A deal to land a 675,000-square-foot Berry Plastics warehouse likely will require both a 90 percent tax abatement and upward of $600,000 in cash incentives, according to new figures from Douglas County.
Douglas County commissioners are preparing for a Feb. 2 public hearing on a package of incentives for the approximately $20 million Berry project, which is proposed for a 60-acre site about 1.5 miles west of the Lecompton interchange on the Kansas Turnpike.
Douglas County Administrator Craig Weinaug has begun sending out a financial analysis of the project to local governments that would be affected by any future tax abatement. He’s also sending a message that incentives have been an important part of the package offered to Berry.
“The company certainly had other alternatives,” Weinaug said. “They had an alternative in a neighboring community where free land and infrastructure was offered. They were offered the types of incentives that are more expensive than what we’re offering.”
The incentives package that county commissioners will consider — city commissioners aren’t involved because the site is outside the city limits — includes:
• A 10-year, 90 percent tax abatement for the company’s project, which is now being valued at $18.5 million.
• Up to $600,000 in county funding that would be used to pay for various infrastructure costs. Those costs include a new turn lane on County Route 438 — also known as the Farmers’ Turnpike — to serve the site. Also, the county is proposing to help pay for an upgrade to a Rural Water District No. 6 waterline that is needed for the large building and interior, private roads that would serve the facility.
All together, the improvements are expected to cost about $1.6 million. Berry Plastics would pay the difference. Weinaug thinks the county has a chance to win two state grants to help with the costs, perhaps lowering the county’s costs to about $250,000. But Weinaug said county commissioners may choose to spend the full $600,000, even if the grants are received, to ensure that the project happens.
The financial analysis, completed by the city of Lawrence’s economic planner, found that all the local governments affected by the tax abatement will come out ahead on the deal over a 15-year period.
Douglas County is expected to receive $2.21 in benefits for every $1 it invests — directly and via tax abatements — in the project. The Lecompton school district — the project is not in the Lawrence school district — is expected to receive $12.69 in benefits for every $1 it gives up through the property tax abatement. The Lecompton Township checks in at $3.53 for every $1; the state of Kansas $3.44; and the Lecompton Fire District $4.22.
The financial analysis, though, does assume that the project will create or “retain” 379 jobs. That’s a different number from what has previously been used. The project is expected to add 11 new jobs to Berry’s area work force. In addition, more than 200 employees at Berry’s existing Lawrence production plant are expected to be relocated to the new warehouse.
Weinaug said the figure of 379 jobs was used because the warehouse project plays a key role in Berry’s ability to increase the number of workers in the Lawrence production plant. Weinaug said there is an expectation that as the warehouse use is removed from the production plant that more space will become available for additional production jobs.
Lawrence’s production plant, which has about 950 employees, has been growing as the company has rolled out a new line of environmentally friendly drink cups.
Weinaug said that if the new warehouse project isn’t completed, Berry’s Lawrence facility likely would start losing out on growth opportunities.
“If they are unable to build the warehouse here, I don’t think they would start laying people off or moving out of town, but I think it would be a sign that they’ve peaked here and they wouldn’t be growing in the future,” Weinaug said.