Olathe is looking to update its industrial revenue bond and tax abatement policy to incentivize higher wages and more sustainable buildings.
These drafted amendments follow months of back and forth among councilmembers about whether the existing policy goes far enough to encourage the types of development the city wants or create jobs with livable wages.
On Tuesday, city staff presented the recommended updates to the policy to the Olathe City Council. The suggested amendments also have the support of the Olathe Economic Development Council.
No action was taken this week, but the majority of the city council showed support for the amendments as written and potentially taking additional steps to update the policy.
Olathe reviews its industrial revenue bond and property tax abatement policy annually, and the city also reviews its other economic development and incentive policies with some regularity.
Industrial revenue bonds are a type of incentive used primarily but not exclusively on industrial development projects in southern Olathe. They are a type of debt financing that is paid back by the developer.
Councilmember Kevin Gilmore was absent from the meeting.
Olathe could require higher wages for more tax abatement
To get an extra 5% of property tax abated (the standard is 50%) the average wage in a new development would need to be at least 110% of Johnson County’s per capita income. Currently, that would mean an average salary of $62,000.
Councilmembers Matt Schoonover and Dean Vakas had wanted to go further on the wage requirements in the industrial revenue bond and property tax abatement policy, but most councilmembers wanted to start with what was proposed and go from there.
“I like the elements that were brought into this, and the fact that they did work on the wage piece,” Councilmember LeEtta Felter said. “I think the higher that we raise the bar, the harder it’s going to be for developers to avail themselves of our the tools in the tool chest, and personally, I really want the growth to happen in Olathe.”
Mayor Bacon had similar thoughts, adding that he feels the city is “going in the right direction” with the recommended incentive policy amendments.
Additionally, the policy will be modified to add more parameters around reporting accurately the anticipated average wage and the estimated number of new jobs. The amended policy will also codify the practice of submitting annual compliance reports to the city with details about wages, employment and other markers.
Bond policy amendments prioritize sustainability, too
- Under the proposed update, developments would be required to go above the environmental and energy efficiency design standards laid out in the Unified Development Ordinance.
- City documents gave no specifics about how much they have to exceed those standards.
- On top of that, developers would have to show during the approval process how they intend to exceed those standards.
Councilmembers pondered more bond, abatement rules
- There was also some discussion about adding data centers as a target industry, which would open the use up to an additional 5% in property tax abatement.
- Currently, the city has things like healthcare, advanced manufacturing and bioscience listed as target industries.
- Additionally, councilmembers talked about potentially increasing the goal of the city’s overall assessed valuation coming from commercial from 30% to 40%. (The city is at about 36% today.)
Next steps:
- The city council is expected to vote on the policy updates at its Dec. 17 meeting.
- Next year, the industrial revenue bond and tax abatement policies will be reviewed again.
Keep reading: Olathe warehouse project spurs bigger question: What are incentives for?
