Archive for Tuesday, September 6, 2011

City Commission to consider tax abatement for Grandstand to make move to East Hills Business Park

September 6, 2011

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Finely-crafted beer and a property tax abatement may end up landing a new business and jobs for Lawrence’s East Hills Business Park.

City commissioners at their Tuesday evening meeting agreed to consider a property tax abatement request from Lawrence-based Grandstand Sportswear and Glassware that would allow the company to move into a vacant manufacturing plant and add at least a dozen jobs.

Chris Piper, Grandstand president, said the company’s business has been booming thanks to contacts it has made in the growing craft brewery industry. The company is now shipping out about 125,000 customized pint beer glasses per week and serves more than 1,000 brewers.

“We have been able to ride that wave, and it has been a huge growth opportunity for us,” said Piper, who also is an announcer for Kansas University’s men’s basketball radio network and was a member of the 1988 National Championship team.

The company, currently located in the former Honeywell avionics plant at 2920 Haskell, has 52 employees and has added 16 since January. Piper is projecting that the company will add about 40 jobs over the next five years. The company pays an average wage of about $14 an hour, plus health benefits.

Piper has reached a tentative agreement to purchase the vacant manufacturing plant that formerly housed Sauer-Danfoss in the East Hills Business Plant. But Piper said financial incentives from the city will be critical in determining whether the project will be finalized. Grandstand is asking for a 65 percent, 10-year property tax abatement and also is seeking assistance with replacing the building’s outdated lighting system with a more energy-efficient system.

“Quite frankly, this project will be more than $5 million investment for us,” Piper said of his business, which he has owned since graduating from KU in 1988. “That is a huge chunk for us.”

City commissioners took no final action on the request Tuesday. Instead, they referred the application to the city’s Public Incentives Review Committee for a recommendation. City commissioners are expected to consider approving the request at their Sept. 20 meeting.

In addition to the glassware business, the company also sells athletic apparel and promotional items for a variety of businesses.

Comments

Richard Heckler 3 years, 12 months ago

This 20 year old structure still not paying back the taxpayers. Sauer-Danfoss left town immediately when their 10 tax abatement period expired.

Those real estate sales people truly know how to stick it to the taxpayers. Meanwhile they get handsome commissions. Local corporate welfare has never ending resources.

Richard Heckler 3 years, 12 months ago

Actually that should say this building will go 20 years of letting taxpayers overlook property tax dollars at a time when politicians say we're broke.

And leave an empty building behind.

Jonathan Kealing 3 years, 12 months ago

In their current building, they paid about $66,000 in the property takes for 2010. The Sauer-Danfoss building paid nearly $187,000 in property taxes for 2010. At a 65% abatement, the taxes would — I think, not an accountant or an attorney here — get to about $65,000.

drake 3 years, 12 months ago

In what world is paying $187,000 per year in taxes for the privilege of owning a building fair? No wonder employers can't afford to hire anyone.

plainspeaking 3 years, 12 months ago

Yes, drake, having businesses pay property taxes is fair. In Kansas, commercial property taxes are based on market value, size, and improvements to the property. And our property taxes are not unreasonably higher than other states' taxes. If a business cannot afford to hire employees or pay its taxes, then the owners need to figure out why their product isn't earning more profit.

blindrabbit 3 years, 12 months ago

Are there any provisions in the City deliberations/granting of tax abatement for "need" as well as owner/employee personnel issues? Just wondering, don't want to support any difficult relationships!

Noweigh 3 years, 12 months ago

A legitimate, quality business that brings in major dollars from out of town is askng for some consideration to expand, add more jobs and fuel the local economy. I understand that "corporate welfare" is unspeakable in our town, but I would strongly favor offering a helping hand to a local business that seeks to employ more local people. This would be Grandstand's third location, each one bigger and better as they have done a nice job expanding their business and customer base. Or I suppose we could just leave the Sauer building empty as it is now.

Jimo 3 years, 12 months ago

OK, wait a minute…let me get this straight…Grandstand, the employer, for some reason has found more people want to buy their stuff so they need to expand their capacity and move into a new building. But because of property taxes assessed equally on everyone they're just going to refuse to take on the additional business unless they get a tax abatement -- because without this abatement the deal doesn't make financial sense.

Does anyone believe this? If it is that marginal of a deal then perhaps it's just a bad deal and likely to turn out to be a loser if any variety of unforeseen events (inflation, energy prices, changes in consumer tastes) eliminate what is claimed by Grandstand to be almost no profit whatsoever deal (without their subsidy).

Of course, more likely, this is a profitable business plan and Grandstand is just seeking to make it even more profitable by asking the taxpayers to subsidize them. You can get what you don't ask for, right?

I'm also at a loss what competitive advantage Lawrence has in the selling of glassware. Is there any value added by this type of venture? Remember: tax subsidies given to this company are tax subsidies that cannot be given to another--better--company later. What's more, what's to prevent another taxpayer shakedown in 10 years?

Finally, $14/hr. sounds high for the job of "shipping" glassware. I'm less interested in the "average" wage than the "median" wage, especially since this venture obviously involves the expansion of marginal workers (a/k/a, those most likely to be paid the lowest in the organization). The City needs to ask for a binding commitment on the lowest wage of these additional hires. I'm all but certain that the lowest paid worker will make somewhat less than $14/hr. And I doubt many will be interested in this shakedown after seeing just how low this lowest paid worker will make.

Townie007 3 years, 11 months ago

Agreed, this deal looks like a "shake down" in favor of a local boy who is connected to the right people. Also, the median wage is the important number to consider and furthermore, how do we know any new jobs will be added? I doubt there is any threat of this business leaving town and I wonder just how much more it can expand given the fact that the opening of new micro-brewery's has probably leveled off or will level off soon.

irvan moore 3 years, 12 months ago

we give abatements to out of town business pretty much as a matter of course, i say support a local business and businessman but maybe cut the abatement some (maybe 40%) and make it workable for everybody.

Austin Bergstrom 3 years, 12 months ago

Abatements are given to attract new businesses or keep local businesses in town. Don't see GSG threatening to leave the area!

tolawdjk 3 years, 12 months ago

+1 to this.

The property taxes between the two locations is a wash.

The business has been in lawrence for years, its not like it is going to pirate from existing businesses (coughOliveGardencough).

$14/hr isn't something you are going to be buying a second house on, but it is still nothing to sneaze at.

And it is manufacturing. How many of those exist in the USA nowdays anyway?

Godot 3 years, 12 months ago

I don't see why the city should pay to improve the lighting in the building. That should be a seller concession.

lunacydetector 3 years, 12 months ago

They should try to move to the Bioscience and Technology Business Center at KU, get a new building constructed, then they wouldn't have to pay any property taxes at all FOREVER. It's a technology business...they make glass bottles for Free State Brewing. Then, all of the local naysayers would be on board.

cowboy 3 years, 12 months ago

An expanding manufacturing business is a plus A local business is a plus Skilled jobs a plus

The glass / ceramic business operates on the slimmest of margins as most of it went overseas years ago. They have a nice domestic niche and the city should support it versus all the corporate bio scam stuff we've been dumping millions into.

pizzapete 3 years, 12 months ago

The business is doing well so the company wants to expand. By expanding they hope to make even more money. The company doesn't want to pay full price for the expansion, so they're asking the city for some tax breaks. You can't really blame them for trying, they're just following the corporate welfare model well established in Lawrence by Dug Copton.

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