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Archive for Thursday, December 11, 2003

City commissioners mull tougher standards for tax abatements

December 11, 2003

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The Lawrence City Commission is wading back into the tax abatement debate.

The issue this time isn't whether the city will continue offering abatements to lure companies to town. Rather, the focus is on the standards those companies will be required to meet.

"If we're forgoing that much public money, I want to make sure we're doing it for a good reason," Commissioner Boog Highberger said at a Wednesday morning study session.

Under discussion is whether commissioners should re-establish the so-called "but for" clause in the abatement policy. That clause required companies to demonstrate they needed the abatement in order to do the project.

The requirement was eliminated in 2001 by then-Mayor Jim Henry's tax abatement task force. The task force came on the heels of a 2000 controversy over granting an abatement for an American Eagle Outfitters distribution center. American Eagle eventually chose to locate in Ottawa.

'Not the issue'

Wednesday, Henry told commissioners the "but for" clause was pointless.

"We decided that really wasn't the issue," he said. "It puts (companies) in the position of saying, 'No we won't come' when they might come."

Alan Zimmerman, another member of Henry's task force, said such a requirement would be hard to enforce.

"I just don't see how it can be implemented," he said. "You're essentially putting the company in a position where they're going to have to lie to you."

And Douglas County Commission Chairman Bob Johnson, also on Henry's task force, argued tax abatements were used more to lure jobs than to help businesses.

"We should never offer it unless it's good for our community," he said. "And if it's good for our community, that's all that matters."

Kirk McClure, a member of the city's Public Incentives Review Committee, which analyzes requests for tax breaks and makes recommendations, argued the city could do its own analysis of whether a company needed an abatement.

"Is it that precise? No," McClure said. "But it can be done."

Three commissioners -- Highberger, Mike Rundle and David Schauner -- indicated they favored some form of the "but for" clause. Commissioners asked city staffers to research how other cities have handled the issue.

Other goals

But commissioners said they also wanted to take a look at other economic incentives, including different ways of structuring tax abatements, as well as building and land incentives.

"Clearly we all want to bring companies to town, relieve the tax burden on the individual taxpayers," Schauner said.

That pleased Larry McElwain, chairman of the Lawrence Chamber of Commerce.

"I like the fact that they're willing to look at broader questions of economic development," McElwain said after the meeting. "I like that a lot."

There were times during Wednesday's discussion when the issue of whether to grant tax abatements seemed ready to flare up. Commissioners, however, appeared to resist such notions.

And they said that while "tweaks" were being made to the policy -- commissioners this fall also added a "living wage" requirement -- they'll honor the current policy for any companies that might come forward.

"While we're continuing to talk, we're not waiting," Mayor David Dunfield said. "We're going to move ahead with the policy we have in place, continue to support economic development."

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