Online Chat - 1/2 cent sales tax
Thursday, July 29, 2010
Submit your questions now. Emporia Regional Development Association director Kent Heermann will answer your questions about the RDA and proposal on the Aug. 3 ballot for the continuation of the 1/2 cent sales tax.
Tell: What are you going to do different if the proposal passes? Do you have any quota's to meet? Do you think Emporia is growing and how? Are there more jobs today than when you began the RDA? Do you need to add to your staff like maybe a salesman?
Kent: The RDA reviews its marketing plan to reflect the current trends and projected economic conditions. This past and current year we have been interacting with Kansas Bioscience Authority and Kansas Bio to position Emporia and Lyon County to be competitive in the growth area of Bioscience.
We have partnered with the Kansas City Area Development Council in their marketing of the Animal Health Corridor with our three animal nutrition pet food plants – Hill’s Pet Nutrition, Menu Foods Midwest and Emporia Pet Products. We are in position to capitalize in that growing sector.
We continue to discuss strategies in partnering with our local manufacturers, Emporia State University faculty, Flint Hills Technical College and other Kansas organizations.
Emporia was growing until 2008; the downsizing at Tyson Fresh Meats will take a number of years for our local economy to adjust. The current recession has stalled any significant growth.
Jobs are created by businesses not government. The RDA encourages and recommends to the governing body performance-based incentives to growing companies. With the new and expanding companies in Emporia over 1,000 direct jobs with a higher than average salaries have been created over the years.
The RDA reviews staffing levels during the budget cycle. With the decline in sales tax receipts the RDA budget will be flat in 2011. No new staff is anticipated.
Hickory: What will happen to the RDA and the future of Emporia if the tax doesn't pass? People need to realize that this isn't a new tax. And it has brought hundreds of jobs to Emporia and has saved property owners thousands of dollars in property tax.
Kent: We certainly hope the citizens of Emporia review the past record and accomplishments of the RDA efforts to grow the economy. One hundred percent of the funding for the industrial and economic development efforts is coming from the sales tax. Half of the revenue is used for property tax relief, and the other half is split between the aquatic center bonds and industrial and economic development efforts.
In the event that the voters turn down the sales tax, the city commission will have to make some very tough decisions on how to either cut $1 million in essential services or raise taxes equal to $1 million or a combination of both.
Sail: HOW CAN THE PUBLIC GET AN ACCOUNTING OF WHAT THE 1/2 CENT TAX HAS TAKEN IN, HOW MUCH WENT FOR ECON DEV, HOW MUCH DID THE TOP 10 GET, HOW MUCH IS LEFT OVER.WHY CANT IT BE USED TO INCREASE ENROLLMENT OF STUDENTS ON CAMPUS AT ESU.
Kent: According to the City of Emporia records from January 1, 1995 to December 31, 2009 a total of $27,542,993 was collected from the one-half cent city sales tax. The city general fund received $13,767,286 or 50%. The other 50% was spent between the aquatic center bonds $2,474,400 (9%) and $11,301,307 (41%) went to the Industrial Development Sales Tax Fund.
I'm not real sure what you mean about the "Top 10," whether it's Top 10 employers. Most of our larger employers have received some kind of benefit from the economic development sales tax in the past on either the recruitment side or the expansion side.
The industrial sales tax fund currently has enough money in it to fund operations, current commitments and small projects that may come up. It would be very difficult to put together a project the size of Hill's or something similar based on current revenue projections through 2014.
mslater: Kent, to me it seems the city government is saying that if the 1/2 cent sales tax doesn't get passed, they will automatically raise the property tax to make up the difference Why can't the city government cut spending like the rest of the population has been forced to do over the past few years, rather than basically blackmailing the population saying they have to have this tax reinstated? Matt
Kent: The current one-half cent city sales tax sunsets on December 31, 2014. In 1994 the City of Emporia mill levy was 46.915 mills, today the city mill levy is 41.570 mills or 5.345 less than in 1994 with the property tax relief. See the answer above to Hickory.
Steve_Corbin: As land aquisistion is a big part of these costs is the RDA willing to list the sales prices of the land bought for the last three industrial parks? I mean cost per acre for each industry, and who the land was bought from. It is however tax dollars, so it should be disclosed. Could we also break down the wages paid, (PER YEAR), of those working for the RDA? Have there been any co-mingeling of funds from the RDA, The Chamber, and the Tourism/vsitors funds? Has the Water Park been paid off yet? If not , WHY? Has anyone involved in the RDA ever owned a private business?
Kent: Industrial Park I was purchased in the 1950’s. The funding for the purchase was entirely from private donations from The Committee of Fifty.
Industrial Park II was funded from private funding, the payroll deduction fund and City of Emporia property tax money.
Industrial Park III was purchased on December 26, 1978 for $2,500 an acre. The funding source was the City of Emporia mill levy.
Industrial Park IV was purchased for $2,500 an acre and funded through the city sales tax.
Other parcels of land have been purchased with buildings on the property. The land costs were higher than $2,500 an acre.
Land acquisition costs are increasing. We appeal to the owner’s “sense of community” to help Emporia grow and create high-skilled and higher paying jobs. Some land owners want to be paid a fair market rate and other require considerably higher than market rate.
The RDA has a separate 501 (c) (o) not for profit corporation. The officers of the corporation have the fiduciary responsibility to be good stewards of the funds from the city sales tax funds.
The RDA receives four quarterly payments from the City of Emporia and is required by contract to provide an annual financial review of the RDA to the City Commission.
The Aquatic Center bond issue will be paid in full by 2014.
The RDA Board of Directors are Steve Sauder, Ken Bazil, Scott Briggs, Jon Geitz, Jeff Longbine, Don Hill and Dr. Michael Lane. The ex-officio non-voting board members are City Manager Matt Zimmerman, City Attorney Blaise Plummer, Chamber President/CEO Jeanine McKenna and Mainstreet Director Casey Woods.
The RDA has two full-time staff Robin Nelson as Executive Assistant and President Kent Heermann. We contract with the chamber for 1/3-time receptionist.
hometownkid: What is the city's interest in sending out fliers to households in the city? Why should we vote for this when clearly so many jobs have been lost since this tax was created? Why do we have to vote on this tax now four years ahead of it being repealed??
Kent: The city provides an informational in August 2000 with a freestanding insert in The Emporia Gazette.
The city provided the mailed brochure as informational and not advocating for or against the ballot issue. Both the City Attorney and City Commission reviewed the content of the informational brochure prior to the mailing.
After careful consideration and city staff recommendations, the city commission chose to place the renewal of the 1/2-Cent City Sales Tax on the ballot on the August 3rd primary for the following reasons:
- Due to our past successes and our most recent success of the Hill’s Pet Nutrition plant our performance-based incentive for land acquisition was funded with bonds. The bond payments, the Aquatic Center bonds and the marketing expenses have committed our future income up to December 2014. So our ability to be competitive from now until 2014 is limited.
- Half of the 1/2-cent sales tax is used for property tax relief, which is nearly $1,000,000 a year. That equates to approximately 6 to 7 mills. If the city waited until 2014 and the sales tax was not renewed, then $1,000,000 would have to be cut from the budget and 6 to 7 mills added to the mill levy. I doubt it would be either extreme but it would be a combination of budget cuts and mill rate increases.
- Most importantly and mentioned earlier was that Emporia is as competitive our resources are limited to close deals with performance-based incentives. We need jobs and not just any jobs, but jobs that are higher than average wage. Job creation above the average annual salary may be eligible for performance-based incentives.
The tax is not the reason that jobs were lost. Business models change and they have to make tough decisions that sometimes mean job losses. It's quite clear that this 1/2-cent sales tax has created new jobs and they would not be here if the tax were not in place.
jamesbordonaro: The City sent out notices in favor of extension of the sales tax. Is paid political advocacy of this sort appropriate for the City?
Kent: The decision to send out the informational piece from the city was a decision that was made by the city commission. The purpose of the piece was to give the voters the information that they needed to make an informed decision. The content of the informational piece was reviewed and approved by the city attorney to make sure that it conformed to election laws and regulations.
auntiem: What is your biggest accomplishment in the last 2 years for the City of Emporia as director of RDA?
Kent: Our biggest accomplishment as an organization was bringing Hill's Pet Nutrition to Emporia. This project, because of its size, number of employees and payroll dollars, was very competitive. Many Kansas communities worked trying to get the projects, and, ultimately, Hill's decided to locate in Emporia because of location, land availability, quality of work force and the ability of the RDA to coordinate the effort.
b3bill: You were interviewed earlier this year on KVOEblog radio show, saying a company that makes concrete substructures for wind turbines inquired about locating in Emporia. They wanted rail access and 200-250 acres, and Emporia didn't have that to offer. You were asked during the interview if you referred that company to other nearby towns along the railroad, such as Neosho Rapids or Strong City. You said no, they didn't have anything to support that company and it was flood plain and no space suitable (which is totally erroneous). You said the company chose to locate in Hutchinson. That provides virtually zero direct economic benefit here. Why don't you refer companies to outlying towns if Emporia can't accommodate them, or doesn't want to, and let the local town and the company meet each other and make their own decisions? You are denying those locations the potential opportunity for a new business by not even referring the company to them. Emporia and Lyon County would still gain economic growth if a company located in Neosho Rapids, Strong City, Lebo, etc.
Kent: The RDA, as a regional organization, always looks for available sites within our county and surrounding counties. For example, the RDA was the lead agency in attracting the Westar's Emporia Energy Center in northeast Lyon County in 2006. We have also worked closely with communities such as Chase County and Coffey County on economic development projects that they have. One of the challenges that we have in referring large projects to smaller communities is most often the infrastructure is not in place to support the facility.
Moderator: What qualifications does the RDA have for businesses to qualify for incentives?
Kent: The RDA has policies that are developed and approved by the city commission and county commission that are based upon job creation, capital investment on real estate and buildings, and employee wages that are above the average manufacturing wage in Emporia. A formula is used to calculate the base incentives based upon those three thresholds.
helpmeunderstand: Lenze left right before they were scheduled to start paying property taxes. What steps have been put in place to make sure that situation does not repeat itself? Out of the companies brought to town under the incentives program, how much have they contributed to the property tax base in the city of Emporia?
Kent: There seem to be a lot of misunderstandings and Emporia folklore about the Lenze project. Lenze located in Emporia because Didde Web Press was one of their largest customers. When Didde Web Press closed, it did not make good business sense for Lenze to continue to operate out of their facility in Emporia. Property tax abatement was granted for 10 years, and property taxes are due and have been paid each year by the owners of the property. The community continues to receive taxes paid on that facility each year and will continue to do so as long as the facility is there.
moderator: How full are our existing industrial parks and what are we doing get more space? How soon will it be available?
Kent: The community's older parks, Nos. 1 and 2, are basically filled at this time. Park 3 has six smaller lots that may or may not be able to be combined for a larger tract depending on the industry. Emporia Enterprises has invested in a 160-acre tract, Park 4, located west on U.S. Highway 50. This park currently does not have infrastructure in place, and it is the goal of the RDA and the city commission to develop this park as funds become available. The earliest that could be reasonably expected is three to five years.
moderator: How competitive is economic development? Are our incentives competitive with other Kansas communities?
Kent: We continue to see other Kansas communities becoming more creative and spending more dollars to attract jobs to their communities. Economic development is a very competitive business that requires professional knowledge, available resources and a cohesive community. Communities such as Topeka have become very competitive because of available resources, marketing, land development, aggressive performance-based incentives. Virtually all first- and second-class cities in Kansas have an economic development program to some degree. Progressive communities fund these efforts because they realize that without them, communities become stagnant and there is no growth.
That's all the time we've got. Thanks for adapting with us.