Archive for Thursday, September 20, 2007

City council to consider EngineeredAir abatement

September 20, 2007

The De Soto City Council will consider a tax abatement Thursday for Engineered Air's plant expansion.

Construction started at the site of the 100,000-square-foot building last week, which will add an estimated 175 employees to the company's work force.

Earlier this year, the council approved a tax abatement policy that set the rate of write offs for qualifying companies for 50 percent for 10 years. However, the council agreed to consider more for existing companies, those companies listed in the city's targeted industry study or within areas the city wants to encourage development.

The abatement package proposed for Engineered Air does go beyond the base policy. It would provide a 100-percent abatement of $1.7 million structure for the first three years before dropping to 50 percent for seven additional years.

De Soto City Administrator Pat Guilfoyle said Engineered Air's willingness to improve the appearance of the structure's façade and other concessions in the planning process contributed to the recommendation the abatement be improved.

At the proposed abatement rate, Engineered Air would pay an estimated $31,160 in taxes in the fourth year of the abatement with $16,727 going to De Soto USD 232 and $6,308 owed the city. A total of $239,000 of taxes would be paid during the life of the abatement with the school district receiving $128,000 and the city receiving $48,000.

Engineered Air also is paying $76,000 in development and building fees to the city for the project.

At the abated rate, the taxes the city would receive from Engineer Air the next 10 years is roughly equal to that paid by seven new homes in the Arbor Ridge subdivision during that same period, Guilfoyle said.

The abatement was challenged at a city council public hearing on the issue earlier this month. Dianne Lavenburg said with the highest sales tax rate in the state and a high property tax rate, the city should reconsider its abatement policy. The city should use abatements to attract new industry and not award them to existing companies, she said.

The company's expansion would create a demand for additional city services that residents would have to pay for, Lavenburg said.

Mayor Dave Anderson defended the abatement, noting that the city was abating taxes it doesn't now receive. He also noted the city wasn't writing off all the taxes on the expansion.

Finally, Anderson said the city would receive all the taxes owed from the expansion when the abatement ended. That would not have happened had the incentive not been available and the company looked elsewhere, he said.

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