Catalyst Incentive Program for Industrial Development

At their meeting Tuesday, Lawrence city commissioners will decide whether to expand a fast-track incentives program beyond the city-owned business parks.

Originally, the tax breaks and other incentives offered by the Catalyst Program encouraged companies to build speculative industrial buildings in Lawrence VenturePark or adjacent East Hills Business Park. However, when the commission approved the program in April, some commissioners said they were interested in expanding the program to industrially zoned property throughout the city.

Commissioner Mike Amyx, who initially suggested the expansion, said that to him it was about fairness. He said because of the city’s ownership of the business parks, it could be competing against private property owners to attract new businesses or development.

“I think it only makes sense that we afford the same opportunity to them, so that we compete on a level playing field,” Amyx said.

The Catalyst Program is part of a trend in speculative, or “spec,” industrial, and involves a developer constructing a building before tenants are determined with the goal of attracting businesses looking for quick start-up. The city’s regular incentives program doesn’t allow for spec industrial because it requires specifics such as the number and type of jobs that will be provided.

Qualifying projects receive an automatic sales tax exemption on construction materials and at least a 10-year, 50 percent property tax abatement. An additional 20 percent abatement would be provided if the project meets certain energy-efficiency guidelines. Projects don’t have to go though the usual economic incentives application process, which includes analysis and review by multiple boards. Instead, only City Commission approval is needed.

One of the factors of the original program was the fact that more than $9 million of special assessments are coming due on the vacant plots in VenturePark, which is still seeking its first tenant close to three years after it opened. If the property remains vacant, the city — and by extension, local taxpayers — will be responsible for paying the assessments. The program provides land at VenturePark and East Hills for free, after which the receiving company would take over payment of special assessments. That would be a major difference with the expansion of the program. Owners of private industrial property would not be expected to give industrial developers free land in their business parks.

If the commission decides to expand the Catalyst Program beyond VenturePark and East Hills, both located on the eastern edge of town, it would apply to industrially zoned land throughout the city. City staff are recommending that the expansion include all properties zoned general industrial (IG) within the city as of June 1 and require that new buildings be at least 25,000 square feet.

Amyx said that whether a new industrial building is built within the city business parks or on privately owned property, the main focus is to create a net gain in new jobs. He said he doesn’t want a scenario that just shifts jobs within the community.

“Granted, we have to have buildings put up so that people can expand who are looking for space to grow and those kinds of things,” Amyx said. “But at the same time, too, we just want to make sure that it works so we just don’t have somebody move from inside the community.”

The Catalyst Program is temporary and will sunset after two years. At that time, the commission can vote to renew it. Since the adoption of the Catalyst Program for the city’s business parks, a Kansas City real estate company has applied for incentives to construct up to $31 million of industrial buildings aimed at luring the first tenant to VenturePark. The commission will receive that application as part of its meeting Tuesday, and vote July 11 whether to award incentives.

The City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.