October 4, 2011 TO: SUBJECT: Mayor and City Council Public Hearing and Tax Exemption Request (Leading Technology Composites) (Districts IV) Office of Urban Development New Business
INITIATED BY: AGENDA:
Recommendations: Close the Public Hearing and place the Ordinance on first reading. Background: On September 21, 2010, the Wichita City Council adopted Ordinance No. 48-838 providing an Economic Development Tax Exemption (EDX) to Leading Technology Composites, Inc. (LTC). The Exemption was granted for an expansion to the composite manufacturing facility located at 2626 West May in Wichita. A notice of public hearing was published in the Wichita Eagle on September 14, 2010, in anticipation of the LTC item being presented to the City Council on September 21, 2010. The notice incorrectly stated that a public hearing would be held on August 3, 2010. The item was heard by the Council on September 21, 2010 and was approved. Since the August date was prior to the publication, there was no proper notification. Therefore, a new public hearing is required. Analysis: LTC is located at 2626 West May in Southwest Wichita. The company has completed an expansion to the composite manufacturing facility to maximize production capacity and meet close tolerance manufacturing requirements. LTC produces parts for vehicle systems and personal body armor plates for the U.S military. The company also produces structural assemblies for aerospace manufacturers and safety products for commercial automotive clients. LTC exports 95% of its products out of Kansas; customers include BAE Systems, Lockheed Martin, Bombardier and Ford. LTC has constructed a 25,000 square foot expansion of the current facility at a cost of approximately $1,750,000. LTC currently has 79 employees in Wichita; the company plans to add at least 37 jobs to support the new facility over the next five years, for a total local employment of 116 by 2015. The average wage for the new jobs will be $34,442 per year. Under the Economic Development Incentive Policy, LTC is eligible for a 99.7%, 5+5-year property tax abatement based on the combined investment and job creation commitment. Staff is recommending approval of 100% abatement. Financial Considerations: Based on the 2010 mill levy, the estimated tax value of exempted property for the first full year is approximately $52,599. The value of the 100% real property tax exemption as applicable to taxing jurisdictions is: City County $ 14,139 $ 12,862 State USD 259 $ 657 $ 24,941
Wichita State University’s Center for Economic Development and Business Research performed a cost-benefit analysis indicating benefit-to-cost ratios, which are as follows: City of Wichita City of Wichita – General Fund City of Wichita – Debt Service 1.98 to one 1.82 to one 2.25 to one
EDX Public Hearing Leading Technology Composites October 4, 2011 Page 2
Sedgwick County USD 259 State of Kansas 1.68 to one 1.28 to one 6.92 to one
Goal Impact: Economic Vitality and Affordable Living. Granting an ad valorem property tax exemption will encourage the business to create new job opportunities and stimulate economic growth for the City of Wichita and Sedgwick County. Legal Considerations: The attached amending ordinance has been approved as to form by the Law Department. Recommendation/Actions: It is recommended that City Council close the public hearing, and approve first reading of the Ordinance granting Leading Technology Composites a 100% tax exemption on the identified real and personal property improvements for a five year term, plus a 100% tax exemption for a second five-year term, subject to City Council review. Attachments: Ordinance