County Commission seeks feedback on property tax abatement request

April 30-- Apr. 30--The Reno County Commission approved setting a public hearing on a property tax abatement request by a longtime county business planning a nearly $1 million expansion, but there was some disagreement among the commission how the tax break should be structured.

Ade Enterprise LLC of Wichita, which owns Wifco Steel at 8803 N. Medora Rd., is seeking a 10-year abatement on property taxes for a 5,400-square foot office and showroom addition to the existing Wifco plant.

A separate reduction may be sought for the remodeling of the existing 2,600 square-feet of office space inside the plant which the company plans to convert into a production area, advised Reno County Administrator Gary Meagher.

The nearly 50-year-old steel fabrication business currently employs 72 people, and the expansion is projected to add 10 more jobs by 2021.

The remodeling would likely be completed yet this year, but the company would not meet the employment requirements qualifying it for the deal until next year, so the first year of abated taxes would be in 2021.

Granting the tax abatement requires a public hearing, during which the public and other entities that would lose property tax dollars can protest. A legal notice must be published 14 days in advance of the hearing, however, so the commission agreed to set the hearing for May 14.

If the commission then approves the reduction, it goes to the Kansas Board of Tax Appeals for final approval, County Counselor Joe O'Sullivan explained.

The need

"Right now we have offices in the plant building that are probably 50 years old," Les Sanborn, chief financial officer for Ade Enterprises told the commission. "They are terrible, to be honest with you... It's really important to have more manufacturing space, and it's really important to have offices that are clean, well lit, and so on. That's what it comes down to."

"It will help the morale of office employees," Sanborn said. "We've had a couple of occasions when a prospective employee admitted they just didn't want to work there because of the bad condition of the offices. Part of the officers are on the second story within the building, which isn't convenient, and it's outmoded."

Sanborn advised they've budgeted $840,000 for the remodel, not including new equipment. The estimate includes demolition of the old office space.

A cost-benefit analysis conducted by the Kansas Department of Commerce estimated Reno County would see its return on the investment by year 7.

"Right now, I'd say 85 percent of our employees live in Hutchinson, another 10 percent in the county and 5 percent live out of county," Sanborn said. "We have a weekly payroll of around $60,000. We're putting a lot of money in the community."

Alternatives?

Commissioner Ron Sellers, after complimenting Sanborn on the company's operation and award-winning safety record, said that though he agreed the expansion would benefit the county, he questioned whether a 10-year, 100 percent abatement was fair to other property owners.

He suggested a declining graduated abatement, which would drop by 10 percent a year over the 10 years.

"That way they get most of the bucks in the early years, and then we wean them onto the taxes," he said.

Commissioner Ron Hirst, while noting he was also "a fan" of a descending abatement, suggested instead it be an 8-year, 100 percent tax break, "relating back to the state of Kansas study."

"We pay quite a bit of taxes now," Sanborn noted.

"We all do," Sellers replied. "And we don't enjoy it. But it takes taxes to run our school and our townships and community college. Your company is supportive of that. But for us to say to a homeowner you pay a 4 percent increase on the budget and not ask industry to do that is excessively unfair to others in the community."

Seeking input

Commission Chair Bob Bush said he didn't agree with Sellers, in that the benefit would be returned to the community in the increased payroll and, eventually, the higher taxes on the business property.

"Right now that building is 50 years old," Bush said. "Statistically, it will be on the tax rolls another 50 years. That's a pretty healthy input to our tax system. They get a break up front, and it's partially put off on other government entities in the community. But there's nothing better than those new jobs, and those dollars and jobs will stay in the community. We'll get the dollars back and more by being generous up front and providing a better opportunity."

The commission agreed to publish the legal notice and set the issue on the agenda in two weeks, and in the meantime ask their constituents for input.

"I'll be the first to say it if everybody writes me emails and says I'm being cheap, like you used to call Dan Deming," Sellers said, directing his comments at Bush. "But I'd like to hear from the community on this matter."

After voting to set the hearing, Bush assured Sanborn "We're going to help. It's just a matter of how. Your business is very valuable, and we don't want to in any way denigrate what you're doing and your commitment to the community."

"You don't want me to think you're being cheap?" Sanborn replied.

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