The Reno County, Kan., Commission approved changes Tuesday to a proposed policy on issuing industrial revenue bonds, eliminating a requirement that the business seeking the bonds must create at least 10 jobs with a payroll of at least $250,000.
Instead, the county included job creation and wages as one of several factors it will consider when deciding if a company should make "payments in lieu of taxes" or PILOTs on property that would otherwise receive 10-year property tax exemptions granted by state law as a result of the bonds.
Creation of an IRB policy was on a list of goals and objectives the commissioners drafted last year, after the issue of PILOTs came up when the commission was considering IRBs for the Agri-Center project in South Hutchinson.
Since the county had no policy, the developer on that project objected to being asked to pay in lieu of taxes, Commissioner Dan Deming said.
County Counselor Joe O'Sullivan presented a draft policy three weeks ago, but several commissioners objected to requiring the creation of a specific number of jobs, and a minimum payroll.
O'Sullivan and County Administrator Gary Meagher together met individually with each commissioner to get their thoughts and feedback over the past couple of weeks, and then drafted the new policy, which the commission adopted without objection Tuesday.
Employment and wages are among six items the county commission will now consider when looking at whether issue bonds and require "in lieu of" taxes.
Other issues the commission may now consider when deciding whether to require PILOTs as a condition of the IRBs include:
- Whether and to the extent the project will remove valuation of existing property from county tax rolls;
- How much of the improvements from the project will go on tax rolls when the exemption expires;
- Whether the project creates new jobs "consistent with the county's Economic Development Job Incentive Policy," which set the original job and wage minimums, or to the extent the project "does not create additional employment nor meet the wage and benefits standards" of the policy;
- To the extent the project retains existing employment "otherwise lost to the community";
- How much the issuance of IRBs without a PILOT agreement would "place additional burden on the county's tax base"; and
- Whether the applicant seeks tax exemptions for less than the allowed 10 years.
The policy also contains a note that in-lieu-of-tax amounts "may be subject to adjustment from time to time, based upon an evaluation of the applicant's compliance with specified criteria," though those criteria did not appear spelled out in the policy.
"The county can enter into an agreement with the application, in exchange for an agreement to issue the bonds, to limit the tax abatement to less than 10 years, or limit it to a percentage of the property tax that's exempt," O'Sullivan advised the commission. "More importantly, it can also provide for the payment of in lieu of taxes, so you recoup some of the exemption."
"This has come a long way since our discussion three weeks ago," noted Commissioner Dan Deming. "I'd like to thank Mr. O'Sullivan and Mr. Meagher for getting with us and the language they came up with. It protects taxpayers and protects developers. It gives us a better understanding of what those criteria might be."
"I echo Dan's comments," Commissioner Bob Bush said before making the motion to approve the policy and resolution formally adopting it.
