Purpose
The appropriate purpose and
use of incentives is to broaden and diversify the tax base, create new job
opportunities for the citizens of the City of Wichita and Sedgwick County, and
promote the economic growth and welfare of the City of Wichita and Sedgwick
County. Economic development incentives are necessary because of the inherent
competition between localities for new businesses and jobs. The governing
bodies of both the City and County have adopted this policy with the
recognition that certain provisions are applicable to only one and not both
jurisdictions. The intent of these guidelines is to complement any incentive
program that may be adopted by other municipalities within Sedgwick County or
by the State of Kansas.
All requests by businesses for
local incentives will have an Economic Impact
Analysis (EIA) and a Return on Investment (ROI) calculation completed prior to
consideration by the appropriate governing body. A designated agent on behalf
of the City and County will conduct the EIA and ROI analyses and any fees
associated with this application are the responsibility of the applicant. The
EIA will be used initially to determine the viability of the proposed project
and must show a positive economic impact upon the City/County. The ratio of
public benefits to public costs should not be less than 1.3 to one.
Eligibility
To be eligible for any public
incentives of any kind, a business must be engaged in one or more of the
following activities:
- Manufacturing.
Determined by appropriate NAICS codes
- Service Sector.
Majority of revenues must be derived from transactions originating outside
the State of Kansas.
- Research and
Development. The conducting of research, development or testing for
scientific, medical, food product or industrial purposes.
- Warehousing and
Distribution. Majority of goods stored/shipped must be destined for
end-users located outside the Wichita MSA.
- Corporate Headquarters.
May include “back office” operations and customer service activities, but
shall not include out-bound call centers. Majority of revenues must be
derived from transactions originating outside the Wichita MSA.
- Transportation.
Freight or passenger transportation services. Majority of revenue must be
derived from interstate commerce/travel.
- Commercial
Redevelopment. Must address rejuvenation of officially designated urban
redevelopment areas.
- Tourism.
Attractions and events considered likely to attract at least 30% of
attendees from outside the Wichita MSA.
- Affordable Housing.
Incentives may include tax-exempt IRBs and sales tax exemption, but shall
not include property tax abatement.
- Medical Services.
Regional medical centers and specialty hospitals considered likely to
attract at least 30% of patients from outside the Wichita MSA.
A business shall be considered
for public incentives only if the average wages paid to its employees are
equal to or greater than the average wages for that type of business as
determined by 3-digit NAICS codes within the Wichita MSA or greater
than the average wage for all jobs in the Wichita MSA when wages are
calculated excluding the wages for the transportation equipment manufacturing
sector (NAICS sector 336). A business must also be current in its
payments of ad valorem property taxes to be considered for any public
incentives.
In addition to the above
criteria, in making a decision to approve or disapprove an incentive, the City
Council and/or County Commission will consider the following information:
- The size of the project
based upon private investment in the site development, plant facilities and
infrastructure;
- The total number of jobs,
wages, benefits and types of jobs created;
- The relationship between
jobs development and total investment;
- Potential for future
expansion and increased employment;
- Potential for retention of
existing employment;
- Potential for
diversification of the regional economy;
- Potential for inclusion of
disadvantaged minority or women-owned businesses as contractors, suppliers,
etc.
- Project specific issues
that impact upon local infrastructure responsibilities of the City and/or
County;
- Project specific
incentives that may be pursued to stimulate other development areas that the
City and County may deem of significant benefit to the community;
- Economic development
incentives from other local governments and/or the State;
- Financial impact and
budget ramifications.
Compliance
All Economic Development
Incentives will be formalized in a written agreement between the City of
Wichita and/or Sedgwick County and the recipient company. The recipient
company will be required to meet the following performance criteria:
- Jobs created as announced
- Capital investment in real
property as announced
- Compliance with wage
requirements
- Compliance with all
applicable governmental laws, rules and regulations
- Compliance with any
conditions imposed by the Economic Development Incentive Agreement.
The City of Wichita and
Sedgwick County reserve the right to audit a company to assure compliance with
the Economic Development Incentive Agreement. The City Council and/or Board
of County Commissioners may discontinue any ongoing incentives and require the
incentives already received to be repaid in full or in part, as set forth in
the Economic Development Incentive Agreement, if the performance criteria are
not met.
Project Evaluation
Each project will be evaluated
on an individual basis. Changing economic conditions and availability of funds
may cause the City of Wichita and Sedgwick County to modify, amend, or
discontinue any economic development incentive program. Should an incentive
program be discontinued, the City Council and Board of County Commissioners
will honor any incentive committed to before the discontinuance of the
program. Economic development incentives may not be transferred or otherwise
conveyed to another party, unless agreed to by the City of Council and Board
of County Commissioners.
Incentive Level Matrices
Economic development
incentives available from the City of Wichita and Sedgwick County include (but
are not limited to) industrial revenue bonds (IRBs), property tax abatements,
sales tax exemptions, forgivable loans and infrastructure improvements. The
City Council and/or Board of County Commissioners will determine the amount,
terms and conditions of property tax abatements and forgivable loans based on
matrices that equate recommended incentive
levels with job creation, wage levels and capital investments.
Property Tax Abatement
Matrix
The City of Wichita and
Sedgwick County are authorized under state law to grant tax abatements on
private business property either in connection with the issuance of IRBs or
under Article 11 of the state constitution that enables economic development
exemptions (EDX) for certain types of businesses. While IRB abatements may be
granted for all types of business included in the list of eligible businesses,
EDX abatements are limited to expanding manufacturing, research and
development and warehouse and distribution businesses that create or retain
jobs.
Property taxes may be abated
for new improvements to real property and for newly acquired items of personal
property used by an eligible business in connection with an expansion or
relocation of the business’ operations in Wichita and/or Sedgwick County.
Land and existing buildings are not generally eligible for property tax
abatement. Existing buildings within the City of Wichita will only be
considered for tax abatement if the building has been vacant for at least
three years and is acquired by a party not related to the previous owner.
Motor vehicles are not eligible for property tax abatement under this Policy.
The term of tax abatement on
real property improvements under this Policy shall be an initial term of five
years, plus an additional five years subject to review and approval of the
City Council and/or Board of County Commissioners at the end of the initial
term. Tax abatement on eligible items of personal property shall be limited
to a term of five years. The recommended percentage of property taxes to be
abated shall be based on new job creation and capital investment by the
eligible business, as follows:
Job Creation: For the
purpose of determining the recommended percentage of tax abatement, the number
of new full-time equivalent (FTE) jobs created by the project will be adjusted
by a factor based on the relationship between the wages to be paid for the new
jobs and the average wage for all jobs in the Wichita MSA. For example, if
the area average wage is $40,000 and the average wage for the created jobs is
$50,000, the factor for adjusting the number of created FTE jobs would be
125%. If the actual number of FTE jobs created is 60, the adjusted number of
new FTE jobs used to determine the recommended abatement would be 75.
For the purpose of this Policy, FTE jobs are defined as
full-time employees who are paid to work at least 2,080 hours per year, or
part-time or temporary employees consolidated to obtain the full-time
equivalent of 2,080 hours per year.
The amount of recommended tax
abatement based solely on FTE job creation is based on a sliding scale that
allows smaller projects to benefit. A property tax abatement may be
recommended for each new FTE job as follows: 3% for the first five new FTE
jobs, 2% for six to 10 new FTE jobs, 1.5% for 11 to 20 new FTE jobs, 1% for 21
to 50 new FTE jobs and 0.6% for each new FTE job in excess of 50, up to a
maximum tax abatement for job creation of 100%.
Capital Investment: A
property tax abatement may be recommended for each $50,000 of private
investment in plant and equipment as follows: Between $50,000 and $500,000 –
1.0%; between $500,000 and $1 million – 0.75%; between $1 million and $2
million – 0.5%; between $2 million and $5 million – 0.25%; above $5 million –
0.10%. The maximum recommended tax abatement for capital investment is 100%.
Location Premium:
Businesses in the City of Wichita shall be encouraged to locate and/or expand
within special redevelopment areas of the City. To foster such action,
businesses may receive an additional recommended tax abatement equal to 20%
for locating into special redevelopment areas, as may be determined from
time-to-time by separate action of the City Council.
Payments-In-Lieu-of-Taxes (PILOTs):
Any business receiving a tax abatement may be required to make payments
in lieu of taxes equal to the amount of property tax abated. Said PILOT
payments shall be payable to the Sedgwick County Treasurer for proportional
distribution to all local taxing jurisdictions which levy taxes on the abated
property. A business may also be required to make PILOT payments at any time
in the event of non-compliance with the conditions imposed by the economic
development incentive agreement, as an alternative to complete cancellation of
the tax abatement.
Service
Fee Payments:
The City of Wichita and Sedgwick County reserve the right to impose on any
business receiving a tax abatement the payment of service fees through the
provisions of the economic development incentive agreements for services
provided by the applicable Unified School District and the Sedgwick
County Fire District.
The
amount of the service fee shall be based on the tax rate of the applicable
Unified School District and/or the Sedgwick County Fire District, and any
service fees thus paid shall be remitted to such School and/or Fire District.
Tax Abatement Percentage Tables
©, Copyright, 2002 Sedgwick County Economic Development
last update:
05/05/05
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