Manhattan — This city doesn't give out too many tax abatements to lure businesses. It relies instead on cash.
That's what Lawrence city commissioners learned Friday during a joint meeting with their counterparts from Manhattan. Officials there described their success using a four-year, half-cent sales tax to fund grants and loans to businesses looking at their community.
"If we hadn't had that money, we would've had abatement requests," said Ron Fehr, Manhattan's city manager.
The Manhattan Economic Development Fund was approved by the city's voters in 1994 in response to the downsizing of nearby Fort Riley and in hopes of using the money to lure a Cessna plant that ultimately went to Independence, Kan.
The tax started in 1995 and ended in 1998, raising about $11 million. About $1 million remains in the fund, Fehr said.
"It's been difficult to explain to the public how successful it was, because we haven't felt the effects of 5,000 lost (Fort Riley) jobs in the area," said Manhattan Mayor Karen McCulloh.
The city has used the money to aid 17 new and existing businesses. More than half the cash, $6 million, went to three companies new to Manhattan: Transportation Design & Manufacturing; Sykes Enterprises; and Farrar Corp.
As a result, Fehr said, 969 new jobs have already been created. That number could rise to more than 1,600 if the companies meet their employment projections.
And, Fehr said, Manhattan's city government is a stickler for ensuring the companies meet those projections. Otherwise, he said, there are "claw-back" clauses that allow the city to retrieve some of the money. The same goes for the four companies to receive tax abatements from the city in the last decade, Fehr said.
"If they don't meet the goals, they pay higher taxes," he said.
The part of the policy pleased Lawrence City Commissioner Mike Rundle.
"I think it's a good model for establishing the accountability and oversight that I don't think we have," Rundle said.
With the fund dwindling to about $1 million, Manhattan officials would like to ask voters to approve a new version of the tax. They'll wait until they're certain of the state's sales tax plans before doing so.
Lawrence Commissioner Marty Kennedy said Lawrence would have to do the same before deciding whether to emulate Manhattan.
"At this point any type of additional sales tax is out of the question," he said. "We have to watch what the state's going to do."
The two commissions discussed other topics, including use of Web sites, single-family zoning policy, downtown development and public transit. Both bodies said they wanted to learn from each other.
"I think we have a lot to gain by hearing what's going on in Lawrence," McCulloh said. "No reason for us to reinvent the wheel, if you've already figured out how to do it."
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