Olathe has amended its industrial revenue bond and tax abatement policy to incentivize higher wages, and also added data centers to the list of target industries the city is seeking to attract.
Last week, the Olathe City Council unanimously adopted amendments to the policy. Initially, the policy was listed on the consent agenda, but Councilmember Matthew Schoonover asked to consider it separately for additional discussion.
Industrial revenue bonds are a type of debt financing incentive that is paid back by the developer and usually comes with a 10-year partial property tax abatement. It is used mostly but not exclusively in southern Olathe for industrial development.
Olathe revisits its industrial revenue bond and property tax abatement policy each year, and the city looks at its other incentive and economic development rules every other year as well.
Still, there had been months of discussion among councilmembers before the vote on Dec. 17 about whether the city’s old policy had gone far enough to create jobs city officials were hoping for with livable wages.
Olathe requiring higher wages for larger tax abatements
- In order to get an extra 5% of property tax abated the average wage in a new development must be at least 110% of Johnson County’s per capita income.
- Based on current numbers, that would mean an average salary of $62,000.
- Otherwise, the standard abatement is 50% for 10 years.
Olathe sets other new rules for incentives
- The new policy also adds more parameters around reporting accurately the anticipated average wage and new jobs for companies that would be located on applicable sites.
- It codifies as well the practice of submitting annual compliance reports to the city that detail wages, employment and other markers.
- Before, that was a requirement negotiated into development agreements for projects receiving IRBs and abatements, but it wasn’t specifically detailed in city policy.
- That being said, the city did not adopt a previously proposed amendment that would have required developments receiving these incentives to exceed environmental-focused design standards in the city’s Unified Development Ordinance.
Data centers are now a targeted industry in abatement rules
- Data centers are considered a target industry in the city’s policy now as well.
- That opens up such a use to an additional 5% in property tax abatement.
- Previously, the city had limited its list of target industries to things like healthcare, bioscience and advanced manufacturing.
- Olathe’s policy still allows the city council to give an extra 5% in property tax abatement on “projects deemed to provide extraordinary benefit,” according to city documents.
More on this: Olathe warehouse project spurs bigger question: What are incentives for?
