A deeply divided economic development committee on Thursday recommended a 90 percent tax abatement for a major expansion of Lawrence-based Packerware Corp.
But the 4-3 decision by the city's Public Incentives Review Committee sets up a crucial vote at Tuesday's City Commission meeting that could determine the fate of the project, which proposes to add 154 employees and invest $118 million in new buildings and equipment at the Lawrence plant by 2009.
Supporters of the 10-year tax abatement said the project - which would add a new line of high-tech equipment to make plastic drink cups - was important not only because of the 154 new jobs it would bring but also because it would provide more security to the 450 employees currently at the Lawrence plant.
"If we don't land this project here, you don't have to be very bright to see that the future for what is done at this plant today isn't very good," said Douglas County Commissioner Bob Johnson, who is a member of the committee.
The tax abatement request now goes to the City Commission for final approval at its 6:35 p.m. meeting on Tuesday. Two of the five members of the City Commission serve on the Public Incentives Review Committee, and both voted against the tax abatement on Thursday.
Mayor Boog Highberger said he supported the project but thought a 90 percent abatement was too high because an analysis by Kansas University researchers showed it produced little benefit to the school district. He said an abatement closer to 80 percent would be more appropriate.
City Commissioner Mike Rundle said he also thought the abatement should be lower because 72 of the proposed jobs would pay a wage of $10.50 an hour, which is only slightly above the living wage of $10.06 per hour that companies receiving tax abatements are mandated to pay.
"I'm not interested in providing an abatement to those jobs because at that wage level people still can't fully participate in the economy and buy a house and that sort of thing," Rundle said.
Robert Weilminster, vice president of corporate development for Packerware's parent company, Berry Plastics, said the 90 percent abatement was critical for the project to locate in Lawrence. He said the company also was considering two other communities for the project. He declined to name them but said they have Berry operations today.
"It is incredibly difficult to justify a $118 million investment in your community," Weilminster told the committee. "Even with a 90 percent abatement, you're still not on a level playing field with the other communities we're looking at."
Weilminster said property taxes would still be higher in Lawrence than in other communities, even after the abatement, but he said the existing plant's labor force made Lawrence attractive. Weilminster said there was a very high probability that Lawrence would be selected as the location for the site if the 90 percent abatement was approved by city commissioners.
Johnson, area banker Mike Maddox, local accountant Brenda McFadden and school board member Rich Minder all voted to recommend the abatement. Kirk McClure, a KU professor in urban planning, joined Highberger and Rundle in voting against the request.
Minder voted for the abatement after the group agreed that the city and county would transfer some of the property tax payments it receives from the project to the school district. The report by KU showed that the school district after 10 years would receive $9,739 in new money as a result of the project. During the same time period, the city would receive $4.7 million and the county approximately $420,000.
The committee agreed that approximately $90,000 in tax money should be transferred to the district during the 10-year period.