Archive for Tuesday, July 31, 2012

Shawnee may use new tool to support Bayer expansion

July 31, 2012

On the heels of the stinging loss of Perceptive Software, Shawnee officials are wielding a new economic development tool to prevent another company from looking elsewhere for headquarters expansion.

Mayor Jeff Meyers acknowledged the city has dangled a new forgivable loan program to entice Bayer HealthCare LLC, Animal Health Division to expand its North American headquarters in Shawnee.

Last week, the Kansas Bioscience Authority’s board of directors approved a $750,000 grant to support Bayer’s plan to add at least 58 new employees — in Kansas — at an average salary of $83,000 within three years.

To ensure the jobs are added at the Shawnee site where Bayer already employs 500, local officials have been talking with the animal health division about a Shawnee Entrepreneurial and Economic Development, or SEED, loan. For existing businesses like Bayer, the program offers upfront cash through loans equal to 2 percent of committed new payroll and an additional 0.5 percent for companies meeting criteria such as local hiring and charitable contributions.

The loan amount, forgiven in increments of 20 percent over five years if expansion targets are met, jumps to 3 percent of payroll for firms adding new buildings. But Staci Gouveia, director of communications for Bayer’s animal health division, said it plans to accommodate its workforce expansion by remodeling existing space.

That means the SEED loan amount that the Shawnee City Council will be asked to approve would be in the range of $96,280 to $120,350, based on the 58-job expansion. But it could be more if Bayer brings a larger job-creation package to the City Council.

Bayer, the world’s fifth-largest animal health company, is planning to add manufacturing, quality-control and product-development jobs in Shawnee, Gouveia said.

In addition to boosting Shawnee’s economy, the Bayer expansion would bolster the status of the region between Columbia, Mo., and Manhattan, Kan., as the so-called KC Animal Health Corridor. The corridor accounts for nearly 32 percent of total sales in the $19 billion global animal health market.

“In the heart of the Animal Health Corridor, Shawnee has become the home of Bayer Health Care, Animal Health’s North America headquarters,” said Ian Spinks, president and general manager of the division. “Shawnee has what it takes for a business to thrive, including an outstanding workforce, a great sense of community and a true pioneering spirit. ... We believe our presence here has had positive benefits for both our business and the local community.”

Those were soothing words for local officials following recent news that a $26 million incentive package helped convince Perceptive Software to move nearly 700 jobs from its leased headquarters facility in Shawnee to new construction aimed at accommodating Perceptive’s growth in Lenexa.

“This is the sweet spot of economic development,” Andrew Nave, executive director of the Shawnee Economic Development Council, said of Bayer’s expansion plans. “To have your leading employers and major corporate citizens further invest their resources in your city is infinitely better than any marketing or promotions we could do to promote Shawnee.”

Unlike Perceptive Software, Bayer was not shopping its headquarters around for the best incentive deal when the city engaged it in discussions about the SEED program, Meyers said. But it’s important to keep not only the headquarters but also the new jobs it creates in Shawnee, the mayor added.

“You want to keep them here and keep them happy,” Meyers said. “And this (SEED loan) is one of the new tools we’re trying to use to do that.”

The SEED loan program is among tools to be funded through a $1 million economic development fund created earlier this year as a result of renegotiated landfill impact fees paid by Deffenbaugh Industries. The increased fees, which are being phased in, will net the city an average of more than $3 million a year over the next 30 years.

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