Archive for Tuesday, October 23, 1990

CITY OFFICIAL SEEKS CONTRACTS WITH FIRMS GETTING TAX BREAKS

October 23, 1990

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Companies receiving tax abatements from the city would be required to sign a performance contract and would be subject to annual reviews to determine whether they were living up to their promises, under a plan proposed Monday by Lawrence City Commissioner Mike Rundle.

Rundle, who has long decried the city's approach to granting tax abatements, unveiled his plan during a study session Monday afternoon at city hall. No action was taken on the proposal.

"I certainly want to make it clear at the outset that I am not interested in eliminating tax abatements, IRBs (industrial revenue bonds) or limiting growth," Rundle said.

Instead, Rundle said he wants to help assure that the city "not be caught short by giving one of these IRBs or tax abatement agreements and not getting the benefits we want to receive."

RUNDLE said many cities require companies to sign a contract that spells out specific benefits the city should expect in exchange for a tax abatement. Benefits spelled out in the contract could include the specific number of jobs generated by the company and the amount of payroll.

Companies then would be required to demonstrate annually, through an independent audit or review, that they have generated the benefits.

Additionally, Rundle renewed a call for a more comprehensive analysis by the city staff of companies seeking abatements. He said such an analysis should indicate whether the company really needs an abatement.

Commissioners reminded Rundle that the city needs to be flexible both in the manner they award abatements and in the amount of abatements they grant.

COMMISSIONER Bob Schumm, for example, said a large corporation employing hundreds and willing to make a sizeable physical investment in the city might be worthy of a larger tax abatement than, say, a small company employing a limited number of people.

Current city policy allows abatements of up to 50 percent over a 10-year period.

Rundle said he agreed that flexibility should remain.

Although the commission made no decision on Rundle's proposals, Schumm and Commissioner David Penny indicated they had little problem with the idea of a performance contract.

Commissioners, who already had spent two hours on other study session topics Monday before taking up the tax abatement issue, decided they needed more discussion before making any final decisions.

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