City OKs tax break for startup company
Tonganoxie City Council members on Monday approved a four-year tax abatement for a startup company that plans to open soon in Urban Hess business park.
On a 4-0 vote, with council member Emmett Wetta absent, council members approved the tax break for Right Choice Pharmacy.
The new business plans to contract with pharmacies to fill prescriptions for maintenance medications. Using automation, Right Choice will fill the prescription in Tonganoxie and send it by courier to the pharmacy. The patient would pick up the pharmaceuticals the following day at his or her local pharmacy, where the pharmacist will be available to counsel patients about the drugs they are taking.
On Monday, council members approved an 80 percent tax abatement in the company's first year of operation; a 60 percent abatement in the second year; a 40 percent abatement in the third year; and a 20 percent abatement in the fourth year. In addition, the council agreed to proceed with a $2.3 million Industrial Revenue Bond issue for the firm. Under the bond issue, the city serves as the conduit for the sale of the bonds, but the city does not back the bonds.
At its Sept. 10 meeting, the council will act on an IRB ordinance, and closing for the bond issue is set for Sept. 28.
"Based on the cost-benefit analysis, an abatement certainly is warranted," said City Administrator Chris Clark.
The administrator cautioned council members about a more extensive tax abatement, in light of budget constraints faced by the city, school district and county. While the four-year abatement helps the company, the company, if successful, will provide benefits to the community, school district and county, Clark said.
"This is a company this is not talking about four years to get on its feet," he said. "It's talking about one or two years to get on its feet."
Because this is the first IRB issue the city has been involved with in at least 10 years, Clark said this would set the tone for future requests.
"I think we will have more," he said.
Jim Aldrich, co-owner of Right Choice, said he understood that the council needed to strike a balance between the tax break and meeting its other budgetary obligations.
"We can live with Chris' numbers," he said. "We would like a lot more, and the city doesn't' want to give a lot more. We came to town because we wanted to be here. We're going to be here if there's no abatement."
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