A vote on incentives for a large industrial project in southern Olathe triggered a broader philosophical discussion about the city’s use of economic development tools with some councilmembers wondering if they could be used to nudge developers towards paying higher wages and building greener projects in the future.
Last week, the Olathe City Council voted 4-2 on a resolution of intent to issue $16.3 million in industrial revenue bonds and to formalize a 10-year property tax abatement for the project within the Great Plains Commerce Center.
Councilmembers Matt Schoonover and Dean Vakas cast the dissenting votes. Councilmember Robyn Essex was absent from the meeting.
What are the incentives for this project?
- According to an application from Matt Roth, president of BlueScope Properties Group, the plan is to construct a roughly 150,000-square-foot building at 15880 S. Theden St., just off Lone Elm Road.
- The building, city documents say, will be used for light industrial purposes, though an exact tenant isn’t discussed in the application.
- However, based on the plan, the full building will either be leased or sold.
- Over the next decade, the development is expected to create 100 new jobs, with an average starting salary of $38,000 in the first year.
Some councilmembers fretted over low wages
On paper, the application meets all of the city’s existing requirements for receiving industrial revenue bonds.
For instance, the project exceeds a threshold of a $10 million minimum investment by the developer, exceeds the cost-benefit ratio minimum as well and will use Olathe trash haulers for solid waste removal, Olathe’s Financial Strategy Manager John Page said.
However, Councilmembers Schoonover and Vakas questioned whether the proposed average wage in the first year — $38,000 — would be livable in Olathe.
In somewhat reluctantly voting against the proposal, Vakas said, “I just can’t make the math add up.”
Could projects be required to have sustainability goals?
During the discussion, sustainability was also brought up as a potential priority.
Vakas questioned whether the city did or could require projects that receive property tax abatements to include sustainability and green design beyond what Olathe’s development standards already entail.
He pointed out that a large mostly flat roof, like the ones usually found at warehouse-type facilities, could be perfect for mounting solar panels.
“It seems like it would be an opportune time to have a conversation about going a bit beyond what [the unified development ordinance] requires for standard building,” Vakas said.
While there’s nothing specific in Olathe codes currently that requires that beyond basic architectural standards, the incentive policy does indicate that projects with more sustainable design will be given preference.
Chief Community Development Officer Chet Belcher said the city is actively working to update development codes, including sections on energy efficiency. He suggested these efforts could cover other environmental design topics, as well.
Later on in the meeting last week, Councilmember Marge Vogt, who is Mayor Pro Tem, also signaled an interest in reviewing some of the city’s incentive and tax abatement standards, nodding at past conversations on the matter.
“I think we maybe have to have a real serious conversation again,” she said. “It may be that we give more points for somebody that is giving a living wage, we give more points for an energy code. It doesn’t mean that we can’t give tax abatements, but we can maybe provide a greater incentive for those that are willing to do these things.”
Vogt said she hoped to see the city loop in leadership at the Olathe Chamber of Commerce on these future discussions, which she predicted would come later on in the year when Olathe typically reviews its economic development tools and standards.
Next steps for Olathe:
- The resolution the city council adopted last Tuesday only indicates the city’s intent to issue the bonds in the future.
- Another city council action will be required for Olathe to actually issue the bonds, but exactly when that will happen is unclear.
- Additionally, any bigger changes to incentive or development policies in Olathe would also require potentially lengthy discussion before a city council vote.
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