Archive for Tuesday, October 15, 2002

Tax abatement policy questioned

October 15, 2002


Members of a committee that compiled a progress report on the city's tax abatement policy finished their work earlier this month but not the debate.

Two committee members have written the Lawrence City Commission, one asking that abatement for two Lawrence companies be reduced. The other suggests the city should hire its own economic development planner, instead of letting the Chamber of Commerce handle most of those functions.

"The tax abatement program is not working well," wrote Kirk McClure, a member of the city's Public Incentives Review Committee. The committee wrote the report; McClure's letter accompanies it.

Committee member Jim Martin said in his own accompanying letter that such actions would hurt the city's business reputation.

"Lawrence will, from virtually any action taken on this matter, continue to project to the business community that the city of Lawrence is not friendly to business," he wrote.

McClure said that only six of 14 companies that received tax abatements in 2001 created the number of jobs and made the capital investment they promised the city when applying for the breaks.

Bob Schehrer, an accountant on the committee, said that two businesses "substantially" failed to meet the objectives: E&E; Specialties, which reported 132 fewer full-time workers than it promised in 1992; and Sauer-Danfoss, which invested $23.8 million in its Lawrence plant short of the $30 million it promised in 1998.

Schehrer noted the city commission approves abatements based, in part, on a cost-benefit analysis that weighs jobs and capital investment. A reduction in those companies' abatements would thus be appropriate, he said.

E&E; Chairman Ed White referred a Journal-World reporter to a financial officer in his company, who did not return phone calls. Keith Folkmann, director of Lawrence operations for Sauer-Danfoss, did not return phone calls.

In letters to the committee, however, officials with both companies blamed their shortfalls on the nationwide economic downturn.

The Lawrence City Commission, expecting a throng of residents interested in floodplain development regulations, will limit public comment during tonight's debate.Each person who wants to speak on the matter will have three minutes, city officials said Monday.The commission will take up the issue at its meeting at 6:35 p.m. in City Hall, Sixth and Massachusetts streets.

"We cannot predict such events," E&E;'s Daryl Morgison wrote in September. "We can only respond to them in a manner that is best for our company and our employees."

Those woes may continue in the short-term for Sauer-Danfoss. The company announced Monday it would have lower-than-expected earnings per share in the third quarter.

Lynn Parman, the chamber's director of economic development, declined comment on McClure's suggestion that the city take some economic functions from the chamber and bring them in-house. But she expressed concern that Sauer-Danfoss and E&E; would be held to the standards of a new city tax abatement policy, passed last year after both companies had received their breaks.

The city commission will discuss the report and letters at its meeting at 6:35 p.m. today in City Hall, Sixth and Massachusetts streets.

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