Renewable Energy Group will get a 10-year-property tax break on its new biodiesel plant in Emporia, but also will pay the city $402,000 and help with the needed infrastructure.
The Emporia City Commission agreed to the deal Wednesday. REG has said the $65 million plant will add 30 jobs to the community with a payroll of $1,325,000. Without that, the tax breaks do not take effect.
Commissioners also agreed that the Regional Development Association will be the “lead agency” in bringing retail to Emporia. But they asked that Emporia’s downtown get a voice on the RDA board.
Emporia city commissioners voted unanimously to make the RDA the point agency Wednesday, expanding the role of what is already the city’s main industrial recruiter. The RDA would help market the city, gather information and be a common point of contact for local commercial entities.
Commissioner Jeff Longbine emphasized that the RDA wanted to assist the efforts of entities such as Emporia Main Street and the Flinthills Mall, but not replace them.
“I don’t see the RDA or Kent (Heermann, RDA director) interfering in any way,” Longbine said. “I see him and RDA assisting them upon request. I certainly don’t see him changing their focus and their mission.”
The commission also asked the RDA to put Emporia Main Street’s director on the board as a nonvoting member. At an earlier meeting, Commissioner Kevin Nelson had pushed for voting rights while Longbine said it would set an awkward precedent to put Main Street on the board at all.
City Manager Matt Zimmerman said Wednesday’s proposal represented a compromise.
“It just gives them a little more of a stake in the process without giving them a vote,” City Manager Matt Zimmerman.
“Well, I would be willing to compromise on that,” Commissioner Jim Kessler said.
The others agreed as well, though Longbine said he wasn’t sure what would happen if the RDA refused to make the change.
The RDA’s voting members include two city representatives, two county representatives, a chamber member, an Emporia Enterprises member, and an at-large position that in recent years has been held by the president of Emporia State University.
Biodiesel
The tax breaks for the biodiesel plant only affect the plant and the land. The equipment inside the plant is already exempt from property tax by Kansas law.
Putting in a plant of that scale will require some improvements, including the extension of Penny Lane, extended water and sewer lines, and an upgraded gas main.
The city will pay $772,822 for the gas main, of which all but $70,000 will be reimbursed by Kansas Gas Service after REG signs a minimum volume agreement. That last $70,000 is the cost of rebuilding the sidewalks in the area.
The repayment will take place within six years of the minimum volume agreement.
The other infrastructure improvements may be offset by a $750,000 community development block grant. Half of that would be an outright performance-based grant while the remaining $375,000 would be a loan to be repaid by REG at 2 percent interest. Approval or rejection of the CDBG should come by mid-June.
REG will pay for the extension of a railroad spur in the area and will build the pipeline needed to pull soy oil from Bunge.
In addition, beginning in 2009, REG will pay the city $40,200 a year for 10 years. The money will go into Emporia’s sales tax fund for industrial development, to help with future recruitment efforts.
The city may also get $300,000 in help from the Kansas Bioscience Authority. Kent Heermann, the director of the Regional Development Association, said he had a verbal commitment on the grant but that formal approval might take up to 60 days.
Wernimont said that REG expects to start building the plant July 1.
Retail development
Commissioners continued to discuss whether to offer incentives for retail development and how, with the discussion taking up much of a morning goal-setting session.
The two main instruments being considered are tax-increment financing and transportation development districts. Under a TIF, a developer or city puts up the initial money for development, which is then repaid by the increased property tax revenue. A TDD helps pay for infrastructure, such as roads and water, by creating a special sales tax district for the business. The extra sales tax is used to pay off the improvement cost.
Both are indirect methods of development that avoid an outright handout. But Kessler said that many people still don’t understand that distinction.
“I think we still have a lot of educating to do for the public,” he said. “They still think you’re just giving them public money.”
Commissioner Julie Johnson said she remained opposed to both methods.
“I’m not convinced that the overall benefit of a TIF or TDD will be realized in the long run,” she said.
Part of the issue for the commission has been a desire to draw higher-earning professions to Emporia, which is currently at the low end of the scale for wages in Kansas. Without that salary base, Johnson said, retailers simply won’t be interested.
“I think we need to channel our energies into making us a more diversified economy with higher-paying jobs,” Johnson said. “That’s what will make us more attractive.”
“But I don’t think you can significantly raise your per-capita income with manufacturing,” Longbine said. “Your real increase comes from the professionals — academics, the medical community, the legal community — and those are the kind of jobs where you have to have a community they want to live in. And dining, shopping and entertainment are important to that sector.”
Later in the morning, the commission discussed a policy for when and how to offer incentives. One additional mechanism was discussed, a performance-based incentive that would only come into play if sales taxes for that business sector increased. For example, Zimmerman said, if Home Depot was recruited and overall sales tax revenue went up but the amount collected from home improvement stores did not, Home Depot would not get the incentive.
The idea would be a difficult one to administer, city staff acknowledged. But if it worked, Agler said, it could keep the city from cannibalizing existing businesses.
“I believe in competition,” he said. “But by the same token, I don’t want to unfairly pay someone who’s gaining a lot of business while it’s costing someone over here.”
blulitespecial (anonymous) says...
I've got to take exception to the statement that only profesionals wil raise the per-capita income here.At the low end wages paid here-this pretty much holds water.But the money for these people and services has to come from somewhere.It comes from cashiers,delivery drivers,electricians,daycare providers,ditchdiggers,bakery line workers,and meatcutters.At my plant we made 55K base to 95K(with OT) plus benefits-I'm retired from there now-have been since I was 50.Multiply by 1300 employees.The plant manager complained to corporate hq that a lowly mechanic made more than he did.A lot of OT,but that mechanic routinely breaks through 105K yearly.I've overheard half-million dollar stock transactions made on the breakroom payphone.We told one of these guys -You oughta sell that old truck and buy a Corvette! He laughed and said that rusty old $2000 truck gets him to work and the bank just fine.I think he has the extra cash to pay doctors and lawyers.Real manufacturing pays. If you're gonna nickel-and-dime everything,that's all you get.Aim higher.
May 24, 2007 at 4:07 p.m. ( permalink | suggest removal )
daveedailey (anonymous) says...
If you take a good look at the corporations that are here in Emporia, you will find that the bigwigs do not live here. For example, Interstate Brands. Their top CEO has a contract that if he gets "fired" he will still be paid over 2 million dollars. If you check other companies, I believe you will find similiar contracts for all top dogs. The ones who are already making big bucks will continue to do so by any means. I believe in an honest living, but where are those people today? Look at the crooks we have here in Emporia. The true working backbone of America is the low man on the totem pole who is not afraid to get his hands dirty! I admire the common working class of people because I am there and realize how hard it is today to eek out a living.
May 25, 2007 at 7:55 a.m. ( permalink | suggest removal )
blulitespecial (anonymous) says...
davee-You're right,the big CEOs ain't here.We do have some pretty good smaller companies here.A few build high quality technical equipment or components for heavy equipment production.We need'em all,and I'm glad they're here. I guess the point I was trying to get across is that some people have wanted only a "higher class" of "old money" here.That outlook stagnated this area and you still find it today.If you want to be at the top of the food chain- you better have a lot of smaller fish.It's good that we build this area 20-30,or 50 jobs at a time.One or two plants like Cessna or Goodyear with real livable wages will bring in the big fish.Didde's,the Railroad Roundhouse & Shops,and Modine are gone.Think big-Plan ahead.
May 25, 2007 at 1:31 p.m. ( permalink | suggest removal )
daveedailey (anonymous) says...
Hey bluelite, You too are so right. The problem is that a lot of the companies do not want unskilled labor. Emporia is getting more of this type person in the area. When not hired any where we end up supporting them. Yes, we do have the vt school and ESU but a lot of people have to work and there are very few night classes. Also, the problem with money here to get trained. As long as Emporia continues with the leaders having their heads in the clouds I do not for see this town ever improving. So many people are leaving, so many have already left. There is better money out there but not offered in this town.
May 25, 2007 at 1:59 p.m. ( permalink | suggest removal )