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Archive for Friday, December 22, 2000

DST tax breaks win support

City commissioners to conduct public hearing Jan. 9

December 22, 2000

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A tax-break request from DST Systems Inc. won support Wednesday from an advisory committee that represents the city, Douglas County and Lawrence school district.

The city's Administrative Review Committee voted to support granting several tax incentives for DST, which is buying the former Sallie Mae loan-servicing center at 2000 Bluffs Drive.

Such breaks are key to DST's decision to start operations in town, said Thomas McGee, vice president of DST Realty Inc. in Kansas City, Mo.

"We don't like to hold guns to peoples' heads, but part of the reason for coming to Lawrence was No. 1, the Sallie Mae opportunity (plus) the quality work force that's there and the package of incentives from the city of Lawrence and the state of Kansas that we've been negotiating for months," he said.

"This is a big decision for the company to choose to locate in Lawrence, and it's an important part of our decision in coming here."

The committee voted to support key components of DST's application:

l Freeze annual real-estate tax payments at Sallie Mae's current rate, $102,598, through 2006.

l Grant a 50 percent tax abatement for 10 years on all new equipment to be purchased. The purchase estimate is $1.45 million.

l Grant a 100 percent break, for five years, on taxes that would be paid on DST's purchase of Sallie Mae's existing equipment. The equipment is valued at $550,000.

l Grant a 50 percent break on taxes for 10 years on modifications to the Sallie Mae building. Such work is estimated to cost $2 million.

DST also seeks a promise from the city to grant tax breaks on future expansion projects. But committee members said they could not make such a promise because it would bind future leaders, who would be responsible for such decisions.

About 150 Sallie Mae employees have signed on with DST, which plans to have 350 people working in Lawrence by the end of 2002. Earlier this year Sallie Mae had 300 employees.

City Manager Mike Wildgen, a member of the review committee, said the committee's recommendation would go to the Lawrence City Commission for a hearing and possible endorsement Jan. 9. Any tax breaks would require approval from the Kansas Board of Tax Appeals.

DST has until Jan. 12 to close on its purchase of the Sallie Mae property, which could be expanded to handle more than 1,000 employees in future years, McGee said.

"We're a growing company," McGee said. "If the labor market in Lawrence is deep enough there's a potential for us to do that."

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