8.5 Ad Valorem CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
5/1/00 4:00 P.M.
AGENDA SECTION: ORIGINATING DEPARTMENT: APPROVED FOR
NO. 8 AGENDA:
PLANNING & DEVELOPMENT
ITEM ROY DUDARK
NO. 5 BY: ~ BY: /~
Item
Consider final approval of property tax exemption for Coronado Engineering.
Background
On November 10, 1997, the City Commission approved Ordinance No. 97-9836 authorizing
the issuance of $980,000 of Industrial Revenue Bonds for the purpose of constructing and
equipping a new manufacturing facility for Coronado Engineering at 1835 Wall Street in the
Airport Industrial Center. The ordinance included approval of a partial property tax exemption
for a ten year period. In accordance with city policy, the level or percent of exemption is
based on the actual amount of capital investment and number of jobs created by the
expansion project. Once the exemption percentage is determined, an agreement for
payment in lieu of taxes becomes the mechanism for implementation of the portion of taxes
not exempted because by statute IRB financed projects are completely tax exempt.
On January 12, 2000 Coronado Engineering submitted a project completion report
documenting their capital expenditures for the facility and the number of net new jobs created
by the company. In reviewing the employment data, it was determined that during the
expansion project 8 new employees were hired but 13 left the company. Consequently, total
employment went from 50 in December, 1997 to 45 in January, 2000 for a net loss of 5.
When asked about this, the company reported that a division of their business was closed
resulting in the loss of several personnel. However, they were expanding another division
and in the process of hiring additional people. On March 24, 2000 an updated employment
roster was received which indicated that total employment had increased to 58. Using the
latest information, presented below is a comparison of projected and actual activity:
Projected Actual
Capital Investment $1,228,990 $1,519,877
New Jobs Created 8 8
Based on the actual results, the tax exemption would be 60% for years 1-5 and 30% for
years 6-10. No exemption is granted for any pre-existing improvements or the underlying
land. The exemption would apply to all taxing districts. A cost-benefit analysis was
presented at the initial public hearing on October 20, 1997 when the resolution of intent to
issue IRB's was approved.
Recommended Action
Adopt the attached Resolution implementing the Agreement for Payment in Lieu of Taxes.
Resolution Number 00-5598