Archive for Tuesday, November 30, 2010

Council extends incentive offer in attempt to land new industry

November 30, 2010

In an effort to attract an undisclosed company to the city, the Tonganoxie City Council agreed to offer the company $100 a year for each employee the company hires its first five years here.

The decision came at a special council meeting Monday and concerned a company Leavenworth County Port Authority Executive Director Steve Jack told the council was looking at a site in Tonganoxie and others on the Kansas side of the Kansas City metropolitan and Topeka areas.

Jack said the company had a Wednesday deadline for proposals. The company would review the proposals in December with the goal of selecting a site early next year and starting its relocation at the new site next spring.

The meeting’s first 20 minutes was conducted in executive session as the council reviewed the company’s business model with private company information and a benefit analysis prepared by Wichita State University, neither of which was made public.

What the council was looking for was an incentive package that would encourage the company to locate in an existing building in Tonganoxie it is considering but cost less than the benefits the Wichita State study indicates the city would receive in the first five years.

The familiar tax abatement on a new building wasn’t available because the company is looking at an undisclosed exiting building, which has already been subject of an abatement.

The proposed incentive was developed after Jack explained the incentives the state likely would offer the company. Those include training grants of $500 to $1,000 an employee and payments for such things as employee relocation expenses.

The council was free to offer anything, Jack said.

With that Councilman Chris Donnelly suggested the city offer $100 for every employee the company hired its first year in Tonganoxie and the same amount for the next four years if those employees continued to be employed. He suggested the same amount and conditions be made available for employees hired the second, third, fourth and fifth years with the incentive ending at the end of five years.

Donnelly said he saw the proposal, which would cost the city a total of $15,000, as two incentives: One to get the company established and hiring and another to help it grow.

The proposal was popular with other council members and Jack said it made sense. It was modified to the simpler form offered when it was agreed that would be a better way to promote growth.

Jack will forward the offer in a letter to the company. He explained, and the council agreed, the offer was contingent on the company agreeing to workforce, wage and capital investment numbers in its business model.

City Councilman Bill Peak said he was particularly keen on the company meeting wage numbers. Although not divulged, it was said the company has indicated it could have some jobs in the $14 to $15 a hour range, but not low-wage jobs of $8 to $9 an hour.

The offer would be a starting point for negotiations, City Administrator Mike Yanez said. Any final agreement would come before the council for approval, he and City Attorney Mike Kelly said.

Donnelly said he would welcome the disclosure of the wage, workforce and investment capital figures in the company’s business plan at that time.


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