Abatements about to pay off for city
After listening to a report from De Soto City Administrator Pat Guilfoyle on the city’s financial status at the start of the 2010 budget preparations, Mayor Dave Anderson was intrigued about the part of the report that looked forward to the early years of the coming decade.
Guilfoyle concluded his report with a summation of the $38.9 million of appraised valuation on De Soto properties currently subject to tax abatements. The large majority of those abatements, Anderson quickly estimated $30 million worth, would expire from 2010 to 2014.
The abatements were on a spate of development in De Soto in the early part of this decade. It includes construction or expansions of Custom Foods, Huhtamaki Americas, Intervet and Rehrig Pacific.
“When you talk about diversifying the tax base, that’s how you do it,” Anderson said.
The first abatements to sunset are a 50 percent personal property abatement on Huhtamaki American equipment in 2010 and a Custom Foods’ abatement on personal property and building that currently exempts 55 percent of their value. In 2011, A Rehrig Pacific abatement on 50 percent of its De Soto factory and equipment will expire. Intervet Inc.’s 75 percent abatement on its buildings and properties ends in 2014.
The other two active abatements apply to the recent addition and expansion of Engineered Air and the first of those sunsets in 2018.
Even with the continued depreciation of the companies’ equipment, the end of the abatements will have a noticeable effect. One key reason is that commercial property is assessed for taxation at 25 percent of its appraised value as opposed to the 11.5 percent of residential property. At that rate, the $30 million slated to be placed on the tax rolls the next four years, will have an assessed valuation of $7.5 million, which would equal 7.8 percent of the city’s 2008 total assessed value of $59.2 million.
At last year’s city fire mill levy rate, the additional assessment would have been worth $205,000 in revenue to the city.
Anderson gave credit to past council members and mayors who approved the tax abatements. He singled out Councilman Tim Maniez, who is the only council member now the council who served when the abatements were approved. Maniez is not seeking re-election and leave the council next month.
The report, taken from the Johnson County Appraiser’s Office annual report, shows De Soto to be one of the top five cities in the county in the county in the number of tax abatements and their assessed valuation worth. De Soto has six properties subject to tax abatements. That is the same number as Lenexa and only five less than Overland Park, but De Soto’s total is far overshadowed by the 63 properties receiving tax abatements in Olathe.
As for value, De Soto total abated value of $38.9 million was far less than the $617.8 million in Overland Park or about a third less than the fourth-rated city of Lenexa at $95.2 million.