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Archive for Thursday, May 24, 2001

Task force begins to refine policy on tax abatements

May 24, 2001

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The Economic Incentives Task Force, charged with studying city tax abatements, got down to business Wednesday, going through Lawrence's tax-abatement policy page by page.

Among the task force's decisions:

Adding language that gives priority to attracting high-technology and research-based businesses.

Clarifying the policy's direction that jobs created with the use of abatements should meet or exceed average wages in the community.

Eliminating a provision that taxes on existing buildings should not be abated unless they have been "vacant a considerable period of time."

Rejecting a suggestion that no abatements should be given on "personal property" equipment purchased by companies.

That suggestion was made by Lawrence City Commissioner Jim Henry, chairman of the task force, in a draft of a possible new policy. The city never gets to fully tax personal property that has been abated, he said.

"It depreciates so quickly," Henry said, "that there's nothing left to tax when it comes back onto the tax rolls."

Opponents said businesses might shy away from town if they can't get the equipment abatements, and new jobs would be lost.

"How does that encourage expansion of local businesses?" task force member Ernest Angino asked. "How does that make us competitive?"

"Perhaps it protects the populace so that we recoup the taxes," task force member Janet Gerstner said.

Rejection of the provision passed unanimously.

Up next for the task force: the meat of the abatement policy. Henry's draft suggests giving 30 percent abatements to companies that come out ahead in a cost-benefit analysis and raising the abatement to 50 percent for the companies with the best cost-benefit ratios.

He also suggests linking the length of the abatement to the size of a company's capital investment. At the top end, a company would have to invest $8 million to receive a 10-year abatement.

And Henry would change the composition of the Administrative Review Committee, which reviews abatement requests and makes recommendations to the city commission. It now consists of the mayor, city manager, county administrator and a Lawrence school district representative.

The draft shifts the responsibilities entirely to elected officials: the mayor, a second city commissioner, a county commissioner and a school board member.

The next task force meeting is scheduled for 11 a.m. June 11.

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