Archive for Friday, January 20, 2006

Packerware tax abatement recommended to city

Dissenters say 90 percent break too much; city to weigh in next

January 20, 2006

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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.

Comments

Rhoen 9 years, 6 months ago

The new County Commission chair has - oddly enough - come out strongly in favor of the Packer tax waiver, claiming that is "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."

In a thinly veiled threat, Mr. Johnson is claiming that "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." (Note: "Land" this project, as if it's some kind of great catch and not just an old tire someone threw into the lagoon.)

Are we supposed to be alarmed that the Packer owners may take their toys and go to "other communities" if the free ride is not ponied up.

... and where might those be ... Bhopal, India? Tijuana or El Paso? ... We know it won't be Puerto Rico - people get paid too much there.

Let's face it: Losing Packer Plastics would be no greater an economic trauma to Lawrence than losing an ingrown toenail would be to your infected toe.

No doubt this is already a done-deal, bought and paid for over breakfast at the Eldridge long before the story hit the newspaper. So, why waste time and newsprint on the pretense of debate and consideration?

It's too bad that the same interests who are pushing for this freebie for Packer-Pork found a better use for the land that used to sit under Gaslight Village - we could at least offer the lucky new employees a shorter commute from their trailers to the factory.

Decision-makers: Go for an authentic and ethical stance and just say no.

just_another_bozo_on_this_bus 9 years, 6 months ago

I think it's just plain sleazy of the VP of this company to invoke the other competitors, but not identify them. If he wants this abatement as so far approved, he should be compelled to identify these competitors, and all should get together and compare notes. That's the only way this extortion of cities and states into the race to the bottom will stop.

just_another_bozo_on_this_bus 9 years, 6 months ago

Why are they demanding 90% if they only want 75%? Is that just chest-beating?

Confrontation 9 years, 6 months ago

I hope this provides some job security for the current workers. There is no greater fear than being unemployed, unless you're one of those overpaid desk workers who can afford to save several months salary. They may offer low wage jobs, but to some people this means survival.

dviper 9 years, 6 months ago

The same people posting here complaining about this abatement are the same who complain about jobs going over to China and products from China. They are also the same people who complain about Lawrence not having enough job employment. These people can't see past the end of their stuck up noses. A job to these people isn't a job unless it's a $75,000 salary sitting behind a desk and surfing the internet on company time.

They also complain about businesses being capitalistic, and not subscribing to their socialistic radical Liberal points of view. They think that when companies negotiate to get the best deal possible that it is unfair, but when they don't get their ways they whine and complain like a 2 year old throwing a temper tantrum.

These people reflect the real reasons why Lawrence doesn't have a stronger employment base, and sadly, the Lawrence city commission has at least 3 that think the same.

If the city commission votes this down, maybe Packer will move its operations to Ottawa and join American Eagle in a business friendly town. FYI: American Eagle is adding a big addition to their operations there, and adding many new jobs. Jobs that weren't good enough for the Lawrence city commissioners.

badger 9 years, 6 months ago

""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."

Who what in the where now?

A 90% abatement still leaves property taxes higher than in other communities? Still leaves Lawrence behind in the game, even accounting for the cost of relocating your existing operations and moving or replacing your entire workforce? I don't buy that.

What other communities? Seriously, property taxes in Lawrence are high, but that's just ridiculous. Perhaps those other communities are located in West Texas, or Times Beach?

If Lawrence can't compete when offering a 90% tax abatement, then the company is getting some seriously preferential treatment from someone else, and I say rather than wringing your hands over whether 75% or 90% is 'good enough' for the company, offer what makes sense for the economy and let them take it or leave it. No sense cutting your own throat tax-wise just because a business threatens to take its toys and go home. I think there's a serious lack of long-term fiscal and economic sense in most city government, not just in Lawrence.

However, I do believe 10.50 an hour jobs are a heck of a lot better than seven dollar an hour jobs, so pooh-poohing the 10.50 jobs probably isn't the most sensible way to go about it. Within the last three years, I'd have been pretty happy to find a 10.50 job myself when I hit on some hard times.

lunacydetector 9 years, 6 months ago

Ottawa (just down highway 59) is offering a 100% tax abatement, approval in one day, and they're willing to help move the whole plant. - just kidding?

isn't it better to have new employment opportunities? especially when this company is caving into the whole 'living wage' nonsense.

if the city commission does not want packerware in our city anymore, this will be proof that the city commission does not care about anything other than stifling growth. how many more companies in lawrence will our commission force from this town?

badger 9 years, 6 months ago

Luny, it is better, on the whole, to have employment opportunities than not to do so.

However, if a company is essentially doing business in your city for free, how much are you really getting, as a city, from those six hundred jobs?

I think it's less that the city doesn't want packerware, and more that at some point you have to be sensible economically and see that if you keep letting people do business in your city and only contributing based on what it pays its workers and what they choose to spend in your city, then you're over-reliant on sales tax and personal home property taxes, meaning that private individuals are bearing the brunt of your tax burden, when corporate entities benefit just as much or more from the services those taxes provide.

It's fiscally irresponsible to set up your economy so that it's primarily dependent upon the amount of cash individuals have to spend and their ability to afford houses over rentals. It leaves you really vulnerable to shifts in employment, shifts in buying power, and residential real estate fluctuations.

Yes, by all means draw businesses in with the great things Lawrence has to offer. But if you lose more in the long run on these abatements and enticements than the company would ever bring in income and employment, you're just being irresponsible and short-sighted.

I believe in giving companies tax incentives to come to your town, just not this big.

Godot 9 years, 6 months ago

"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."

Now I understand why Rundle works as clerk in a grocery store and doesn't own a house. He just isn't very bright.

just_another_bozo_on_this_bus 9 years, 6 months ago

"Now I understand why Rundle works as clerk in a grocery store and doesn't own a house. He just isn't very bright."

Great argument, Godot. Are the ad hominem attacks because you "just aren't very bright?"

Rhoen 9 years, 6 months ago

Refusing to hand out "tax abatements" that are actually tax waivers - and 75% is STILL too much - is not "stifling growth."

Haven't you ever played SimCity? "Growth" costs lots of money!! Growth requires infrastructure. Growth requires sound management. Growth requires foresight, planning and - in best-case scenarios - thinking of what's best for all of those who comprise the community and not just the lucky/greedy elite who stand to rake in big paydays from that growth.

One major point hidden in Mr. Weilminster's arrogant remark that "It is incredibly difficult to justify a $118 million investment in your community ... Even with a 90 percent abatement, you're still not on a level playing field with the other communities we're looking at" is this:

With Lawrence's property taxes being so high as to make this an unattractive location for the Packer-Porkers, abating (waiving) 90% of those taxes results in an even more HUGE amount of money in terms of tax-dollar loss to Lawrence than it would to the other communities.

Why not just let them have the "privilege" of supporting this corporate panhandler?

Everything that our "high" tax dollars provide to the individual and corporate citizens who live here would be given away gratis to these corporate users - Not to mention that there will be additional infrastructural needs represented by this facility apparently not even being factored in to the giveaway equation.

The only thing that Mr. Weilminster and his ilk find "attractive" in Lawrence in addition to the fact that people here are also willing to waive 90% of what they should be paid on their jobs is undoubtedly it's proximity to Alvamar for those long, long lunches.

nomorebobsplease 9 years, 6 months ago

Just reviewing these, how many of you once worked (and were fired/quit PackerWare? Sounds to me like there's some sour grapes comments here.

Wendt-"If Packerware wants to leave, let them leave."

ummm...what about those 400 or so people currently employed? Don't you think that may just have an adverse effect on them and potentially the city?

"The profits made by Packerware don't stay in the city anyway." And how do you know that the profits made by Packerware don't stay in the city? I don't know about the company profits, but I know a whole bunch of employees there, who own houses and spend their money in this town.

-During the same time period, the city would receive $4.7 million and the county approximately $420,000-

4.7 million compared to what expenses incurred by the city? That does not sound like a loss to me.

badger 9 years, 6 months ago

4.7 million over 10 years?

Isn't that 470,000 a year?

Let's see. How much of the special equipment needed on hand for the fire department to deal with plastic industrial fires and hazards will it cover (I don't know if the city is required to keep the equipment on hand by OSHA or if it's just done because it's smart to do so)? How much will it cover of replacing the perishable parts of that equipment, charging special fire suppression equipment, and checking it each year? How much of the road maintenance for the street it's on? How many police officers to handle various complaints surrounding the facility? How many nights of de-icing the street so that first shift workers can come in by 10:00 in the morning?

How much for a light at the intersection south of the plant so that those of the 600 workers who live south or southwest of town can make it to work on time? How much for ambulances that require special gear and equipment for the hazardous chemicals used at the plant - and annual training exercises in dealing with those chemicals?

How much for groundwater and wastewater treatment if they have a containment problem with a plastic component or a cleaning solvent (because if you think they will clean it up without a protracted investigation and court battle, you're naive)? How many annual trips will it cover for the Fire Marshal to inspect it for hazards?

Those are just a few of the basic costs associated with a corporate industrial entity. If packerware is willing to receive a 90% longer delay in fire response, a 90% longer delay in police response, and a 90% reduction in road maintenance, then I think they can have a 90% tax abatement. But, you know, I bet they'll be screaming about business delays if they aren't able to open because the roads aren't clear, petitioning for better road maintenance, and they'll likely sue the city if they ever have to call the fire department only to be told that they don't have the necessary equipment to put out that machine on fire.

The income tax on 150 more jobs, or even the full 600, isn't enough money to justify the abatement. Even if the packerware employees spend every single penny of their money in Lawrence, the sales tax won't make up the shortfall - and we see by recent articles that a lot of those employees won't spend every penny in Lawrence at all.

Besides, if packerware gets this abatement by threatening to take its toys and go home, why won't every single company in Lawrence with over 200 workers demand the same? Then Lawrence becomes a city where industry collects the equivalent of welfare - subsidized and abated profits paid for by the tax dollars of individuals and small business owners who lack the clout to blackmail city government.

Steve Jacob 9 years, 6 months ago

You have to give it to them. While Packer does not pay great, $10 is not bad when most of the factory line workers probally are just high school grads with that are not highly skilled. Think when places like Davol and Sprint and K mart left? We need these jobs.

lunacydetector 9 years, 6 months ago

if growth costs so much damn money why are there thousands of cities larger than lawrence that are still in business and thriving?

the bottom line is, either you want companies to remain in lawrence and grow or you want to give them the boot. also, lawrence is in need of much more retail which generates sales taxes and property taxes. the local progressives want neither and they don't even want a highway that the voters voted and approved. affordable housing to a progressive is a cheap apartment or a habitat for housing type of house.

we need business leaders in our city commission. we do not need a group of people who make their living off of non-profits (what's a profit?) or the state of kansas. banker and lawyer bean counters can stay put at the chamber as well.

badger 9 years, 6 months ago

No, luny, the bottom line is that if you have to sell the hog to pay for the butchering, you still have no bacon.

Lawrence does need business leaders on its city commission. Business leaders who will see that 'new business and business growth at any cost' is not any more viable an option than 'no growth of any kind.'

Rhoen 9 years, 6 months ago

Agree that Lawrence needs business leaders, but they should be at least minimally competent and ethical and not simply provincial robber barons.

While we're having this discussion, why not introduce the idea of requiring an ethics course as a part of earning a KU business degree? Quite a few of our local business leaders received their training there.

Isn't Westar's David Wittig a KU business alum? He's done very well for himself but not very well for the local people his organization was supposed to serve.

His was the same approach as is going on here: Treat your buddies like your buddies, and everyone else like ... um, pork ...

Hopefully, Wittig won't want to open a factory in Lawrence when he's released ... although he could probably do very well in this environment.

cowboy 9 years, 6 months ago

Tax abatements are not just property i.e. land , they are also on installed equipment / capital , The value that Packer adds is all those employees spending thier hard earned money in Lawrence.

Rundle is such a retarded commissioner , if the fair wage is 10.06 and thier going to have some jobs at 10.50 then they have made the mark , shut up idiot !

Also if you add up all the services it takes to support Packer from the office supply , contractors , lawyers , vending machine companies , truckers , roofers , advertising , just a few of the many vendors who do business with a local large manufacturer.

Anyone who says we don't need these jobs is an idiot !

Yeah we all want 100,000 dollar a year jobs but there is a segment of Lawrence who are tickled to be working there.

It costs 9 times as much to get a new customer as it does to keep one you have ! So for all who want them to go I hope you don't break your neck when you fall off your high horse !

just_another_bozo_on_this_bus 9 years, 6 months ago

Pay attention to what Rundle has said, cowboy-- he said those wages don't warrant a 90% abatement. Both Highberger and Rundle have said they could support an 80% abatement, which is hardly chickenfeed.

If you want to see what effects Packers newest operation is having on Lawrence infrastructure, go to 28th St. just west of Haskell St. in the old E&E building, which Packer is now using as a shipping and recieving warehouse. Neither the street nor the facility are adequate for the amount of tractor-trailer traffic they have brought to it.

Who is going to pay for the street repairs this is necessitating? I won't even bother to ask who's going to pay all the other businesses in that area for the major inconveniences and lost time while waiting on one of their trucks to quit blocking traffic.

Godot 9 years, 6 months ago

A pox on those pesky businesses. Away with them all. Lets have all government, all dense residential, all the time.

Godot 9 years, 6 months ago

I vote for sending our commissioners and city executive staff to a two-week crash course on the art of negotiation. Preferably taught by Donald Trump. They need it.

Christine Hammon 9 years, 6 months ago

I want to point out that PackerWare has not released any factual information concerning average wages earned, the demographics of their employees, or their investments/costs of running the plant in Lawrence.

How much does the average employee earn? Most of the "new" employees are required to work through a temp firm that has an on-site office at PackerWare, with an undetermined length of time as a "temp" only to recieve approximately another dollar an hour in wages(IF that, sometimes none) when hired on perm. So is the 10.50 the average? While entry level jobs will average $8.50 an hour, the costs of health insurance for permanent employees AND dependents are taken out of their paychecks. And remember, temps don't recieve ANY benefits from PackerWare.

What are the demographics of the entire plant? Where do these employees live? Do they live in Lawrence, Douglas County, or outside of the area? Do they shop in Lawrence? If they commute here for work, where do they live? These are important factors to consider. Are they recent high school grads, how many positions require a college degree or some college? Who are the people who are accepting these jobs at a wage that places them at poverty level? What is the average age? Are they legal US citizens? Do they participate in the cultural and social aspects of our community?

How does the community of Lawrence find access to PackerWare's annual financial reports/documents so that we, as a community, know exactly in dollars and cents what this factory is bringing to Lawrence vs. what PackerWare's "costs" to Lawrence are . Aside from Astro's, Henry T's, local liquor stores, and gas stations-what local businesses benefit directly from employees wages? Of the over 100 new jobs, how many of these will be permanent and have health insurance? What will be the actual starting wage for each position of these new employees according to the wage scale for PackerWare? Where can published findings from the KU study be found, in it's entirety?

just_another_bozo_on_this_bus 9 years, 6 months ago

To negotiate, you need a negotiating partner. Packer has no intentions of negotiating, only of making demands.

curious_one 9 years, 6 months ago

O.K I think that since I live in Lawrence. Spend All of my money locally. Receive less than 10.50 an hour. I should receive a tax abetment of 90% as well. On my property tax since I am purchacing a house locally. On my vehicle lience. Which should carry over to an abatement on my Federal Income tax because I live in Lawrence.

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