CITY OF SHAWNEE
FINANCE AND ADMINISTRATION COMMITTEE MEETING
MINUTES
MARCH 3, 2009
7:00 P.M.
Chairperson Pflumm called the meeting to order at 7:02 p.m.
Committee Members Present
Councilmember Pflumm
Councilmember Sawyer
Councilmember Straub
Councilmember Sandifer
Other Councilmembers Present
Councilmember Kuhn
Councilmember Goode
Staff Present
City Manager Gonzales
Assistant City Manager Charlesworth
City Clerk Powell
City Attorney Rainey
Public Works Director Freyermuth
City Engineer Wesselschmidt
Police Chief Morgan
Fire Chief Hudson
Parks and Recreation Director Holman
Information Technologies Director Doherty
Finance Director Kidney
Deputy Police Chief Larimore
Fire Marshal Mattox
Battalion Chief Beatty
Battalion Chief Owens
Members of the public who spoke: (Item 1) ROBERT JACOBS, 7029 Warwick; JIM MARTIN,
Shawnee Economic Development Council; TOM LANGHOPHER.
1.
ECONOMIC DEVELOPMENT REPORT.
Chairperson Pflumm stated that the staff will make a presentation on several economic
development issues including an overview of the IRB/Tax exemptions that the City has
given in the past, an update on economic development activities and a proposed change
to PS-21 IRB and Property Tax Exemption Policy.
Finance Director Kidney thanked the Committee. He stated several weeks ago one of the
councilmembers asked to get some sort of an update on the IRB policy and how the City
has done over the past several years. He stated the staff took that as how they have done
with valuation before and valuation afterwards, jobs before and jobs afterwards, put that
together for tonight’s presentation.
Finance Director Kidney stated he will present a quick overview of the results over the
last 10 years and Mr. Martin with the SEDC will give the overview of his operations and
what they have been doing in Shawnee for economic development over the past year.
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Finance Director Kidney stated since 1994, 22 companies have used the abatement tool,
whether or not it has been issuance of IRB bonds, or in one case they had a constitutional
exemption from manufacturing. Of those 22 companies, seven are complete, two have
received multiple exemptions which are in various stages, Kraft Tool and Bayer; Bayer
has multiple ones.
Councilmember Goode asked City Manager Gonzales if that goes back prior to 1994,
because they had that 25 years ago and probably more than that.
City Manager Gonzales replied that she knows they have been in Shawnee since the
1960’s under a different corporate name, but is not sure when the first tax exemption was
given.
Finance Director Kidney stated the staff just picked the year 1994. He stated it was
rather hard to categorize those two companies in either completed or active exemptions
since they have both.
Councilmember Goode stated he wonders how many the City has granted over that
period of time and thinks they gave Bayer the original granting and they redid that thing
many times.
Finance Director Kidney stated to be honest, going back and trying to get a handle on all
the IRBs the City has done since 1994, they know of these 22 they have a really good
handle. He stated seven are completed. He stated Bayer and Kraft have some completed,
but also have several active ones. He stated 13 of them have active exemptions which
means they are in their 10 year period of the process.
Finance Director Kidney presented the list of the seven that have been completed.
Harte Hanks
Naz-Dar
Olson Manufacturing
Roadway Transport
Shawnee Inn, Inc.
Simmons
Wilcox
Finance Director Kidney stated the IRB value as of now in 1998, is $49 million for these
seven companies and that is appraised value. He stated taxes collected from the seven
companies, before they received IRB, were about $4,000. He stated in 2008 the City
received almost $1.1 million from just these seven companies. They employ
approximately 1,700 employees.
Councilmember Goode stated Bayer has to be the largest.
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Finance Director Kidney clarified that Bayer is actually not on this list and he has them
on the next list as ones that have multiple exemptions.
Councilmember Kuhn stated on the exemptions, there are obviously the pre-value and
post-value, the pre-taxed and after taxes, so she wonders if there is a total of how much
the total tax exemption was.
Finance Director Kidney asked Councilmember Kuhn if she meant for each company.
Councilmember Kuhn answered yes, or for the group.
Finance Director Kidney stated they could do that, but it would be a company by
company presentation. He stated they should be able to go back, for example with Harte
Hanks, and show over that 10 year period how much the City received in lieu of taxes
and how much they receive now.
Councilmember Kuhn apologized to Finance Director Kidney because she knows it will
add work for the staff and make one more step, but one of the arguments heard when
people have concerns about tax exemptions, IRBs, or abatements that the City made due,
is that they were given just as much as they would have gotten. She stated it would be
nice to have one more column that says assuming a 7% increase in valuation of the
property in these 10 years they would have gotten “X”, but instead they got “X”, which is
a growth of ‘this much’ money. She stated it is not urgent, but it would be a nice chart to
have as a reference.
Finance Director Kidney skipped to the back of the packet and presented estimates just
based on the land. He stated the lighter blue line is in lieu of taxes the City has received
and not what they would have received if they were paying 100% tax. He stated the next
page show the new value after the 10 year abatement and projected 10 years more. He
used Simmons Manufacturing as an example. He stated the 20 year projection, even with
the abatements, is $1.9 million over 20 years for taxes, versus $459,000. He stated he did
not prepare that for each company to present this evening, but is certainly something the
staff could put on their project list to work towards.
Councilmember Kuhn stated it would be nice to ask the question, especially when the
conversation comes up again about the abatement policy.
Finance Director Kidney explained he was just trying to capture a snapshot. He stated
with the one for Bayer, for instance, the value was $1.1 million and the current market
value is $50.8 million. He stated Councilmember Goode said earlier that this goes back a
long ways, but with the buildings they are looking at within this 10 year period, the value
of the taxes they were paying was $6,500 for those land areas. He states now those land
areas are paying $545,000 in taxes to the City and employing 515 employees.
Finance Director Kidney stated the numbers are there for Kraft, the pre-IRB value is
$2,000, and the current value is almost $10 million.
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City Manager Gonzales stated that is what they actually paid, so that is the ‘in lieu of’
portion.
Finance Director Kidney stated this is just 2008, so it is just one year. He stated some of
it is in lieu of and another part is for the property that is paying 100%. He stated with
Bayer it is a mixture, because it would have been hard to go back and pull all of those out
for tonight’s meeting.
Finance Director Kidney explained that with the active exemptions they have out there,
the ones that are within their 10 year period, the next list will get it anywhere from
Catellus down to Straub Construction. He stated the Council will know better than him
what these companies are going through here, so if they have any questions Mr. Martin
will be able to answer them.
Councilmember Goode stated the $50 million for Bayer is actually pretty cheap for what
they have there. He asked Finance Director Kidney where he got that number.
Finance Director Kidney explained that is for the buildings that are in the 10 year abated
period that have been abated since 1994, so that is not the whole 100%.
Councilmember Goode stated he was going to say if that were the case, the City is in
trouble.
Finance Director Kidney presented the list showing pre and post. He stated for this list of
companies that are within active exemption, the value is $48 million, which is even less
than the one from Bayer he was showing earlier. He stated the taxes being brought in are
$441,000 and these are in lieu of taxes and are the amount of abatement, the portion the
City receives, and the job listing of over 900 employees.
Finance Director Kidney stated they have four companies who are in the beginning of the
process where they come in and ask for a Resolution of Intent to do an IRB bond in this
case. He stated there is Stag Development, York Properties, Woodsonia Investments, and
Hinz Hospitality, which is the Holiday Inn property. He stated Hinz has the Resolution
of Intent with the City and the staff anticipates that the developers are going to come into
the City and file for a Resolution of Intent, but for all intents and purposes, they still have
the Resolution of Intent with him and fully anticipate him coming in. He stated the one
for Hinz would obviously go away.
Finance Director Kidney stated the last two slides of his presentation were previously
mentioned showing Actual Taxes Paid with Abatements vs. Estimate of Taxes from
Property if not developed.
Councilmember Sawyer stated this is great information and they are almost there.
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Councilmember Sawyer asked Finance Director Kidney what it will cost the City to do
this.
City Manager Gonzales asked Councilmember Sawyer to be specific.
Councilmember Sawyer replied they have streets, fire and police protection, so he would
like to know that cost. He stated he is trying to derive at the cost for all of this. He asked
if the City is ahead or behind.
City Manager Gonzales replied a cost benefit analysis is performed each time the Council
approves one. She stated they have varying opinions about how accurate that model is,
but it is a model that is state-approved that tries to calculate that and take into account the
City’s costs and benefits of having employees and the property tax valuation. She stated
all of those have shown that in the future if everything happens the way they say it will,
those will, in the end, benefit more than they will cost or she cannot imagine that the
Council would have approved them or the staff would have recommended them.
City Manager Gonzales stated she is not sure how they would begin to do that, to actually
calculate that cost to any more exactness than is what in the model, but is sure it could be
done. She feels it would be very complicated with a lot of assumptions; if the road is
already there, would it have been there anyway if the building did not come, or not been
there. She stated there are going to be lots of questions.
Councilmember Sawyer stated he understands that, but that is part of their job and why
they should sit up here saying it is a good deal. He stated if they take the one slide of the
exemptions and taxes the City collects on the $48 million - is not quite 1% of the value.
City Manager Gonzales responded this is a snapshot in time, so prior to any of those
being developed, the total was $6,000 and now the City is getting $440,000.
Councilmember Sawyer stated that is not what he is saying. He stated the assessed
valuation is $48,741,000 so if he is doing this correctly, that is .9%, so he wonders what
that costs the City. He stated he does not know how they arrived at that answer, but he is
trying to get at it. He asked if the City is covering their costs. They have costs for the
Fire Department, Police Department, and the Public Works Department. He stated he is
sure cleaning the streets is probably not that much, but with most of these the developer
has already put the street in so the City did not have to, but with some they probably had
to. He stated that is what he is trying to arrive at here; he wonders if they are covering
their costs as they do this.
Councilmember Sawyer stated he is not sitting up there on the Council advocating that
they do not do this, but believes they need to make sure of things and more so than ever
today because they are having difficulty now coming up with ways to keep funding. He
stated the issues at hand with the Fire Department, Police Department, and Public Works
Department, keeping all the wheels on the buggy and knows they cannot change any of
this.
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Chairperson Pflumm stated he thinks this is like the proof in the pudding. He stated if
they did not have the $441,000 there, then they would not have the fire and police
protection they have today. He stated every one of these has been a tremendous benefit
to the City of Shawnee and Councilmember Sawyer just mentioned that they probably
did not put in a lot of streets for those. He stated they really have not added a lot of
police protection over the past 10 years and thinks they are at the exact same number.
Chairperson Pflumm stated the City may have added some fire personnel, but they are at
relatively small numbers, when they are actually bringing in some pretty good numbers
on every single one.
Chairperson Pflumm stated they are looking at over half a million dollars on the second
slide with $600,000.
Councilmember Sawyer stated he sees $441,000, so that is not a half a million dollars.
Chairperson Pflumm stated there were ones that had multiple exemptions where they got
$600,000 and then there was $441,000 on actual.
Councilmember Sawyer stated he will still get back to his original point and it is great to
sit here and say they are going to bring in $441,000, but if they are spending $600,000 to
take care of it, they are still behind the eight ball.
Chairperson Pflumm stated he agrees with what Councilmember Sawyer is getting at, but
does not see how they could be spending $600,000 when they really have not added any
police protection and maybe added to the Fire Department – a few here and there to
protect the residences.
Councilmember Sawyer stated he does not know the answer to that question and is what
he is trying to find out - the real answer.
City Manager Gonzales stated there is a model the State uses prior to and Springsted did
somewhat of a model when they looked at Cobblestone and they could ask them to do a
version of that, as it was a TIF-based model. She stated it will be based on a lot of
assumptions and each one of these is unique and different kinds of businesses.
City Manager Gonzales stated she would also add that the information the staff knows is
that the taxes do not support the services the residents demand and that business is due, at
least that is the theory she has always assumed and believed to be true. She stated the
biggest bulk of the City’s services go to their residents.
Councilmember Goode stated another thing they have to look at is increasing the
valuations over the years they have worked with these people. He stated they started out
with something that is worth “X” number of dollars and each year the valuation has
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increased, so they have increased their valuation by about a million and they have to look
at it that way as well.
Councilmember Straub stated they could look at the percentage of the $1.5 million before
and then there is $6,000 off of that and they are now at $48,000 and $441,000. He thinks
the percentage has gone up and agrees with what is being said. He can not imagine how
the staff will figure out how many hours each fireman and each policeman drive up and
down that street if they are not called on that site.
City Manager Gonzales stated it would have to be based on the assessed value versus the
total cost of the Police Department and then divide that to come up with some kind of a
formula.
Councilmember Straub stated he is assuming that the State and the Federal government
have figured out a formula already and if that is what the City is already using. The
numbers look like they work to him and the City is getting more than they were.
Councilmember Kuhn stated she thinks from where Councilmember Sawyer may be
coming from, because she can understand outside of it and feels very confident in the
decisions she has made as far as granting abatements and whether or not she believes that
those numbers justify it, but it would be nice to be able to have some hard numbers to
back up her assumptions. She stated when the Council makes their decisions to approve
abatement or anything that goes with it, City Manager Gonzales brings forward the
calculations and assumptions that are done on the State’s assumptions. She asked if there
is any way to go back to that original assumption and see if “X” number of years later the
assumptions that were made are proving true, or if there are some changes so they can
almost justify the justification.
Councilmember Goode stated they have been lucky over the last 10 to 15 years, because
everything has increased, increased, and increased some more, but the thing is if they can
get ahead if they do this again. That is his concern. He asked if they keep doing this, can
they stay ahead of it because the valuations may be at a standstill for the next 5 to 10
years. He stated that is surely not how he has been experiencing the last 10 to 15 years,
because they have had valuation after valuation increase and it has helped the City.
Councilmember Kuhn stated she would assume that even if making a decision on
whether or not this is the right policy for them, they can assume actually no change in the
valuations, except for undeveloped empty land earning the City nothing on a developed
property that will just by nature of being developed have a higher valuation, even after
the day it is built it never increases in that valuation, so they are still ahead of the game,
at least in her opinion.
Councilmember Sawyer stated if they look at it percentage-wise, the $1.5 million is .003,
and he is rounding, and the $48 million is .009, so they are up a little.
Chairperson Pflumm stated these are active dissentions and when these come off . . .
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Councilmember Sawyer interjected that he understands that, but they are trying to come
up with money to run the City right now. He stated they have fire, police, and
employees, just stuff they have to do and are doing now. He stated they can not say they
are going to ‘do this 10 years from now or 5 years from now’ and have to really say what
it is. He stated he that he knows it is going to be difficult to come up with and they can
sit here and say that residential requires more and he would agree with that, but these
require some of that to be allocated to these as well. He wonders if they are ahead or
behind and that is all he is trying to get at and does not want to change the policy. He is
just trying to get a measurement if they are ahead of the curve.
Councilmember Sawyer stated no one can sit there and say that the assessed valuation on
these properties might not go down as well, because he knows that the taxes started
coming out yesterday on homes and they are down.
City Manager Gonzales agreed with that statement.
Councilmember Sawyer stated, in his opinion, it only stands to reason that these property
valuations will most likely fall some, probably not near the magnitude of home real
estate, but he is not sitting out there in Johnson County coming up with these numbers,
but someone is doing just that. He stated he is not trying to cause havoc here.
City Manager Gonzales stated the staff can not come up with a model as it is going to be
on their skill set, but Springsted should be able to come up with some kind of a model to
calculate it. She stated it is a moving target and coming on and off from year to year with
different levels of staffing from year to year and different costs for roads from year to
year, so it will be pretty complicated to put together, but she is sure they can do it.
Councilmember Sawyer asked if they could do something a little easier and maybe take
the total housing assessed valuation for the City. He stated these commercial properties
are different from retail and they would probably have to have three of them and then
come up with a percentage to determine if they are covering all their bases. He asked if
anyone understands what he is trying to find out here.
City Manager Gonzales replied she understands the end product of what Councilmember
Sawyer would like to see.
Councilmember Sawyer stated he does not want to spend tons of money trying to figure
this out.
City Manager Gonzales stated that is the hard part.
Councilmember Sawyer stated he does not want to hire a consultant to do this.
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Councilmember Goode stated it does not seem to him like they are doing so poorly right
now; they are not doing good, but are not doing so bad. He does not know if they have to
justify anything right now.
Councilmember Sawyer stated he is not trying to justify anything and is simply trying to
see where they are at.
Councilmember Goode asked what the difference was between justifying and seeing
where they are at.
Councilmember Sawyer stated when he looks at his checkbook, he has it or he doesn’t;
he looks to see if his revenue is higher than his expenses.
Councilmember Kuhn asked about the assessed assumed costs when they get the
application and if it gives them their number. She seems to remember it saying they were
expecting it to have associated costs being “X” dollars and asked if it says over “X”
number of years.
City Manager Gonzales stated Jim Martin can speak to that model better, but it is a lot of
assumptions.
Councilmember Kuhn stated they should assume, because they did when they all voted in
favor of it, at least the majority of the Council thought those were correct assumptions on
the cost. She asked if they could not just take those assumptions and take an individual
line and subtract what the assumptive cost was and see if the number they get at the end
is still bigger.
Councilmember Sawyer stated that is kind of what he has been trying to get at tonight.
Councilmember Kuhn stated she was just trying to find that number without having to
hire a consultant or recreate the wheel.
City Manager Gonzales replied she is not sure it would be that easy.
Finance Director Kidney stated a lot of the formulas in there are based on assumptions
where it would be very difficult to go back and look at, based on number of employees
and of those employees what is the multiplier effect and things like that.
Chairperson Pflumm stated they know that there are probably 3,000 jobs that were
introduced in the City of Shawnee based on these tax abatements, so they know that has
added a lot to this City as they have spent a lot of money. He stated one column is the
2008 taxes paid and he thought that was property taxes paid. He asked if that is correct.
Finance Director Kidney answered yes, that is correct.
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Chairperson Pflumm asked if they could go back when they apply and get the values
today and the values in 10 years. He thinks what Councilmember Kuhn is getting at, is if
those documents from 10 years ago, or even 6 years ago, balance off to the actual.
Councilmember Kuhn stated without having to go back and recount the number of
employees and how many trips from the Fire Department, they will assume that the
assumptions were correct, but if they were correct assumptions and if that worked out the
way they were supposed to, those numbers should be pretty real today and the variations
should be minimal. She asked if it said it was going to be $160,000 in costs each year
associated with that, could they then take that $160,000 and subtract it from the $441,000
to show how much they are ahead of the game each year.
Councilmember Kuhn stated she thinks that is what Councilmember Sawyer was talking
about and is probably the easiest way to get them as close to those numbers, without
having to go back and redo things.
JIM MARTIN, Shawnee Economic Development Council, stated he does not have cost
benefit analysis for before that time for the last eight years. He is not sure how accurate
it would be, because there have been changes. He stated there are different kinds of
companies represented here. He stated they put in an SIC or Nakes code, so the benefit
from jobs from Rudolph would be different from the jobs with Prairie Star.
Councilmember Kuhn stated for most of this they could just do the costs.
Chairperson Pflumm stated he thinks what Councilmember Kuhn is looking at, is there is
a property tax number offsetting the costs which are assumptions, so he wonders if they
could just take on revenue – revenue of what they projected even six years ago, based on
what it is today and if it is onboard.
City Manager Gonzales asked if they mean just based on the property tax piece, because
there are factors in there for the employees, how much employees spend, and
assumptions.
Councilmember Sawyer stated that goes to sales tax.
City Manager Gonzales stated that is correct, but it also helps with how the City pays
their bills, with sales tax and property tax.
Councilmember Sawyer stated what he is getting at, is the City’s Fire Department has
had to purchase more equipment to help take care of some of this and the cost of a fire
truck is not exactly cheap.
Councilmember Goode stated they kept some of those fire trucks for 18 years.
Councilmember Sawyer stated that is not exactly how they allocate equipment.
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City Manager Gonzales stated the staff will see what they can do, but she does not want
the Council to get their hopes up that it is going to be very accurate because a lot of the
records are not really there.
Councilmember Straub stated the way he looks at this now, is if they did not have it they
would basically have $6,000. He stated there are some companies where they did not
give them any, versus $441,000, so he wonders if it cost the City more than $435,000 to
have these companies in their town. He doubts it.
Councilmember Sawyer stated that is the answer he would like to know.
Councilmember Straub stated for one year $435,000, he can not imagine if they just had
the police sitting there 24/7. He stated he can not imagine how they make a formula here
to make a legitimate number, because it is all a guess.
City Manager Gonzales stated there are certainly a lot of assumptions.
Councilmember Straub stated it is a logical thing, at least in his opinion, by having
$435,000 more than before they had before they got here, so he can not imagine it costing
them that much more, but it may have. He stated Councilmember Sawyer may be 100%
right, but he does not see plowing the streets, fire, police, and street lights – it is just a lot
of extra money coming in.
Councilmember Sandifer stated he thinks realistically they have done an outstanding job
and it has really made some major changes in the City, with what the City has done on
abatements and the aggressiveness they have done with businesses. He stated what he is
really concerned about, is how many of these companies with these abatements have they
given City backed bonds to.
City Manager Gonzales replied none – they are IRBs and are separate. She stated they
never do GO bonds for tax exemptions.
Councilmember Sandifer asked if that meant for none of it.
City Manager Gonzales answered yes.
Councilmember Sandifer stated the City has the money coming in here and they have
given City backed bonds in other areas, where people can get a bond to build their
building and low interest bonds. He asked if the City has to stand behind that as well.
City Manager Gonzales answered no.
Councilmember Sandifer asked about the Circuit City building in Merriam.
City Manager Gonzales replied that is a TIF – a different structure.
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Councilmember Sandifer stated Merriam has a tax that they are going to have to come up
with and thinks it is around $3.7 million. He stated that would be tough for Shawnee to
come up with if they had a situation that came in right now, and it is all because of a
national company that went bankrupt. He stated that is what he is more concerned about
at the moment.
Councilmember Sawyer stated he does not have a great level of concern and just wanted
to see if the City was covering the costs. He stated they can sit here and say they think
they are, but he understands that government is more complicated trying to come up with
cost, besides the type of business he is in where they allocate over “X” number of years
and the City has to operate that same way, like all of these businesses. He stated they can
only take “X” number of years and then it is zero value on equipment.
Councilmember Sawyer stated his only point in bringing this up is if they could see that
yes, in fact, they are covering their costs. He stated it is easy to sit there and say they
have not added any firemen or policemen, but there is more than that involved. He stated
it is assets that the City has to provide for those employees to do their jobs. He stated
there is a vast amount of equipment, supplies, and people and they all add up to dollars.
He stated that while he is sitting there looking at the numbers, he is thinking just like the
rest of them that the City is probably covering their costs.
Councilmember Straub stated there is no way to determine if the City needed a piece of
equipment and if none of these companies came to the City, if the City would not have
bought that piece of equipment.
Councilmember Sawyer stated some of them, probably not.
Councilmember Straub stated he does not think the City is going out and buying
equipment because Perspective Software showed up. He stated they might have to have a
taller ladder, but that is not just because they are here now. He stated if a company did
not have an IED, would they have bought that truck if there were other buildings that
size. He stated there is no way for the City to determine, at least in his opinion, exact
numbers.
Councilmember Sawyer stated that is the problem he has; when someone says ‘no way’.
Councilmember Straub stated that is why they have the formulas and that is why the
formulas are a ‘best guess’ on that stuff.
Chairperson Pflumm stated he agrees with Councilmember Sawyer, in that there is a way
to find out the numbers it is costing the City, but it is difficult to find that number out and
will cost the City if they want accurate numbers.
Councilmember Straub asked how do they know which equipment they bought because
of one of these buildings, versus not.
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Councilmember Goode stated he only knows of one piece from 25 years ago when the
City bought a big fire truck to take care of the big outfit out there. He stated the City did
not have the right fire equipment to get to those taller builders.
Councilmember Sawyer stated he thinks he voted on three fire trucks.
Councilmember Goode stated Councilmember Sawyer did not vote on that one, because
that was the one that made them get the deal. He asked Fire Chief Hudson how long ago
they purchased that fire truck.
Fire Chief Hudson replied if he is thinking about the same one as Councilmember Goode,
there was a partnership with what is now the Bayer Corporation to purchase the City’s
first ladder truck and they replaced that one in 1989. He stated that one is being replaced
currently with the one they are expecting soon. He does not know they can say it is for
one particular building, but is for the way buildings are being built now and the setbacks
and challenges those buildings give them.
Councilmember Straub stated they would have bought that truck with or without the
IRBs.
Fire Chief Hudson replied the City has many buildings that are similar to the ones on this
list.
Councilmember Straub said the City would have mostly likely bought it anyway.
Fire Chief Hudson replied the City had that truck before many of these buildings came to
Shawnee.
Councilmember Kuhn stated she will not deny that because she thinks they would have
seen a change in the equipment as building structures changed, but she thought they
voted on a truck last year based on the growth pattern, but specifically because of a
building in Shawnee that they could not reach if they did not have that truck.
Fire Chief Hudson replied they may have used the example of Bluejacket Lodge where
they had a fire last year. He stated when they first started their ladder truck projects, they
partnered with the Bayer Corporation, which he thinks was Haver-Lockhart at the time.
He stated that was about a 100 foot aerial ladder truck. He stated the City traded that
truck in, in 1988 or 1989 for the one they have now that is a 75 or 85 foot truck, so they
scaled back then and found it was just not working.
Councilmember Kuhn stated that had nothing to do with her earlier comment and she was
just having a moment of doubt.
Fire Chief Hudson clarified they are replacing that particular truck and are going back to
a 105 foot truck.
MARCH 3, 2009
FINANCE AND ADMINISTRATION MINUTES
PAGE 14
Councilmember Kuhn stated she remembers the discussion with the ladder not reaching
the highest levels and was just asking.
Councilmember Sawyer asked how many the City has.
Fire Chief Hudson replied they will have one 105 foot ladder and then the ladder at
Station No.72, which is also being replaced with about the same length ladder on a single
axle chassis.
Councilmember Sawyer asked if the City has two of them.
Fire Chief Hudson answered yes. He stated he would just like to mention that the City
bought that second ladder because they got their ISO rating down to three where it is. He
stated they could not achieve that three level the way ISO was grading them without
adding that ladder in the western part of Shawnee to cover, so they had them spread them
out in their districts to serve the entire City. He stated that was purchased because of an
ISO recommendation and not particularly because of the buildings, but it all ties together.
Councilmember Sawyer stated it gets back to if they would not have had the growth,
would the City have had to buy it. He stated it still gets back to if the taxes are covering
the costs. He stated he is not saying that Fire Chief Hudson slugged the cost of the fire
truck, because he spread it out over many years. He stated there are equipment and
employees, and it is 2009 and he thinks in the 1990’s the City added some police because
the president at the time gave the City some grant money to hire them, which was paid
for, for the first few years and then the City ended up paying that so they added people.
He stated they have not added people like they should, because frankly he believes there
are needs out there to add people to both departments – Police and Fire.
Councilmember Kuhn stated she does not need an answer now, but wonders if someone
could put it together for them. She stated that obviously she does believe in the benefits
of the abatements and their uses, but has to answer that question to other people often and
since this seems to be the time, one thing she would love for the staff to be able to plug
into that spreadsheet is the answer she gets that sometimes ‘if not for, would they have
got’.
Councilmember Kuhn stated, just as Councilmember Straub just said, they would have
had $600,000 and now they have $441,000 and the answer she gets is that is not true,
because some of that would have been built anyway. She stated some of it might not
have been as good and might not have been as useful, but something would have been
built there.
City Manager Gonzales stated it might have been built somewhere else.
Councilmember Kuhn stated that is true. She stated that is why she personally thinks the
City should draw the better product in and abatement is a tool to give them a better
product for a longer term benefit. She stated in order to answer that question, she would
MARCH 3, 2009
FINANCE AND ADMINISTRATION MINUTES
PAGE 15
ask if it would be possible for the staff to take that same 10 years and plug in anybody
they want out of there and say if that development was done at 50% and they did not give
a tax abatement, but over 15 years, 10 of which was an abatement and 5 of which was full
payment, if that property now has the value of $5,894,000, so what would they have had
over those 15 years in total taxes, versus what they have now, after abatement and
assuming five years valuation.
Councilmember Kuhn stated that is something she gets from people fairly often, when
her answer is if not for the abatement they would not have had and so what, they would
have at least gotten something. She stated what they would have gotten would not
necessarily have been the quality and not necessarily brought the jobs or necessarily
maintained that valuation.
Councilmember Kuhn stated it would be beneficial for her, as a councilmember, to have
actual factual numbers to be able to present that said, ‘Let’s say you are right, something
if not ‘this’ would have been built half as good as it was’, but they would only have had
instead of $441,000 maybe about $200,000 in taxes brought in. She asked if she was
asking that clear enough.
Finance Director Kidney replied he thinks Councilmember Kuhn is asking him to make
an assumption on the value that would have been there.
Councilmember Kuhn stated she is asking him to make the assumption of the value that
would have been there at 50% without any tax abatement.
Chairperson Pflumm stated it is basically equal to Finance Director Kidney’s tax for the
first 10 years and afterwards it would double.
Councilmember Kuhn stated that is more or less right, but during the first 10 years they
have an abatement up to 60% or 80%, depending on the abatement.
Chairperson Pflumm stated realistically some of these are above that and a lot of them are
very close to that.
Councilmember Kuhn stated she recognizes the math and is just asking if the staff could
plug them in so that same chart exists that says, ‘Hey, here are those things’. She stated
no matter how often she says it; sometimes it is hard for people to believe, so when they
can show them black and white numbers of what those differences are it becomes real.
She stated it justifies decisions they make and justifies policies enact.
Councilmember Goode stated if they could bring those in, they are going to be looking
for a lot more tax abatements.
Councilmember Straub stated how he would answer that and he has looked at this, is that
Olathe has done a lot more abatements and a lot more promotions than Shawnee has ever
done. He stated 25 to 30 years ago, he would say Shawnee was probably ahead of
MARCH 3, 2009
FINANCE AND ADMINISTRATION MINUTES
PAGE 16
Olathe, as far as development and commercial business. He stated Olathe pushed for
more and have grown a lot better commercial-wise than Shawnee ever has, because they
were more aggressive 25 years ago. He stated that has been sitting back not being as
aggressive, so that is why they have become a bedroom community to a lot of the other
cities who have gone more commercial, while they have gone more residential.
Councilmember Straub stated Shawnee is a great city to live in from a residential
standpoint, but their taxes on the residents are covering most of their revenue, because
they do not have the commercial business like Olathe, Overland Park, or even Lenexa.
Councilmember Goode stated Lenexa got started with their commercial properties years
ago.
Councilmember Straub stated that is exactly what he is saying. He stated he is all in
favor in getting companies to come to Shawnee and if it means giving them something up
front to get them here, then he would agree. He stated companies will go somewhere else
and Olathe is a perfect example. He asked why anyone would open a company in Olathe
25 years ago because it was way out in the boonies, but now it is huge.
ROBERT JACOBS, 7029 Warwick, stated that he and Charlotte Hargis used to have a
meeting after the meetings about these things and she was always mad as hell about
things. He stated that he always told Charlotte that the jury is still out – period, as there
is no way to know and he did not have an opinion at all until tonight.
ROBERT JACOBS stated this deal is good and they are never going to measure it. He
stated he has a lot of business experience and to him it is all about cash flow and is not
about anything else. He stated they can take all these other numbers and put them where
they want to. He stated the worst thing they are missing is the fact that the state
precluded the City from collecting any equipment money for all the equipment that are in
these places, like Bayer and Nachbar where they have all the printing, or whatever they
do out there, or the place where they make mattresses. He stated the City does not get
that money anymore and it kind of takes the fun out of all of it - that other money coming
from the equipment.
ROBERT JACOBS stated he has seen all these other companies come in and out of here,
and Bayer for the second time, and he did not care much for that but it seemed as if they
were pretty clever and has worked out. He stated when he looks at this completed list
and he sees ones like Stag Development down on 75th Street and York Properties. He
stated the City would not have the Holiday Inn coming in if the developers were not
given an abatement.
ROBERT JACOBS stated that TIF business got Kansas City Missouri in trouble. He
stated that he is over in Kansas City, Missouri pretty heavily and it is going to keep them
in trouble. He stated he is not sure what Merriam did, but knows that is kind of his
neighborhood over there and there are two huge brown dirt places that he is not sure they
are ever going to do anything with.
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ROBERT JACOBS stated the only things he has any qualms about are TIFs for
commercial properties, when there are commercial empty buildings. He stated in
general, he has absolutely no understanding of TIFs. He stated he was lost with that
whole TIF thing and Carolyn from the newspaper straightened him out on everything, but
he waded through that swamp and came out on the other side thinking to himself there is
more lost numbers in this thing than Carters has pills and he got lost. He stated it looks to
him like the City is going to build the roads and pay for them and if the deal does not go
through, there is $2 million or $5 million worth of roads, at least that is what it looked
like to him and he does not think the City has the money to spare when they are talking
about $10,000 or $20,000.
ROBERT JACOBS stated the thing that has really bothered him over the years and still
does is the amount of residential development that has just been given for every reason
and these businesses will keep up with the rooftops and that was the theory and is
absolutely true.
He stated he goes down there and looks at the business
accomplishments. He stated the Barton Place was the guy down there and they moved
the Brotherhood Bank to put in a drugstore. He stated these are things that economically
drive. He stated the drugstore moved the Firestone store lock, stock, and barrel.
ROBERT JACOBS stated he is on Medicare and gets in a donut hole around April and it
is no fun to go the drugstore. He stated the drugstores have a goldmine because people
have to have them. He stated CVS is way out there and he was out there the other day
and sees that shopping center. He stated these people come in by choice and not because
they have to be attracted. He stated the market is here and the rooftops are here.
ROBERT JACOBS stated he thinks the City’s tax problem is going to be in the
evaluation of the rooftops. He does not know if it was right or wrong to build so many
homes out here, but the only thing he has always known over the years and mentioned it
years ago, is for every home they build it costs the City a great deal of money. He stated
he is not sure what each home costs the City, but it may be an amount over and above the
amount of taxes are paid on that home.
ROBERT JACOBS stated he does not think the City would have any of the people on the
list, including Bayer, without those abatements - period. He stated he would say
unequivocally, that they would not be here and he is seeing where they are finally paying
off. He stated he would love to tell Charlotte that he thinks he was right. Charlotte, Rest
In Peace. He stated he has been here long enough to see them all come in and out and is
very interested in politics, religion, and economics. He stated that Shawnee really stirs it
up pretty good.
ROBERT JACOBS stated he thinks Shawnee is a really well run city and there have been
no mistakes, but just fiscal things that have happened when they had another city
manager and had some finance problems, but those things happen with cities. He stated
there was a lot of smoke in mirrors back then and that is life.
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FINANCE AND ADMINISTRATION MINUTES
PAGE 18
ROBERT JACOBS stated that the Shawnee City Council has been very open – even
transparent, to use a new word. He stated he thinks the financial condition that Shawnee
is in right now is nothing new to other cities.
ROBERT JACOBS stated Overland Park is not jumping through any hoops right now,
because he lives there. He stated Overland Park promised the people a street
development in the fall and have yet to start it. He stated they seem to be a little short on
money and the ability to build roads, so they are having the same problems as Shawnee,
but just do not talk about it; they are not open about it.
ROBERT JACOBS stated he thinks without the abatements, Shawnee would have never
have had any of these companies come in. He stated all these other 2008 business
development accomplishments come because the business is there, but the other guys
come because they are lured in by those abatements.
ROBERT JACOBS stated Tom Zarda went out there and did the Perimeter Park thing.
He stated he used to get preached to by Charlotte about how that was not the appropriate
thing to do and Ernie Rieke is his partner and he is not even sure if Ernie is still alive.
He stated he drives by there all the time and thinks that was a real well done thing, no
matter what anyone’s opinion was, because the final deal is that these deals have paid for
themselves clearly and they have the cash flow that they would not have under any other
circumstance.
ROBERT JACOBS stated the old building in the back has been there for as long as he
has been alive, the Bluejacket Lodge, and they needed a fire truck. He stated he goes to
the fire house too and that is a complicated business.
Councilmember Goode asked what would have gone in out there without tax abatements.
ROBERT JACOBS replied they would not be there – none of them would be there
because they would be in Olathe or in Kansas City, Missouri. He stated during all this
time when all this was going on, to him, it was a learning experience for everyone. He
stated it was a learning experience for him as a taxpayer and for all of them as a
Governing Body, to learn how to handle these things. He stated this is the final result and
he used to think Jim Martin was just a shovel throwing it around, but he is good, because
it works. It really worked and he is trying to be nice, because he thinks Jim Martin is a
very effective marketer.
ROBERT JACOBS stated they had these fellas come in to the Planning Commission
meeting last night, the Vision Group for the thing out there on Renner Road. He stated it
is going to be a very difficult piece of ground to develop and will be very difficult to get
anything in there without some kind of abatement. He stated it was interesting to hear
them talk about it for an hour and a half last night at the meeting and no minutes were
taken. He stated that he is very familiar with that property because he has a horse out
there at the park and goes out there a lot.
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PAGE 19
ROBERT JACOBS stated he does not think there is any way to measure this and hates to
see them burden the staff with trying to get some bogus number that does not matter
anyway. He stated to him, and he does not have all the governmental answers, it is cash
flow. He stated it is way up and there would not have been any money otherwise and
they would still be out there and Perimeter Park would have probably just been one or
two crummy buildings of some kind. He stated he looks at what Tom Zarda put out there
at Shawnee Crossings and it takes a lot of ump to put something like that in and put it
together.
ROBERT JACOBS stated he looks at the things that have come here and Perceptive
Software which is Tom’s building and the building would not be out there otherwise. He
stated there are a lot of these things that are really proving themselves out. He stated he
does not say much up here, but thinks they should give credit to the people who bring
these things in here and the local people who have done it too. He stated there are some
people who really have some brass in this City who are willing to stick their necks out
there and do the work to bring things to this City by putting together partnerships. He
stated if they make money, then fine. He stated there is a lot going on down on Maurer
Road. He stated all he really wanted to say to the Committee is to look at the cash flow.
Councilmember Sawyer stated getting back to the staff, he appreciates Bob’s comments
and did not bring it up because he is against abatements; that was not his point. He stated
he knows the City gets roughly $2 million a year off these abatements. He stated asked if
the budget is at $58 million.
Finance Director Kidney clarified the budget is roughly $55 to $58 million.
Councilmember Sawyer stated that is $2 million of that total. He stated he brought it up
just because he wanted to know if the City was being able to cover their costs – nothing
more, nothing less. He stated if it is too complicated to find out and everyone is
comfortable, so be it. He stated he can sit there and wonder about it, but thinks it is a
number they should know – whether they are covering their costs because every business
he has been involved in has had to be able to cover their cost, or they did not stick
around. That is the only reason he brought it up.
Councilmember Sawyer reiterated that he appreciates what the staff has brought to the
City thus far.
JIM MARTIN, Shawnee Economic Development Council, introduced John Miller,
Chairman of the Board of the Shawnee Chamber of Commerce and Tom Langhopher,
Chairman of the Shawnee Economic Development Council.
JIM MARTIN stated it has been said that they have been in a recession now for 15
months and he does not doubt it one bit. He stated even at that, he thinks the City had
some good things happen in this past year. He presented 2008 Accomplishments:
Business Developments:
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FINANCE AND ADMINISTRATION MINUTES
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Barton Place Phase 1
Brotherhood Bank
Continental Business Park
K-7 Self Storage
KC BioMediX, Inc.
Nachbar Plumbing expansion
CVS Pharmacy
Family Video Center
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Nill Bros. Sports
Premium Nutritional Products
First Financial Bank
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Harold Payne Plastics (expansion)
VidTroniX
Vistar Corp.
Heart of America Research Institute (expansion)
Impact Design
Walgreen’s
Woodsonia West Retail/Office
J.A.S. Shops/Starbucks
JIM MARTIN stated many of these businesses are ones the SEDC had the pleasure of
working with. He stated it is a pretty significant list of people in the midst of a recession
and they should be proud.
JIM MARTIN pointed out a couple of interest. He thinks the Brotherhood Bank facility,
as well as the new Walgreen’s facility proposed down at 75th and Quivira are both
noteworthy, not only because of who they are, but because they are good developments.
He stated hopefully they will deliver the much needed traffic to that troubled center. He
stated they have had lots of conversations about that center.
Councilmember Straub stated Jim just said the “proposed” Walgreen’s. He asked if it is
definitely happening.
JIM MARTIN answered yes, as they are currently doing the site work. He stated he
hopes it does not take four years to build like the one out west. He stated the First
Financial Bank is interesting, because it is the City’s policy in progress for banks and
other facilities like that to build extra office space. He stated that facility will have 8,000
SF of office space upstairs available to other users.
JIM MARTIN stated KC BioMediX, Inc. is a really interesting company and they could
spend the whole evening discussing it. He stated it is the first company that has
developed from the commercialization of a new technology out of the University of
Kansas. He stated they have developed this technology for premature babies to assist
them in learning how to feed when they are not yet fully developed. He stated it is a
MARCH 3, 2009
FINANCE AND ADMINISTRATION MINUTES
PAGE 21
pretty impressive and interesting application and they may be able to help people in the
future who have speech impediments.
JIM MARTIN stated Nill Brothers Sports is huge for the City and may be about 10 years
overdue and about one-tenth the size it should be, because the City has a tremendous
clientele in Shawnee to use a facility such as this.
JIM MARTIN presented a map of businesses that are “Coming Soon”.
There is
th
Walgreen’s at 75 and Quivira which they still expect to move forward. He stated they
were moving dirt when they were over there the other day for the ribbon cutting
ceremony.
Councilmember Goode stated the bank got out of their way.
JIM MARTIN stated they sure did and they are open as of a couple of weeks, so it is
exciting. A couple of things that stand out and are very exciting for him are both
AIRTEX and Molin Concrete Products. He stated they are like a lot of companies now
that they surveyed and Finance Director Kidney showed the numbers. He stated
manufacturing is hurting right now and both of these are on hold, but they have also both
purchased ground in the area so at least they have that commitment from them. He is
very excited about Wal-Mart and would like to see it get started soon, not because he is a
big Wal-Mart fan, but because of the tax base it will generate.
JIM MARTIN stated TLY Industrial Condos is the York Construction project. He stated
it is the first industrial condo facility being built on the Kansas side of the metro area. He
stated it is like an office condo where a company can come in and buy their space, but it
will be for industrial use. He stated the magic of this thing is that they are flexible and
will lease as well. He stated the preference is to sell them off.
JIM MARTIN stated Fritz’s Railroad Restaurant is another one that has taken about four
years to develop here. He stated it was in 2005 when they opened that file and he is
anxious to see that get started before his boys get too old to enjoy it.
Councilmember Straub asked if it looks like it is actually going to happen.
JIM MARTIN answered yes, it does. He stated he hopes they break ground in the next
month or two, but they need a building permit first.
Chairperson Pflumm asked Jim to give them a better idea on the Wal-Mart.
JIM MARTIN said he believes they are looking to break ground in January of 2010
TOM LANGHOPHER stated they are not giving any clear indication at this time. He
stated they have to have the infrastructure in by April of 2010 and are doing it right now.
He stated they are throwing all kinds of dates out.
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PAGE 22
JIM MARTIN stated things change, literally, on a day to day basis with them. He stated
they were saying before that they could break ground mid year this year and then the
latest they heard was 2010, so who knows.
TOM LANGHOPHER stated his bet would be it will happen some time in 2010.
JIM MARTIN stated the City had some new restaurants come in this past year. He stated
those in Ward III probably know all about Infused. He stated that he understands they
are just on fire with the amount of clientele they move in and out of that place, even on
weeknights. He stated it is more of a nightclub-type of thing because they have live
bands.
JIM MARTIN stated there is no reason Tanners shouldn’t have been there a long time
ago either and finally opened in time for the NCAA tournament last year which was
exciting.
JIM MARTIN stated some other things they were working on throughout the year that
came to fruition, is the City revealed the new brand image. He stated the Council knows
a lot about that already, so he will not spend too much time on it, but the only thing he
would like to say is that he is receiving tremendous feedback from people he deals with
that that was a good brand image for the City of Shawnee and for all their organizations.
JIM MARTIN stated something that is very impressive and something everyone may
have read about in the newspaper but may not know much about it, and something Linda
Leeper, her staff, and the Economic Development division have all worked on, is their
application for accreditation. He stated a lot of volunteers came through with it too. He
stated it is highly unusual for a chamber to be accredited for the first time and receive the
4-STAR designation. He stated it is issued by the American Chamber of Commerce
executives and will raise the City’s credibility and profile in their business, which is good
for what they are trying to do to attract businesses.
JIM MARTIN continued with a couple of new programs they started last year. They did
the Developers Familiarization Seminar, where every April they call in the City
department heads that have anything to do with development and invite in their members
to hear about the development process and what is expected. He stated it cuts down on a
lot of questions that might come up during the development process, hopefully to just
kind of streamline that whole process.
JIM MARTIN stated they started the SEDC Member Roundtable Discussions. He stated
those have been a great opportunity for them to present a presentation much like they are
looking at this evening to talk about current projects, enhance communication between
public and private sectors, and hopefully provide mutually beneficial value between
them, as the City, and Economic Development Council, and their members.
JIM MARTIN stated he feels as if being part of the economic development, he has
benefited as much as their members with any of that.
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JIM MARTIN stated as with any year, they keep track of the number of new inquiries
they get every year. He stated in 2007 they had 168 and in 2008 they had 205. He stated
as he was mapping those out, calculating them, and putting them in a month, in June
things really crashed, both with the prospect meetings, visitations, and with the new
business prospects.
JIM MARTIN stated he surmised it was the presidential election and economy, so he
went back and looked at 2004 and there was a dip mid-year that year, but not nearly as
pronounced at they saw this year. He stated they probably had 40 of those meetings and
visitations in the first six months of the year and only 18 or so since that time.
JIM MARTIN stated he is an ex-officio member of the CERI Board of Directors. He
would say they got 80% of all of their research that they use to attract businesses to the
community from them, so that is an important connection. He stated they have talked
about the eco/devo team and how important it is to have the cities buy in and has really
increased the level of service they can provide to their prospects.
JIM MARTIN stated the Finance team looks at and reviews IRB and TIF applications.
He stated the SEDC represents Shawnee with the Kansas City Area Development
Council and acts as the City’s liaison with the Kansas Department of Commerce, two
important partners in economic development. He stated they are members with KEDA’s
great career development opportunities and legislative lobbying for business-friendly
legislation.
JIM MARTIN stated they have been involved with several ad-hoc short term task forces.
Currently, he is a member of the Advanced Energy Task Force which is being put
together by the Kansas City Area Development Council. He stated it was originally
called the Alternative Energy Task Force, but they switched the name because there is
some existing energy usages out there that can be adapted so it is cleaner. He stated it is
very similar to a bioscience task force he served on three years ago. He stated the
outcomes from that task force manifested itself in this animal health corridor and has
received tremendous press coverage.
JIM MARTIN stated this task force is examining the same types of things; what are
Kansas City area strengths, how can they attract businesses here that are associated with
this new green movement, and alternative energies and advanced energies. He stated
they are looking at the work force advantages, what their existing business base is
composed of, and if there are things they can rely on. He stated there are a lot of people
represented, including scientists from the Midwest Research Institute and other places
like that; it is an impressive group. He stated thus far, they have only had two meetings,
and hope to unveil their conclusions this summer. He will keep the Council posted.
JIM MARTIN stated the only other one that is not covered anywhere else in tonight’s
presentation is the Workforce Partnership Outreach Program. It was a one time thing put
together by the Kansas Department of Commerce and the Kansas Department of Labor
MARCH 3, 2009
FINANCE AND ADMINISTRATION MINUTES
PAGE 24
who formed something called the Work Force Partnership and includes personnel from
each of those departments. They called him in who took people from Perceptive
Software and Bayer Corporation before the recession hit big time and he wishes they had
this problem now, because there were a lot of companies back in October who were
having trouble finding employees. He stated they were looking at ways to attract people
to Kansas and the Kansas City metro area to fill all these jobs and it is really probably not
a big issue now with the current recession.
JIM MARTIN stated they do a lot of external marketing when they can with their limited
budget. He stated last year they attended the Western Veterinary Conference which is
associated with the Animal Health Corridor. He stated they focused on those first of all,
because they have Bayer in Shawnee and get tremendous support from those who attend
all of the events. He stated those guys are the best ambassadors for the City of Shawnee.
They are always open with people about how good the City is to work with, so they have
focused on that because he thinks they have an advantage in that area.
JIM MARTIN stated a prospect that was generated out of last year’s central vet
conference is actually coming for a tour in Shawnee tomorrow to look at a facility for the
possible relocation of 35 employees; he and City Engineer Wesselschmidt will visit with
them tomorrow afternoon.
JIM MARTIN pointed out the Partnerships Consultants Hosting event that took place
about 10 days ago in Los Angeles. He stated the opportunities for that arose because the
State of Kansas is having terrible budget problems. He stated they bought reservations at
places like the Staples Center in Los Angeles to host various events where they invite
consultants in. They bought it at a bulk rate and can not afford all of them now so they
were willing to sell the partnership for one of those events, invite the consultants for
them, and the only message in that meeting was Johnson County and what a great
location it is. He stated they had the full support of the State and had the western region
development consultant on hand so it has been great to take over these events so cheaply
and have it be exclusively a Johnson County partnership-type marketing event which is
very exciting.
JIM MARTIN stated he has said over and over every year when he comes in to give his
report, that real estate developers and realtors really drive every major project that
happens in the metro area. He stated they do a lot of events every year where they
specifically target these people. They try to get in front of them and make sure they are
thinking about Shawnee, not only at formal events, whether it be phone calls or luncheon
meetings, and he counted 45 individual meetings last year over lunch or what have you.
He stated some were with SEDC members, but related to the real estate area and he
thinks it is tremendously important to keep in front of those people.
JIM MARTIN continued with Business Climate Enhancement. He stated there are
several things they have worked on over this past year and some are still ongoing. He
stated with Transportation, the SEDC was not the focal and was more Ron Freyermuth,
Doug Wesselschmidt, and others from the City of Shawnee, but they contributed to a
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brochure that was issued to the Governor’s Ten Year Transportation Plan Task Force. He
stated that Public Works Director Freyermuth did a good job presenting Shawnee’s
desires for future transportation-related projects.
JIM MARTIN stated they talked about a future interchange at 43rd and 47th at K-7. He
stated they talked a little about Johnson Drive and K-7. They talked about 75th Street and
K-7. He stated their thought was with the intermodal facility being built, not right away
but at some point in the future K-7 will be a tremendously important link between I-70
and the intermodel center. He stated they really played up that aspect.
JIM MARTIN mentioned that he and Councilmember Kuhn gave a presentation this past
December to a special joint committee on transportation.
Councilmember Goode asked if people were there from western Kansas.
JIM MARTIN answered yes.
JIM MARTIN stated another thing they have been working on over the last few years,
and it is not so much an issue now because businesses are really not making big moves,
but for 15 years Kansas really had it too easy. He stated Kansas had incentives that
Missouri just could not beat. He believes it was in 2005 when Missouri developed the
Quality Jobs Program. He stated it is a payroll tax exemption that generates a lot of cash
up front for companies that are hiring employees.
JIM MARTIN stated in recent months, Kansas has lost a lot of projects to the Missouri
side and Shawnee is one of them. They lost a company called Symbiotics Corporation.
He stated it came down to North Kansas City, up around by the airport, and a building in
Perimeter Park for the headquarters of this animal health company. He stated pretty
much everything else was equal, but the company selected Missouri primarily because of
their Quality Jobs Program.
JIM MARTIN stated this past summer, with the Johnson County Partnership, they started
putting together a proposal for a plan similar to that for the State of Kansas. He stated in
this past fall, they started building consensus with their friends out west and did not think
a Johnson County program would stand a chance in the legislature, but they were
pleasantly surprised to find out that people in western Kansas were thinking along the
same lines, especially their counterparts who are near a state border, because Oklahoma
has a quality jobs program, along with Colorado and Nebraska. He stated they are
basically surrounded by states that have these types of programs.
JIM MARTIN stated there is a house bill that is actually going through the process in
Topeka. He stated they would not think Topeka would be talking about incentives in a
year when finances are tight, however the Kansas Department of Revenue likes certain
aspects of it and it is easier to track the fiscal impact of a program like that, than the tax
credits they are currently using, so they have that going for them. He stated it is anyone’s
guess at this point, but it could be a tremendous move up for the State of Kansas and
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hopefully Shawnee in competing with Missouri and some of these neighboring
communities.
JIM MARTIN stated they also received news last fall that the legislature had
commissioned a post-audit report on economic development over the last 20 years in the
State of Kansas. He stated the post-audit group determined that economic development
was not overly successful; probably not worth what the State of Kansas has invested over
the last 20 years.
JIM MARTIN stated a group of them from the Kansas Economic Developers Alliance
provided written testimony and a few of them got up and talked about it, about the dozens
of companies. He stated if they just think about it, Bayer Corporation, Perceptive
Software, Ford Motor Company, Simmons Mattress, and Kraft – the State was a partner
in every one of those business development projects and let it be known. He stated that
was a joint meeting of the eco/devo committee and they were very receptive. He does
not think there is going to be any follow-up on the post-audit and thinks the legislators
agreed with them and not with the people with the post-audit.
JIM MARTIN stated a few weeks ago he thinks City Manager Gonzales brought in their
overall goals and program for this year in the City of Shawnee and one part was
economic development strategies. He stated that is what City Manager Gonzales
discussed at that time, where they are as part of the overall program of work. He said he
will not go into any of that since the Governing Body has already heard most of it.
JIM MARTIN stated the first thing they want to do with their brand image, is to update
the websites. He stated part of the reason that is top priority, is because they know for a
fact that location consultants use the Internet to search out communities that might be
good for a business development. He stated they are not looking for good communities,
but for communities they do not want, so they need to make sure they have the most upto-date information on their websites and the site are the most user-friendly.
JIM MARTIN stated with the brand image, their website is stale – he’ll admit it – it’s
bad. He stated they are hoping to unveil the new one within 60 days and will have the
aesthetics representing their new brand image. He stated it will be integrated and revised
content. He stated by integrated he means, there is a lot of redundancy between the City,
Chamber, SEDC, and CVB to some extent. He stated they want to make sure if a
consultant or a company is looking for their tax abatement policy and wants to make sure
no matter where someone gets to it from, whether it be from the City or the SEDC, they
are looking at the exact same information. It will be easier to update that way.
JIM MARTIN stated it is a tremendous nightmare to set up, because in the first place
they have to figure out exactly where all those common areas are going to be, but easier
to update and it will flow better for the end user. He stated that simultaneously, as the
Council knows, the City is redoing theirs along with the Chamber and CVB.
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JIM MARTIN continued with “Steps to “Shovel-Readiness”. He stated they have been
using the term ‘shovel readiness’ for years and now that it is so overused, they will have
to think of a different name. He stated one of the disadvantages that Shawnee has had
over the years, is the fact that they did not have the developers that were assembling the
larger sites. Shawnee has some strikes against them because of fragmented property
ownership or rough terrain and typography. He stated they are trying to examine what
they can do to get them a step closer to make it easier for a developer to come in and
assemble those sites.
JIM MARTIN stated the City staff will take a look at the Land Use Guide, along the
south side of Shawnee Mission Parkway between Woodland and Monticello and
determine the best uses along that area. He stated that area is a great location and they
just need to determine what will go there.
JIM MARTIN stated that will be a future project down the road, probably a multi-year
project but similar to what Overland Park and some of the other communities did with the
Metcalf corridor study. Since Shawnee occupies most of Shawnee Mission Parkway in
Johnson County, there will be some other communities involved and they will want to
look at it long-term. He stated with the downtown program, they have done a lot of
improvements on Shawnee Mission Parkway but there are some tough nuts to crack out
there and maybe there is more they could do in directing future redevelopment to that
corridor. He stated there is a pretty good sized chunk that has yet to be developed.
JIM MARTIN stated the Council authorized the I-435 Corridor Land Use Study, so the
Council already knows a lot about it. He stated the only thing he would say is that from
his perspective, it is a tremendously important corridor for them. He stated in the future,
he sees it as a link between the east and west sides of Shawnee - the established and the
newer. He thinks from that aspect and the aspect of the tax base potential there, it is
huge. He is anxious to hear from focus groups that they plan on conducting with some
property owners and City leaders and developers.
Councilmember Sandifer stated one of the sales pitches from that particular corridor, is
that it is not in the DeSoto School District tax zone and is right outside it in the Shawnee
Mission tax zone.
JIM MARTIN stated they were surprised to find that the Hodgdon site is about half and
half.
Councilmember Sandifer stated the majority of the property will be a lower tax rate for
whoever they build.
JIM MARTIN responded that that is absolutely correct.
JIM MARTIN presented a slide entitled “Future – Holliday Business Park – 43rd and K7”. He noted the orange area and stated it is not controlled by Holliday Sand and Gravel.
He stated they have good buy-in from them who were bought out by Ashgrove Cement
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and are onboard. He stated they met with Charlie Sunderlin, who is onboard with the
plan out there. He noted the orange area which is not controlled by Holliday and includes
about 14 or 15 property owners.
JIM MARTIN stated a couple things they want to do this year, is first bring as many of
the property owners together to let them know what the City has in mind and hopefully
build a consensus with them to work together to establish a price where someone could
buy this easily - a developer for example. He stated they may even have some developertypes who own that.
Councilmember Straub asked when they brought it before the Council, did they already
have an agreement with those people.
City Manager Gonzales answered not that far north, but the part on the south that is not
colored in green on the slide has been purchased by them which is the part they did not
have at the time they came before the Council.
JIM MARTIN stated the other thing City staff is going to look into, is that they have
known that utilities are a hindrance to development down in that area. He stated the staff
will take a hard look at what needs to be done and will get cost estimates. He stated it is
just another step towards ‘shovel-readiness’.
Councilmember Goode asked about the floodplain.
JIM MARTIN replied all of it is 500 year floodplain, but there are developments all over
the City of Shawnee in 500 year floodplains which can be alleviated by building up the
foundations. He stated that is a consideration for some people.
JIM MARTIN stated the SEDC contracted with Jeff Green Partners to do some work for
them – a proprietary study. He stated it has been a little frustrating because he really
thinks Shawnee is a no-brainer for retail. He stated that might not be true in 2009
because no one is a no-brainer for retail right now, but with their incomes and their
growth, it should happen.
JIM MARTIN stated that so far, they have not gotten a lot of traction and he is pleased
that Wal-Mart and Gray Oaks are moving forward at some point and that Shawnee
Station has done well over the past 10 years, but they needed to take it another step to
entice developers into the community. He stated they contracted with Jeff Green Partners
to first of all define Shawnee’s trade area which has been one question.
JIM MARTIN stated most of the information they have are concentric circles radii
around the location. He stated they wanted Jeff Green to determine what their trade area
is, analyze the citizen’s buying patterns, and identify that Shawnee is very sophisticated.
They made mention that Shawnee is very similar to southern Overland Park and some of
the areas in Olathe that have boomed. He is somewhat in agreement of what he has
thought all along and Jeff helped them identify certain types that might be a good fit.
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JIM MARTIN presented a map provided by Jeff Green. He noted within the green line
that goes clear over to County Line and follows some natural and manmade barriers. It
goes up to Leavenworth County and into Wyandotte County as well and is their total
trade area which includes approximately 340,000 people. He noted the blue outline,
which is their primary trade area and includes approximately 117,000 people.
JIM MARTIN pointed out the areas in darker orange and noted they are growing at a rate
of 5 to 7.5% per year, at least they did until the housing bubble. The light yellow areas
would be areas like east of K-7 in Shawnee grows at a rate of 2.5 to 5.0%. He stated
there is a lighter area in Wyandotte County that is growing at 0 to 2.5% per year.
JIM MARTIN stated taking another look at the Shawnee trade area’s household income,
the mauve area is the highest average and household income in those areas is above
$100,000 per year. He stated the orange areas are $75,000 to $100,000 per year average
household income and the lighter yellow areas show $50,000 to $75,000 per year, which
are tremendous demographics for them to tout as they move forward.
JIM MARTIN stated it is proprietary and he had to change his mindset a bit on how they
distribute this. He consulted with a lot of retail developers, ones he could trust, about
how to distribute this thing and it will be somewhat limited. He stated that is because
they want the end developers to a perceived value with this study. He stated the other
thing is that he is worried if it would happen to get into the hands of his competition,
because they do have stiff competition nearby.
JIM MARTIN stated they are going to share it with property owners that are already here
and developers who have proposed projects or are in some certain stage of develop. They
will share it with a group of developers who have not actually done anything in Shawnee
yet, or at least not have taken formal steps, but have expressed strong interest in
Shawnee.
JIM MARTIN stated the recommendation was not to take it directly to retailers, at least
not a lot because retailers are like the office and industrial clients now, in that they are
using consultants too. He stated they might as well save themselves some time and go to
the developers who have a relationship with them and other consulting-type people.
Councilmember Straub asked a question off mic – inaudible.
JIM MARTIN replied it has gone for the time being from Shawnee Mission Parkway and
Maurer Road. He stated there are rumors going around that they are looking at the
Circuit City store that never got occupied, but he does not believe it. He thinks that is too
close, not so much in how the crow flies, but in travel time to the 95th and Quivira store.
He stated there is a new one in Wyandotte County as well.
JIM MARTIN stated Jeff Green on both counts said that he thought Shawnee was a good
location for that type of store, but did not necessarily say. He stated Jeff Green is very
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well known and appears a lot on the FOX business network on TV. He stated Jeff was on
a lot at Christmastime when everyone was talking about retail sales going down. He
stated he actually called him one day because he thought he might want to know for his
study that Circuit City was not going to open that facility, in fact they are closing all their
stores in the Kansas City area. He stated Jeff told him, ‘Just wait, they will close them
all’, and they did within just a few days after that because they filed for bankruptcy.
JIM MARTIN stated one of the things they have talked about for a while, is that they
want to continue to hammer on their big box vacancies and do everything conceivable to
try to find somebody to move into those. He stated they also need to talk about some of
the strip malls that are aged and can use some revitalization. He stated they plan on
doing ongoing contact with the property owners and managers. He stated he has talked to
all of them in the last three or four weeks, so they continue to keep in contact with them.
He stated they are certainly as frustrated as the City – misery loves company.
Councilmember Kuhn stated she knows they are not able to offer the same incentives to
retail that they are able to offer to office/manufacturing. She stated they are able to make
use of the grant program downtown for façade improvements, even if the actual merchant
is retail. She asked if there is some option to incorporate that concept into some of the
City’s strip centers that may need facelifts more than anything else, because one of the
problems with them is obviously when they look old and used, they do not get new and
improved wanting to move in.
Councilmember Kuhn stated they have talked before, as a Council, about what they could
possibly do at a retail center to do anything to move them forward and help attract clients
and that was just something she has been thinking about – is there an option of using that
same style of grant program or some type of similar version, to help façade
improvements on empty retail, without violating the abatements that they would normally
get denied for retail.
City Manager Gonzales responded that the grant program is the City’s, the one
downtown, in that they created it and cash fund it. She answered yes, she is sure there is
a way to structure a program and it would be a matter of how much money they throw at
it. She stated the City’s grant programs downtown, the $5,000 and the $2,000, are
probably six years old now, so how much can they do for that amount of money, but the
City has had great success with those downtown on the smaller storefronts and does not
know if it would be fundable on a larger level.
Councilmember Kuhn asked about expanding out the loan program that they use with the
downtown area to offer some sort of City-backed or very highly competitive interest rate.
She thinks they do a portion of the interest paid back in on that program.
Councilmember Kuhn stated she thinks Chairperson Pflumm mentioned it at a meeting
six months ago and asked what the City can do that is creative – something different. She
stated she has been racking her brain to find something that they know they are allowed
to do, might be completely outside of the box, but might be cost effective. She stated if
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nothing else, would it not increase the value of that property either way and would the
City then be able to recap a portion of that as the valuation increased.
City Manager Gonzales stated that is certainly a possibility.
Chairperson Pflumm responded off mic – inaudible.
City Manager Gonzales stated they talked with the Henry S. Miller investment group
about a TDD concept. She stated their concern was that the City has a hard enough time
getting tenants there anyway, so if they are going to tell them they are going to have a
higher sales tax than anyone else in the City, they would rather see the City abate the
sales tax which is what they ask them to do, which of course they can not do legally. She
stated the TDD is a good tool. She stated TIF is a good tool, but none of them are a real
good fit for these strip malls which makes things challenging.
Chairperson Pflumm asked about the theatres. He stated that he suggested doing a TIF
around six years ago, or at least do something down there to allow them to expand and do
something else.
City Manager Gonzales stated the TIF tool is about blight and they all know the
definition of blight can be very broad. She stated they would have to drastically increase
the tax base in order to create the increment and it is just not a great tool for an existing
shopping center that is not in that bad of shape. She stated Jack is moving forward on
things.
Chairperson Pflumm asked about 75th and Quivira.
City Manager Gonzales stated it is a beautiful center, so the challenge is what they can
really do to help them find tenants - it is really about tenants.
Chairperson Pflumm talked about subleasing and what property owners can do to buy out
of their lease. He stated there are a lot of those guys here in Shawnee – they are all over.
JIM MARTIN concurred. He stated the former Dillon’s lease expires in 2012.
Councilmember Sawyer stated Price Chopper has a lease on it and the property owner
probably does not care, because he is getting his money either way until 2012.
Chairperson Pflumm asked about the Price Chopper on the east side, because he probably
has 4+ years left on his lease. He asked what today’s is dollar with four years worth of
money. He asked what his lease is.
JIM MARTIN replied he does not know exactly, but it is probably about $8.00 per SF.
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Chairperson Pflumm stated it is 60,000 SF. He stated people can buy their way out by
working in another tenant at zero cost; be creative. He stated that is what he would try to
do if he was the guy trying to sell these things.
JIM MARTIN stated he does not want to be too hard on the property owners, but with
having that extra level in there, he does not think they would have any argument from
Dillon’s, HyVee, Price Chopper, or the Cosentino’s Family – any of those folks in
finding a new tenant, but it is just having that extra layer of someone else who has to sign
off on it.
Chairperson Pflumm stated there are some issues out there with the Price Chopper and K7 Highway and that possibly going through there, but if that shopping center is left out of
that Price Chopper, the rest of those tenants are suffering and could be going out of
business.
JIM MARTIN stated that is absolutely correct and some are moving.
Chairperson Pflumm stated the property owner out there is a pretty shrewd guy and
knows what he is doing. He stated he is not going to let that store sit empty for that long,
so anything the City could do to hook him up is what they should be doing.
JIM MARTIN stated he believes Councilmember Sawyer mentioned something about the
lease expiring in 2009, so they will start hearing from them. He stated they have kept in
touch with the Wolpert people for years, but it is true that over the last few months they
are all of a sudden motivated to do something.
Councilmember Sawyer stated they should put a sign on it.
Councilmember Sandifer stated he can probably say right now, and probably if any of
them up on the Council owned one of these buildings that was a $1 or $2 million building
and they have a secure tenant paying that bill and they do not have to put a dime in that
building and are getting a check every month, they are not going to put a tenant in it.
Chairperson Pflumm asked what if the other 60% of that shopping center is empty.
Councilmember Sandifer stated they do not care.
Chairperson Pflumm stated they are not getting a paycheck for the other 60% of the
shopping center.
Councilmember Sandifer stated they do not care.
Chairperson Pflumm stated they do so care.
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Councilmember Sandifer countered no they do not, because their anchor store is bringing
in the most amount of money and chances are they are brining in enough to cover the rest
of the center for their pocket.
Chairperson Pflumm stated they could have a new guy buy out the deal and get a bunch
of new people to sign on.
Councilmember Sandifer stated they can not make people lease their building.
JIM MARTIN stated sometimes like in the case of the east Price Chopper, up until about
two months ago the grocery store building and the rest of the strip center were actually
under two separate ownerships. He stated someone just bought the entire thing and they
are good to work with and he feels as if they just might make some headway there.
Councilmember Kuhn stated just to be somewhat fair to the Price Chopper on her end,
while they did move into the other one and are doing business, they are using the building
that they are renting that is currently being used as storage space for the other grocery
store. She stated while they are paying rent on that store, if they were not storing stuff
there they would be paying rent somewhere else, while it might be cheaper, would be
more work to them. She felt it necessary to make that comment, to be somewhat fair,
because the building is not completely empty, although it is not helping any of the
merchants on the other end or benefiting the City.
Chairperson Pflumm stated all he is saying, is that Jim Martin has to be the guy who
brings everyone together - both the owner and the new tenant and Jim has to get them
hooked up somehow to help Shawnee get some sales tax.
JIM MARTIN stated that is absolutely one of the things they want to do – convene some
of those kinds of meetings and get people together. He stated there are also possibly
some creative reuse options out there. He stated they have examples here already like 24
Hour Fitness and Power Play. He stated Burlington Coat Factory was a backfill as well,
but more of what they kind of expected for hoped for – another retailer to go in.
JIM MARTIN stated there are opportunities out there and one of the things Jeff Green
told him was that the Price Chopper at Pflumm and the one out west should be easier to
backfill than the HyVee and Dillon’s on Quivira, because of the differences in the
amount of traffic and the fact that Westbrook is pretty close to the Oak Park Mall area
and is faster to get there with the Quivira bridge.
JIM MARTIN stated these are things to think about as they move forward.
JIM MARTIN stated that City Engineer Wesselschmidt put together a wonderful map of
the retail centers in the area. He stated in case the Council is curious, right now
Shawnee’s vacancy rate is 12.1%. He stated Johnson County’s as a whole is 9.1% and
the Kansas City metropolitan area is 9.9%. He stated the north Johnson County
submarket, which includes most of Shawnee, is 8.9%. He stated as they were talking
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about this the other day, City Engineer Wesselschmidt said something interesting, in what
would happen if one of the big boxes got filled. He stated if that happened, their vacancy
rate would go from 12.1% down to 9.8% if they only filled one of those big boxes.
JIM MARTIN stated 12.1% is not good, but it certainly could be worse. He stated it
could be pretty easy to get farther down the road and get them more in line with what the
rest of the metropolitan area is experiencing.
JIM MARTIN stated the residential marketing task force is kind of the same phenomenon
that he has experience on the commercial real estate side in having a hard time getting
realtors and developers to look in this area. He stated it turns out that the residential
industry has experienced that very same type of challenge.
Councilmember Straub stated that is surprising to him, because he thought there were
building permits going out of here like crazy.
JIM MARTIN replied not anymore – unfortunately. He stated what they did, especially
at this time when they are seeing a lot of home developers having to sit on a lot of vacant
inventory, so the time is right. He stated they formed a task force and their first meeting
was with the Kansas City Regional Association of Realtors where they went in and City
Manager Gonzales gave a nice presentation on Shawnee. He stated they had another
meeting in December where they invited realtors who are high producers from the north
Johnson County area to get some of their feedback.
JIM MARTIN stated they have another meeting coming up next week where they are
going to talk to the relocation directors from ReMAX and Prudential Kansas City and
Reece and Nichols. He stated there are seven people coming in next week and all they do
is work with corporation relocations where they work with numerous people.
JIM MARTIN stated he thinks the realtors and their clients will be pleasantly surprised
when they look at lots that actually have trees and hills on them.
TOM LANGHOPHER stated he thinks one of the keys to that is not just focused on the
new, but should be equally focused on the existing residential.
City Manager Gonzales added that, and all the price points.
JIM MARTIN stated they put together a wonderful presentation and he is sure the
Council could look at it.
Chairperson Pflumm stated one thing they looked at a couple years ago was incentives to
get people here. He stated they talked about Bayer and how they got their people to
relocate to Shawnee, Kansas for their corporation. He stated if they provide type of
incentive and knows Wyandotte County is buying trash for three years, but Shawnee
could provide some type of incentive, either on their property tax bill or some other type
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of program. He stated he would be greatly in favor of doing something like that and
would like Jim to come up with something.
City Manager Gonzales stated one of the comments they heard from one of the groups is
if people just knew about Shawnee they would love it and once they get people here they
never leave. People buy their next house here and their next house. She thinks a lot of
what they need to do most, is just spread the word and tell the story. She stated they have
been very well received by all the groups.
City Manager Gonzales stated one comment that was interesting to her, was from a
person who said that she sold houses in western Shawnee to several different medical
professionals because they are an equal distance from three main hospitals where those
particular doctors work. She stated every time the staff picks up those pieces of
information, they plug them back into the presentation to try to maximize any kind of
asset they have.
JIM MARTIN stated the final phase, as they are revamping their websites, is one thing
they heard over and over again was to set up some place where they can find all the
information they need, i.e. contacts at the school districts, and make it easy to find. He
stated as part of their websites, there will be integrated locations where people can get to
it from the Chamber site or the City’s site and people can find out the important
information they need if they are considering relocating to Shawnee.
JIM MARTIN stated downtown Shawnee is always an important emphasis. He stated
this is really part of the bigger program that the Shawnee Downtown Partnership and
Planning Department are working on. He stated with regard to actively promoting
downtown incentive programs, the City has had tremendous success downtown and he is
so very proud of that. He stated over $35 million has been invested there over the last 67 years. He stated to tell the truth, those projects were the easier ones to do and they are
getting to the point now where they are either working with property owners who do not
want to do anything or it is difficult to assemble properties, or whatever the case may be.
JIM MARTIN stated they developed a list of 250 realtors who specialize in retail and
office brokerage. He stated Julie Hurley put together a very nice presentation that they
plan on sending out to each and every one of those 250 realtors and are doing it soon.
JIM MARTIN stated another thing they have done that has been tremendously successful
is when they created the sliding scale so office was eligible for a higher level of incentive
than other types of developments and higher level of investment – that type of thing. He
stated they have been very successful with a lot of medium and smaller sized offices. He
stated as they continue to think in terms of the fact that there is limited ground left in
Shawnee, it is green not to do sprawl too much so maybe it is time to start thinking about
building up more than out.
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JIM MARTIN stated they always try to encourage people to thinking towards a two story
facility, but if there is another way where they could possibly start encouraging people to
think along those lines, that may be what they should start to do.
City Manager Gonzales stated she thinks that is one tool they have, because it gives Jim
and her and Doug, when they are out talking to people, a commitment from the Council
that they know the Council will support that if they brought something to them and sends
a good message. She stated this does not stand alone and they would hope to incorporate
this into some of the planning tools they are already doing like the I-435 corridor study
and the 43rd Street utility study, and they would be able to put a package together for
someone, go out and meet with them, and say if they would build a three or four story
building, even higher and it would be an even higher abatement level, so this would just
be a modification to their current template.
City Manager Gonzales stated the philosophy when they all came up with this together,
was to identify what they really wanted and then incent it. She stated the staff felt at this
point, the 3+ story, for the reasons mentioned earlier by Jim, is very important and to add
the extra column with a little higher incentive level for that type of structure would be a
good change.
JIM MARTIN stated they talked about limiting the program and initially talked about
two years, but with the economy the way it is now, he has recently been saying that
maybe three years might be a better time limit on it and then they can reexamine it at that
time.
Councilmember Kuhn asked if they are going to reexamine any of their guidelines, as far
as requirements for that, things like water, parking spaces, curb - etcetera. She stated as
they go up, things change and that same piece of land might not support something. She
stated she always knows that impacts things and would ask if that might change anything
with the City.
City Manager Gonzales replied it is not directly tied to that.
Councilmember Straub stated it does - the parking and stuff to know how many leasing
square feet they have and if they need more parking spaces.
Councilmember Kuhn stated if she has “X” space and the City wants them to make it
three stories that is all good and well, but asked if she only has so much space what will
she do because it will not work.
Councilmember Sandifer stated a lot of them would work with shared parking to some
degree.
City Manager Gonzales stated that is certainly possible, but one of the other projects in
the staff’s strategic work plan this year, is Planning Director Chaffee’s and City Attorney
Rainey’s complete update of the City’s zoning ordinance to incorporate sustainable-type
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deals which would definitely deal with parking, less parking, less asphalt, and more green
areas. She stated that is a good thing to think about as they think about this incentive - to
make sure their right hand knows what their left hand is doing.
Chairperson Pflumm stated agreed with Councilmember Kuhn and said it is actually one
of the things he brought up years ago.
City Manager Gonzales stated they try to tell the retailers not to build the big parking
lots, but she thinks they need them.
Councilmember Sawyer stated he has to weigh in here, because it gets right back to what
he originally asked for. He stated they are going to up the percentage they are going to
give away, but are not sure they are covering their costs. He stated the first one has to
coincide with the second one. He stated fine, they will give away more and will get more
in here and the tax valuations go up and the City gets less tax dollars and they might or
might not be covering their costs.
Councilmember Sawyer stated before he would support something like this, he would
have to see for sure if they are covering their costs. He stated everyone can sit there and
say they are not hiring anyone and not doing this or doing that, but yes, they are – they
are doing things that has cost to it and they should be smart enough to know whether or
not they are covering their costs. He stated he is not against tax abatement and not
against moving it up, as long as they are covering their costs.
Councilmember Goode asked how Lenexa is building those multistory buildings out on
95th Street.
JIM MARTIN replied that was a TIF district. He stated it was his understanding because
of the terrain out there, TIF was a better case.
Councilmember Goode stated those are nice buildings.
Chairperson Pflumm asked for the square footage on that.
JIM MARTIN replied he would say around 160,000 SF. He stated there are two
buildings and they are both in that range and he can get those numbers for the Council.
Councilmember Sawyer stated they are probably bigger than 160,000 SF, at least the one
on the north side.
Chairperson Pflumm asked Jim to give an estimate on the amount of sales tax money the
City loses from those big box stores. He stated if they just would take a 60,000 SF
facility now that the City has sales tax in, and granted will not do as good as they are so
knock it back at a discount of 20%, and that is the amount of money that the City of
Shawnee loses times (X) six or seven. He asked how many box stores do they have
empty at this time.
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City Manager Gonzales replied they have four.
Chairperson Pflumm stated he thinks the Price Chopper has been empty for 100 years.
He stated when he moved into this house the thing was empty and he has lived there for
nine years.
City Manager Gonzales stated it was empty before she came to Shawnee, so she would
probably guess it has been vacant since around 1997.
Chairperson Pflumm stated that is 10 years worth of incentive money and if the City of
Shawnee got something in there, that would have been 10 years worth of sales tax money
and they lost out on that money. He asked for a rough estimate.
JIM MARTIN stated they could come up with a number of something like $250.00 per
SF sales, although he is not sure that is realistic.
Councilmember Sandifer asked Chairperson Pflumm before he wastes the staff’s time,
what good is this going to do unless he is planning on trying to get the City to buy out
their contracts so someone else can rent the building.
Chairperson Pflumm stated he is not saying that. He stated he is not going to waste
anyone’s time. He stated what he is looking for here is the amount of money that the
City is losing.
JIM MARTIN stated it would probably come to quite a bit.
Chairperson Pflumm stated they are losing hundreds of thousands of dollars a year on
sales tax.
JIM MARTIN replied easily – yes.
Councilmember Sawyer stated it is probably not that kind of money.
Councilmember Straub asked how much the City gets each year on sales tax from a
grocery store – say a Price Chopper.
JIM MARTIN replied he is not privy to those numbers.
City Manager Gonzales stated those are not public numbers, but the staff could come up
with a square footage estimate and take it times the square footage – that will not be a
problem.
Councilmember Straub stated Wal-Mart will bring in a lot of money.
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Councilmember Sawyer stated that is true, but that is also several hundred thousand
square feet more.
Chairperson Pflumm stated all he is saying is that the City is losing out if they do not do
anything. He stated as long as all of them are aware that the City is losing money as long
as they do not have anything in there, then fine.
Councilmember Sawyer stated that only equates if they put something in the box store
that is going to generate that type of sales tax.
Councilmember Kuhn stated maybe that would be like what they talked about earlier, in
that maybe there are some incentives for the façade. She stated maybe the new store they
can bring in, they use that difference and maybe the City fronts the money, but they sign
that 15 year lease and they redo their tenant finish for them.
Councilmember Sawyer stated he is not sure they can do that. He asked City Manager
Gonzales when they did the redevelop for the downtown district, the State had some
input on the requirements.
City Manager Gonzales stated with the neighborhood revitalization, it is a statutory
authority to establish that kind of district and they have to get the permission from all the
property tax entities within that district.
Councilmember Sawyer stated they cannot just willy-nilly go out there and say they are
going to do 65th and Quivira.
City Manager Gonzales stated there has to be an increment of increase to the property tax
base for an NRA to be effective. She stated obviously they could improve the look of the
center and increase the tax value of it, but how significant she is not sure. She stated the
NRA is probably not a great tool for strip malls.
Councilmember Sawyer stated he would also say that while these big box stores are
glaring to Shawnee, they are not the only city with this same problem.
Chairperson Pflumm stated they have had a bigger problem than any other city in
Johnson County for a number of years in this category.
JIM MARTIN stated he is not sure if they do or not and just thinks that theirs are just all
bunched together.
Chairperson Pflumm stated Shawnee has 12% while the other cities have 9%.
JIM MARTIN stated that is true.
Chairperson Pflumm stated Shawnee is bringing down the average, because overall it is
around 8%, so they have to be at 6% if Shawnee is at 12%.
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JIM MARTIN stated Shawnee has such a small portion of the retail space in Johnson
County.
Councilmember Sawyer stated he could give a good example of the huge Dillon’s store in
Olathe that used to be occupied, but is now empty. He stated Price Chopper and Dillon’s
made the deal and Price Chopper bought it, but decided they were not going to open
some of them.
Councilmember Sandifer stated the Wal-Mart over by JC Penney’s Outlet is getting ready
to shut down.
BREAK (9:12 p.m.)
MEETING RESUMED (9:17 p.m.)
City Manager Gonzales stated if there is a motion to recommend the Council approve the
revision to PS-21, the staff is actually looking for a motion this evening, if the Committee
chose to do so.
Councilmember Straub, seconded by Councilmember Pflumm, moved to recommend the
Council approve the revisions to Policy Statement PS-21, IRB and Property Tax
Exemption Policy. The motion tied 2-2, with Councilmembers Pflumm and Straub
voting aye and Councilmembers Sawyer and Sandifer voting nay.
2.
END OF YEAR FINANCIAL UPDATE.
Chairperson Pflumm stated that this is the first meeting of the 2010 Budget Process. Staff
will present an overview of the City's financial position as of the end of 2008.
Finance Director Kidney stated he ran end-of-the-year financials for all the funds. He
stated the summaries are in front of the Committee and he will point out some interesting
things this evening.
Finance Director Kidney stated the staff recently met with Johnson County Appraiser,
Paul Welcome, who allowed him to update what he felt was the evaluation for their
estimates. He stated they started in January of this year the staff met with Mr. Welcome
who had gone over some information and led them to believe that it looked like a 4%
drop in valuation over last year.
Finance Director Kidney stated the Committee should remember that part of their
assessed valuation are three major areas in real estate with residential, commercial
farmstead, agriculture, vacant, and not-for-profit, but the big ones are residential and
commercial. He stated commercial, of course, again is based on a 25% valuation. He
stated in taking in all these numbers there is a 1.3% drop in appraised valuation. He
stated with commercial, it looks like a -1% drop.
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Finance Director Kidney stated from this amount it all comes together to about a 1.4%
drop from $684 million last year to $674 million of assessed valuation. He stated the
other two pieces of the valuation are personal property that businesses pay on machinery
and equipment and residents pay for boats and other equipment.
Finance Director Kidney stated the City had about a 20% drop from two years ago to last
year. He stated he really does not have any basis, other than to say that he just rounded
down to a 25% drop. He stated it could be low, but truly really they have no idea.
Finance Director Kidney stated the State assessed utilities are the other component, like
KCP&L, for the valuation of the infrastructure they have within the city limits. He stated
that also appears to be dropping and he estimated a 10% drop for them, but reminded the
Council these percentages are all preliminary. He stated when they take all those
together, he came up with an estimate of -2.7%. He stated it was -4% and plumped it up
to -2.7%.
Finance Director Kidney stated looking at things from last year, when they met with Mr.
Welcome this time last year, this amount was actually a 2% increase and by the time the
year was over their valuation actually dropped, so over the last couple of years they have
gone from a 9% increase to last year where the City had the first decrease for years and
are looking at a negative number this year.
Finance Director Kidney stated the calculation for the CIP purposes, they used the -4%
number, but have gone to -2.73% which is better than -5%, but did not make a huge
impact. He stated he can make that information available to the Council and send it to
them.
Finance Director Kidney stated he would now get into year-end financials. He pointed
out that Chairperson Pflumm had asked last week about not just the revenues year-end,
but maybe to get a little idea about the future. He stated he just wanted to point out that
at year end, they had budgeted 27.9% as revenue for the end of the year. It came up to
27.6%. He stated if they look at budget Actual for everything other than taxes, they are
right on track from the revised budget; license permits, service charges, fines, and
interest. He stated interest was off somewhat, but they will see all through his fund
forecast, interest was all over the board from what he expected. He stated in the General
Fund, unfortunately it was down quite a bit. He stated other than those items; the only
place they were off from their revised budget was under Taxes.
Finance Director Kidney stated on the Expenditures side of things, they had Revised
budget to $29.9 million from the original budget. He stated by the end of the year they
had actually dropped the actual expenditures to $27.5 million. He stated if they look
department to department, across the board, they are down. He stated a lot of it was
because of the freeze in hiring for replacements, but there was also a lot of capital that
was originally in the budget that department heads did not purchase.
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Finance Director Kidney stated he will say there was something like a $300,000 savings
in fuel. He stated they budgeted it up, ramped it up, but then it went down. He stated
they would hope to see that partially in 2009 as well.
Finance Director Kidney stated at the end of the year they expected a fund balance of
$9.3 million. He stated where it gets somewhat confusing is at the end of the year,
because they also made the transfer from the Employee Benefit Fund into the General
Fund of $3 million. He stated overall, just in the General Fund, he would like the
Council to focus on the fact that the staff had expected hitting funds balances by $2
million, but actually increased the fund balance by about $100,000 at the end of the year
and that was mostly on the expenditures side. He stated obviously on the revenue side,
they were under about $300,000.
Councilmember Straub asked how they have an estimate in 2009 where they are gaining
$9 million in taxes.
Finance Director Kidney replied it is all about the transfer from the Employee Benefit
Fund. He stated they closed the Employee Benefit Fund into the General Fund. He
stated they talked about this last year and it is always going to be confusing going into the
future, just because it is hard to compare apples to apples.
Councilmember Straub stated the City is spending $10,000 more according to the
General Fund.
Finance Director Kidney stated it is all property tax – basically. He stated the Employee
Benefit Fund is mostly funded through the property tax, so that is how they were able to
bring their percent of revenue up to the 30%. He stated that was what they were aiming
for as shown at the bottom of the chart – a 30% fund balance by the end of 2009.
Finance Director Kidney stated because of that basically $2 million turnaround from
lowered expenses, if revenue stays somewhat where it is today and the expenditures stay
where they were in the original 2009 budget, they could potentially end the year at 37%
of fund balance. He stated the problem is going into 2010, so that is why he also shows
the 2010 column on the chart, just for discussion purposes. He stated it is really too soon
into the process to get too much into it.
Finance Director Kidney stated with the 2.7% drop in valuation, plus the sales tax being
dropped, they can see the tax revenue is actually projected to go down this year. He
stated plugging in 3% on the expenditures side, they are then right back where they were
as part of the 2009 original budget – basically as they talked about as a structural
imbalance. He stated that is the big picture for the General Fund and they have a lot of
work to do, even before they come back the first part of April to start the budget process.
Finance Director Kidney continued by stating if they focus a little more on the General
Fund tax side, they will see property tax, as Councilmember Straub indicated earlier, and
there is a big difference on the property tax side of the $4 million versus $10 million. He
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FINANCE AND ADMINISTRATION MINUTES
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stated that is basically the Employee Benefit Fund being merged in there. He stated they
then see the property tax dropping in 2010, as he talked about earlier.
Finance Director Kidney stated sales tax is pretty self explanatory if they read across the
numbers. He stated they are obviously down, especially the City option. He stated at the
end of November, they were cautiously optimistic and at 7% over in November from the
previous November, but it just bottomed out and dropped all in December with the
numbers they received just a couple days ago.
Finance Director Kidney stated they expected Use Tax to be down.
Councilmember Sawyer stated they did not just expect it to bottom out. He asked what it
was off – percentage-wise. He stated they need to be careful how they toss some of these
figures around for the press.
Finance Director Kidney stated it dropped $350,000 out of $8 million.
Councilmember Sawyer stated that is less than 1%. He stated if they say ‘bottomed out’,
then everyone will be selling stock tomorrow morning.
Councilmember Straub stated they already area.
Finance Director Kidney apologized if his terms offended anyone. He stated by taking
the same percentages across, the 2009 flex of 1.5% increase over Actual 2008 is probably
overly optimistic, so those are things they are really going to take a close look at over the
next couple of weeks. He stated at the end of the day, they are looking at about $31.5
million in revenue, as opposed to $31.8 million in revenue that was originally budgeted.
He reiterated that it is really very early in the process to dwell too much on that.
Finance Director Kidney moved on to the Public Safety Fund. He stated the only thing to
really point out is on the expenditures side. He stated expenditures came in quite a bit
lower than expected which is primarily because they have not started the lease payment
on the fire trucks they talked about earlier this evening. He stated that is basically where
the fund balance is now, because of the Public Safety Fund.
Finance Director Kidney moved to the Employee Benefit Fund. He stated he just has the
two years Actual plugged in there. He has Budget 2008 and Actual. He stated they were
under budget on the expenditure side of things, so instead of transferring over $2.6
million in the General Fund, they were able to transfer $2.9 million, so the staff is happy
with that going into the year.
Finance Director Kidney continued with the Special Narcotics Fund. He stated they had
more drug tax by about $10,000 and he does not have any more comment.
Councilmember Straub asked if the Employee Benefit Fund is no longer and just a
portion of the General Fund.
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Finance Director Kidney replied it is now included under each department’s employee
benefit cost within their department. He stated in the past, that cost was in a separate
fund.
Finance Director Kidney continued with the Special Highway Fund. He stated they
ended the year with a little better fund balance, so as those go into next year they will
take that into account. He stated he still really does not have a handle on what is coming
out of the State budget for the 2009 Revised budget for the State Gasoline Tax. He stated
there is a 6% cut in his figures, but what it actually ends up being is still a little early to
say. He stated the increase in the fund balance is directly related to the fact that the City
did not do the full blown mill and overlay they had originally discussed. He stated
instead of ending the year with $125,000, they ended the year with $139,000 in that fund.
Finance Director Kidney stated the Special Parks and Recreation Fund is funded
primarily through the alcohol taxes. He stated Shawnee did real well with alcohol taxes
last year. He stated it shot up to $240,000 from $180,000 that he had originally
anticipated. He stated that he kept the budget and revised budget at the $180,000. He
stated again, they are not sure if part of the State budget is going to stay in there or not,
but if it does it will obviously impact this program which is primarily designed around
the Shawnee Town capital expenditures.
Councilmember Sandifer asked if that is one the State has talked about killing.
Finance Director Kidney answered yes. He stated it is $240,000 just in this fund and this
represents one-third of those tax dollars, so they are talking about quite a bit more.
Finance Director Kidney stated another thing of note is the first year of donation of
$100,000 from the Deffenbaugh Foundation. He stated he has included that in the 2009
Revised numbers.
Finance Director Kidney continued with the Special Alcohol Abuse Fund, which is
another one-third of the dollars. He stated it is the same situation. He stated they have
changed around a little bit and thinks they have talked about the D.A.R.E. officers were
previously funded out of this fund. He stated they really have not talked too much about
what the use of this fund will be in the future. He stated it is again one of those things
where they want to wait and see what is going on with the State budget. He stated if the
money goes away, obviously it will change the dynamic. He stated there is about
$97,000 in that fund balance at the end of this year that would be able to provide at least
the health services. He stated the City provides the funds for health services, about
$30,000 a year and that would theoretically keep that going for a couple years if the
revenue went away.
Finance Director Kidney moved to the Special Parka and Recreation Fund. He stated that
was the fund that had the County special sales tax in it. He stated starting in 2009 with
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FINANCE AND ADMINISTRATION MINUTES
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the Public Building Safety Tax from the County, or the jail tax, now the City’s portion is
going into the General Fund.
Finance Director Kidney stated the other part is the park impact fees that they will see
when they get a building permit. He stated at the end of the year they are at $48,000,
where they had anticipated $100,000 which was on track up until the middle part of the
year. He stated he went ahead and lowered the 2009 Revised budget and the staff will
look at that further. He stated it is makes $40,000, he thinks they will be pretty happy.
Finance Director Kidney stated the last of the east aquatic improvements are in there and
obviously they need to look at this fund because of the drop in the park fees and come up
with other options on the anticipated expenditures.
Finance Director Kidney stated the revenue is up in the Convention and Tourism Fund.
He stated the Council increased the percentage from 4% to 5% on the hotel tax. He
stated that went into effect in November and December, so that directly resulted in an
increase at the end of the year of $327,000 versus the $288,000 they had expected.
Finance Director Kidney stated on the expenditure side of things, it is somewhat
interesting to note that they were unable to transfer the full $123,000 from this fund to the
General Fund, because at the end of the year they truly ran into a cash flow issue with
this. He stated the $76,000 fund balance shown on the chart was the payment they
received in January from the guest tax that was paid in the quarter before, so they are at
the point now where they have the budget authority, but just did not have the cash flow in
there at that time. He stated that is why they only paid $110,000.
Finance Director Kidney stated if the Council will look in the 2009 Revised budget, it
shows this fund paying the General Fund back for an additional $13,000 that was not able
to be transferred in 2008. He stated the staff did work with the Convention and this year
with Wonderscope, to make sure they were funded before the General Fund was
transferred.
Finance Director Kidney moved to the Parks and Pipes Fund. He stated the expenditures
on the Parks and Pipes Fund, as with most of these funds, are very project oriented. He
stated the expenditures actually take place in another fund at the end of each month. He
stated that fund is zeroed-out with the transfer from this fund, so it is all related to the
timing of the construction projects. He stated it is sales tax funded from Parks and Pipes
and it is the same percentage drop, but a smaller dollar figure than seen in the General
Fund.
Finance Director Kidney stated taking this forecast on out will have an impact on the City
– obviously. He stated that is one of the things that the staff will have to sit down and
talk about with the Public Works Department and the Parks Department and talk about
what kinds of projects they will move around when they bring the financial forecast back
before the Council.
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Finance Director Kidney moved to the Cemetery Fund. He stated he believes the City’s
sexton had talked to the Council about this a couple of weeks ago and it is pretty much
explained on this chart. He stated most of the columbarium was completed in 2008. He
stated there are some finalization things that were funded in 2009, so they see the 2009
Revised budget including those dollars. He stated this fund ends the year with a fund
balance.
Finance Director Kidney moved to the Stormwater Utility Fund. He stated the primary
thing to point out with this fund is that the stormwater utility tax came in at the same rate
they expected. He stated the expenditures were quite a bit less and directly attributable to
not doing some of the projects last year. He stated they ended the fund balance at about
$1 million more than what they anticipated.
Finance Director Kidney stated these revised budgets have not been reviewed by anyone
else, so he has not worked with the departments on any of this and just wanted to get
something up before the Committee to give them some sort of an idea of where they are
on these projects. He stated what the Council sees in a couple of weeks will probably be
quite different.
Finance Director Kidney stated the Public Safety Sales Tax Fund is a fund that they
currently use to pay the debt back for the justice center project. He stated this is one
thing that is directly related to the sales tax rate, so as the sales tax has dropped, it is
something they will definitely have to look at. He stated the staff will have some fund
balances carrying that forward because the project did come in less than anticipated, so
that fund balance should carry the City over several years, but is something they need to
keep a close eye on.
Finance Director Kidney stated the Neighborhood Revitalization Fund is a fund where
10% of the abatements the City gives out are reimbursed back for property owners within
the downtown area, plus a transfer from the General Fund. He stated a real big item to
note is that the City’s expenditures were quite a bit less in here than anticipated, so that is
why they carried forward a $47,000 balance instead of $10.00. He stated this should be
able to allow the City to transfer less next year, depending on the downtown plans this
year.
Finance Director Kidney wrapped up with the Debt Service Fund, which they talked
about the long term forecast a couple weeks ago as part of the CIP. He stated it is very
similar again to what they talked about with the General Fund. He stated property taxwise it really hits the City in 2010 dropping from $6.5 million in property tax to $6.3
million. He stated it could have been worse if it was -4 instead of the -2.7.
Finance Director Kidney stated it looks like the City has a real healthy fund balance
going through to 2010, but when the debt starts hitting for some of the other projects they
have in the works right now, as they showed the Council a couple of weeks ago, the long
term forecast is not in balance. He stated that is an item the staff and Council will have to
work pretty hard on over the next couple of months.
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ADJOURNMENT
Councilmember Straub, seconded by Councilmember Sandifer, moved to adjourn. The motion
carried 4-0, and the meeting adjourned at 9:44 p.m.
Minutes prepared by: Cindy Terrell, Recording Secretary
APPROVED BY:
_____________________________________________
Stephen Powell, City Clerk