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5.1 Great Plains Property Tax ExemptionCITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 4/2/2012 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR NO: 5 AGENDA: DEVELOPMENT SERVICES ITEM PLANNING NO. 1 BY: Dean Andrew BY: Page 1 ITEM: Resolution No. 12 -6890 Consideration of application for property tax exemption submitted by Great Plains Manufacturing, Inc. BACKGROUND: Great Plains Manufacturing, Inc., a manufacturer of agricultural and landscaping equipment, has filed an application for property tax exemption pursuant to the city's ad valorem tax exemption policy for economic development purposes. Great Plains Manufacturing is requesting a tax exemption for an estimated $3.5 million in proposed building improvements as part of an expansion of their operations at the main Great Plains Manufacturing campus at 1525 E. North Street. Specifically, the project for which Great Plains Manufacturing is seeking a tax abatement is a proposed 63,600 sq. ft. addition to what is referred to as Building S5. (see attached campus map). It is anticipated that this expansion will result in the creation of 21 new jobs. This type of business (manufacturing) and the proposed improvement (major building addition) are eligible for exemption under state law and the City's tax exemption policy. A change in state law automatically exempts new machinery and equipment purchase from property taxes so it is no longer part of the local property tax exemption formula or process. A similar exemption application for a proposed expansion of S5 was approved by the Commission in 2008 but the addition was never constructed due to the economic downturn and the application expired. The Great Plains Manufacturing campus is located in the city's Special Redevelopment Area (SRA) and this project is also eligible for SRA incentives, including a waiver of building permit fees. This project is also eligible for Enterprise Zone benefits which include a state administered sales tax exemption on building materials and equipment. Prior to granting a tax exemption, the governing body is required by state law to analyze the costs and benefits of the exemption, establish a procedure to monitor compliance with terms and conditions, notify affected taxing districts and conduct a public hearing on the granting of the exemption. Notice of this public hearing has been duly advertised and notification of this request was provided to Saline County and USD No. 305, whose tax levies would also be exempted if this request is approved. FISCAL NOTE: Assuming of capital investment and the creation of 50 new jobs, a tax exemption for the addition of 100% during years 1 — 5 and 50% during years 6 — 10 would result under the City's adopted policy formula. The actual exemption will depend upon actual capital expenditures and jobs added prior to project completion. Based on these figures, the amount of property taxes exempted over the first 5 years of the exemption would be 100% of the taxes otherwise due. This would be reduced to 50% in Year 6. After 10 years, the entire project would become fully taxable. A more detailed breakdown of the costs and benefits of the requested exemption is attached. The investment and job creation Great Plains exceeds the amount needed to be eligible AGENDA SECTION NO: 5 CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 4/2/2012 4:00 P.M. ORIGINATING DEPARTMENT: I APPROVED FOR AGENDA: DEVELOPMENT SERVICES ITEM PLANNING NO. 1 BY: Dean Andrew BY: Page 2 for a 100% exemption. The attached spreadsheet shows the eligibility if there were no 100% cap COMMISSION ACTION: Following closure of the public hearing, if the City Commission wishes to approve this tax abatement request, it should adopt the attached resolution granting a property tax exemption to Great Plains Manufacturing, Inc. for this expansion project at their North Street campus. Encl: Application and Supporting Materials Resolution #12 -6890 cc: James Hall, Great Plains Mfg. Dennis Lauver / Larry Powell, Salina Chamber of Commerce 0 0 0 0 0 0 o p O O 00 0 00 0 O 10 N O N Of P O N tQ N O N O� N n � 0 c 0 V> 0 0 (a 69 0 0 69 63 0 0 V> (Al 0 to 0 0 V) V� 0 w d V> CO (9 (9 D � LL q O V3 V3 w, C C a V) V3 Vi N O q < N N a 0 0 0 0 0 0 0 0 0 0 0 V) Vi w V) V! 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Box 736 S Salina, KS 67402 -0736 CITY OF SALINA, KANSAS APPLICATION FOR PROPERTY TAX EXEMPTION ECONOMIC DEVELOPMENT PROJECT APPLICANT INFORMATION 1. Applicant Business Name and Address: Note: Attach the name and address of principal owners and officers of the business. Roy Applequist —Owner, President, CEO Linda Salem — Chief Operating Officer Curt Carpenter — Vice President of Finance 2. Name, address and telephone number of contact person: James Hall - Director of Real Estate, 1525 E. North St, Salina, KS 67401, 785 - 826 -0288 II. BUSINESS INFORMATION 1. Type and nature of applicant's business: Manufacturer of agricultural and landscaping equipment. See attachment Note: Attach a general description of business history and experience. 2. Is this a new business or an expansion of an existing business? Expansion of existing business 3. Principal competition in local market; if any: None (PLF - 067 Rev. 12/04 III. PROJECT INFORMATION 1. Location of the proposed project; (local address or legal description). 1720 Dewey, Salina, KS- part of the Great Plains Mfg, Main Campus 2. Name and address of the owner of the land and building to be occupied by the business: Land Owner - GPM No 1 LLC, P.O. Box 5060, Salina, KS 67402 Building Owner — Great Plains Manufacturing, Incorporated, P.O. Box 5060, Salina, KS 67402 3. General description of proposed project: Construct an additional 60,000 s.f. of production space Note: Attach a site plan showing existing and proposed buildings or improvements. 4. Are Industrial Revenue Bonds planned for any of the project financing? Yes _X —No. 5. Estimated capital cost of project: $ $3.5 Million (Buildings and Improvements) $ n/a (Machinery and Equipment) 6. Number of existing (full -time equivalent) employees: 876 Note: If an existing business, attach the average total monthly employment figures for the past twelve months. 7. Number of new (full -time equivalent) jobs to be created: 91 (see attached) Note: Attach a listing of the number and type of new jobs to be created by the project. (PLF - 067 Rev. 12/04 IV. TAX EXEMPTION INFORMATION 1. Amount or percentage of tax exemption requested; (subject to City Policy Resolution). 2. Why is the tax exemption being requested? See attachment IV 2 Note: Attach a supporting statement explaining why the requested tax exemption is a critical factor in determining whether the proposed project is to be completed or to the success of the project in Salina, Kansas. V. APPLICANT CERTIFICATION I certify that the above information and statements are true and correct to the best of my knowledge and belief. I understand that this information will be available for public inspection under the Kansas Open Records Act. I further understand that failure to produce the stated economic benefits may result in a reduction or loss of tax exemption. Furthermore, I certify that the requested tax exemption is a critical factor in the achievement of the stated economic benefits and, if not granted, could prevent the realization of the business location or expansion. Signature Vice President of Finance Title J/x // 1i Date Note: For further information contact: City Manager's Office (785) 309 -5700 (PLF - 067 Rev. 12/04 City Planning Office (785) 309 -5720 Chamber of Commerce (785) 827 -9301 (PLF - 067 Rev. 12/04 Attachment II 1. Great Plains Manufacturing, Inc. was established in Salina in 1976. From its beginnings as a small manufacturing shop, it has grown to one of the largest privately owned agricultural manufacturers in the United States, with multiple plant locations throughout Central Kansas, and a global market serviced through a network of over 1500 dealers /distributors. Great Plains is a manufacturer of seeding, planting, spraying, and tillage equipment. Great Plains, under the name Land Pride, is also a manufacturer of landscaping /finishing equipment. Great Plains also operates Great Plains Trucking, a fleet of motor carriers, and Great Plains Acceptance Corporation, which provides product financing. Great Plains is recognized as a premier employer in Salina, with a history of outstanding corporate citizenship, and has invested heavily in expansion in the community. Attachment 111 6. Year Month Total Employees Project Facility Total Employees State 1 2011 JANUARY 827 880 2 2011 FEBRUARY 836 889 3 2011 MARCH 842 896 4 2011 APRIL 846 900 5 2011 MAY 850 905 6 2011 JUNE 863 918 7 2011 JULY 886 941 8 2011 AUGUST 892 947 9 2011 SEPTEMBER 893 948 10 2011 OCTOBER 918 973 11 2011 NOVEMBER 931 986 12 2011 DECEMBER 932 986 Total 10,516 11,169 12 Month Average 876 932 Attachment III 7. The new employees will serve in a variety of functions, including production, warehousing, and administrative positions. Attachment IV 2. Great Plains Manufacturing, and its owner, managers, and employees, have had a strong economic influence on this community. Great Plains Manufacturing has been an outstanding corporate citizen, with senior management taking active leadership roles, and employees that continue to be active in the community through many organizations. Great Plains Manufacturing is currently preparing to undertake a large expansion project, with capital investments of 3.5 million in construction of over 60,000 sq. ft. of production space, and the hiring of an additional 21 employees. This project will allow them to improve efficiency, and better serve their customers and the agriculture sector. This project will provide a positive economic impact to the community. This is another chapter for a company that has made tremendous capital investments in Salina since its formation in 1976. Considering the current economic climate in the U.S., with rising energy, manufacturing, and transportation costs, economic incentives are vital to companies to help insure the success of their expansion, and help them continue to be a premier manufacturer, employer, and corporate citizen in Salina. m 11yy�� CL � a � }11 aar g o� € €E '� L" � 111 • I ■ • I : 1 � u B Ed # t w 4 O r. „nq v oas d 3 .H= !'4 i1. �o 0 � yZ W N n Lt eT A � � c- N r �v ri` 3 - — o 02 a ptq � o C. / 1 = a 3 N 0 co 7 ' m 0 � G1 L W f aim � . I 300' -0' A FH DEWEY STREET I i i L. i i -0" w 275' -0' NORTH STREET S I I o I I� � I I i; Y _ 1&1."*� C SITE PLAN 0 75' 150' 300'