Archive for Tuesday, April 23, 2013

Excise tax suspension spurs industrial development

April 23, 2013

Shawnee has reaped the first benefits from the City Council’s vote last month to suspend the city’s excise tax on new development.

Airtex Inc., which designs and manufactures heating, ventilation and air conditioning systems as Engineered Air in De Soto, has been spurred by the tax suspension to develop an industrial park on 80 acres it owns at 43rd Street and Powell Drive, just east of Kansas Highway 7.

Ric Rambacher, president of the company, said the $767,366 in excise tax savings helped the development numbers work for the project, called Westlink Business Center, which will include about 1.1 million square feet of industrial space valued at more than $50 million and add more than 2,000 jobs.

To help get the project started, the City Council also approved an 80 percent, 10-year property tax abatement for the first of seven planned buildings, a 170,000-square-foot facility to be built on a speculative basis. During their April 22 meeting, the council, with Dawn Kuhn absent, voted unanimously for the abatement plus $9.5 million worth of industrial revenue bond authority, which will help Airtex Inc. achieve a lower interest rate on financing.

Rambacher said the $9.5 million will cover construction of the first building plus necessary infrastructure improvements for the entire project. Of the seven planned buildings, Airtex plans to occupy two, he said.

Andrew Nave, executive director of the Shawnee Economic Development Council, said the development was “huge” for Shawnee, which desperately needs speculative space to attract prospects in the region’s hot industrial development market. Currently, Nave said, the largest vacant industrial space Shawnee has to offer is 25,000 square feet.

Airtex, a wholly owned subsidiary of a Canadian firm that owns 1.5 million square feet of rental property, purchased the Westlink Business Center site as a real estate investment in 2007. According to Rambacher, Airtex needs only 20 acres of the site for expansion of Engineered Air, which has 250,000 square feet in De Soto. But company officials thought they could find a profitable use for the other 60 acres when the time was right, and that time came after Shawnee lifted its excise tax of 21.5 cents per foot on newly platted property.

The goal of Shawnee city officials is to reduce the residential property tax burden by increasing the city’s commercial tax base, which currently accounts for less than 30 percent of city property tax revenue. Ward 3 Councilman Jeff Vaught, who proposed the excise tax suspension, said he’d like to see the number top 40 percent.

In other action during the April 22 meeting:

• The council voted unanimously to hold a May 28 public hearing on tax-increment financing for the proposed Prairie Pines redevelopment project at the northwest corner of 55th Street and Kansas Highway 7. Currently occupied by a vacant car wash and convenience store, the 33-acre site is to be redeveloped with 222 townhome units and 3.5 acres of commercial uses. The estimated cost of the project is $41.3 million, of which the developers, Shawnee Associates LLC, are seeing $3.8 million in tax-increment financing. TIF allows a portion of new tax revenue generated by project improvements to be used to pay eligible development expenses.

• The council voted 6-1, with Ward 2 Councilman Mike Kemmling casting the "no" vote, to approve a $22,000 forgivable loan for Source Inc., a wireless solutions provider moving from Overland Park to the Shawnee Office Suites building in the Shawnee Crossings development. Kemmling said he voted no because of vague requirements in the city's forgivable loan program that stipulate "substantial" local hiring and charitable contributions in order to maximize the loan proceeds. Source Inc. plans to move eight existing jobs to the new site and add eight new jobs there this year. The average salary for the jobs is $87,000. Ray Medlock, CEO of Source Inc., and Todd Dupriest recently formed a partnership to purchase the Shawnee Office Suites building. Dupriest is CEO of Sur Tec and Clarence M. Kelley & Associates, two Lenexa firms that will be moving their offices and 58 employees to the Shawnee Office Suites building next month. The City Council approved $100,000 worth of forgivable loans last month to attract those firms, which are expected to double their workforces in the next five years.

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