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Archive for Wednesday, January 10, 2001

DST Systems wins tax breaks from city

Commission votes 3-2 in favor of incentive package

January 10, 2001

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Lawrence city commissioners approved incentives Tuesday for a financial services company to fill the building and replace the jobs left vacant with last month's closing of Sallie Mae's Lawrence operations.

DST Systems Inc. has already moved into the former Sallie Mae building at 2000 Bluffs Drive and begun training employees. Sixty employees will begin work Monday, officials said.

It's that commitment of resources that made some question whether the incentives were needed to bring DST to town.

"Would you locate in Lawrence if the tax abatement wasn't granted?" Commissioner Mike Rundle asked.

"No," said Thomas McGee Jr., DST vice president.

DST will receive the following:

The freezing of real estate taxes on the building at their 2001 level for five years. The tax bill for 2000 was $102,500.

Complete tax exemption for five years of all property Sallie Mae left behind for DST use.

A 50 percent exemption for five years from taxes on new equipment and building renovations with an estimated value of $3.45 million.

The resolution passed 3-2, with Rundle and Commissioner David Dunfield opposed.

Earlier in the meeting, Dunfield offered an alternative resolution that would have eliminated the real estate taxes provision and reduced the complete exemption on Sallie Mae property to 50 percent. Dunfield said his proposal was more in line with city abatement policy and precedent.

That resolution failed. McGee said after the meeting DST would not have accepted Dunfield's proposal.

The incentives succeeded despite a report by Kansas University's Policy Research Institute suggesting the Lawrence school district would be negatively affected by the tax-incentive package.

But Steven Maynard-Moody, director of the institute, said the report was based on uncertain assumptions.

"The cost to the school may be somewhat inflated in the current picture," he said. "Looking at hypotheticals, you can look at the impact if all 150 (Sallie Mae employees) lost their jobs."

Lawrence resident Melinda Henderson told commissioners that DST didn't qualify for the incentives under the city's own policy, which says tax abatements should be given for new construction or buildings that have been long-vacant.

Mayor Jim Henry and Commissioners Marty Kennedy and Erv Hodges justified their votes with the 160 jobs they say DST will save. Sallie Mae employed 300 people at its Lawrence service center before the announcement in August of its closing.

"We're going to have a nonvacant building," Kennedy said.

After the vote, Rundle said he would work for the elimination of tax incentives. Henry pledged as he did after a May vote on incentives for American Eagle Outfitters to form a mayor's committee to examine the issue before the end of his term.

"In a perfect world," Henry said, "there would be no such things as tax abatements."

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