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Lawrence-based manufacturer of LED lighting seeking tax abatement for expansion

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Here's an interesting economic development project to keep an eye on: Lawrence may become a bigger player in the world of LED lighting.

Lawrence-based Sunlite Science & Technology, a manufacturer of LED lighting, has filed paperwork with City Hall to receive a 50 percent, 10-year tax abatement for a new headquarters and warehouse facility in the city.

The company is proposing to buy a vacant warehouse/office building at 4811 Quail Crest Place, which used to house Midwest Graphics. The company is estimating the project will have about a $2.3 million price tag to purchase and renovate the 21,000-square-foot facility.

Sunlite currently is a tenant in the Bioscience & Technology Business Center on KU's West Campus, and it also rents some warehouse space in town.

The project is expected to create a few new jobs in the community. Over the course of the 10-year tax abatement, Sunlite expects to add 40 new employees to its Lawrence ranks. The company employs five people in Lawrence currently.

More specifically, the company is projecting six new jobs over the first two years — three production jobs with salaries of about $26,000 a year, and three professional jobs with salaries of about $50,000 a year.

But don't expect for the city to have a full-blown LED lighting manufacturing plant, at least not in the near term. Sunlite currently manufactures its LED lights overseas, it says in its application to the city. I've chatted with a leader at the firm before, and I think most of what currently takes place in Lawrence is research and development, customer service and some distribution.

The company has been growing. It has one patent for a unique construction technique for LED lighting, and has another patent pending for a process that is expected to reduce the materials needed to produce LED lighting.

Company officials in their letter to the city do not rule out using Lawrence for a manufacturing site in the future as production levels grow.

The tax abatement request now will go through a formal city review process.

Information on the tax abatement request became available late Thursday afternoon, so I haven't yet had a chance to get additional details from company leaders. But I'll check in with them and report back.

Comments

Bob Forer 1 year, 4 months ago

They don't produce anything in this country, yet they claim they will create 40 new jobs in ten years. That's not a pipe dream, its a Cheech & Chong bong dream. And, of course, when the jobs never materialize, they will have our tax money, smile and say "Oops, we make a mistake" and laugh towards a lucrative retirement.

$26K a year. That's around 12.00 per hour. Enough to pay one's bills, but hardly a nice living in a town such as Lawrence.

"Company officials in their letter to the city do not rule out using Lawrence for a manufacturing site in the future as production levels grow." Is that a joke?. A company that has been reaping its profit off the backs of third world labor is suddenly going to move some of that production to the states??? The trend is in the other direction. The chances of production jobs in Lawrence doesn't even qualify as a bong dream.

Dave? Dave's not here, man.

Ken Lassman 1 year, 4 months ago

Wow, why don't you take that chip off your shoulder--it's gotta be tiresome to be carrying it around. The idea of basing a research oriented end of an up-and-coming company here in town is not necessarily a bad thing at all, and by housing the warehouse distribution in our centrally located community could make it possible to stick around at least a few years after they are bought out by a GE or some other such big boy if they are successful. That's what my only real concern is: that the whole thing, if successful, will be bought out AND moved out. If I were involved in reviewing this proposal, I'd be looking for assurances that any prospective buyer would have to keep the Lawrence location active until the 10 years is up and ideally consider expanding the current location, not taking it away.

Another potential plus would be to have a local distribution point that could offer local builders, businesses and residents a discount on LED lighting. Could that be part of the deal: we help you out by providing tax abatement AND a local market, and in return, you give a discount to your products to locals?

BigAl 1 year, 4 months ago

Great points DougCounty. As far as local distribution, I think these folks sell direct and bypass distribution. Long term, that may or may not work. Usually, a good distribution system outweighs the direct method. Time will tell.

gatekeeper 1 year, 4 months ago

I've been in the lighting industry for over a decade. These guys make more specialty type lighting, not your general household type LEDs. They have some pretty cool stuff, but not much for a normal household. Philips holds all the patents on LED lighting and they're pretty happy having others pay them royalties. Don't think any of the big 3 (Philips, GE, Sylvania) would have much interest in buying them out, unless they cut into their residental market in the future with new products. Production would never come to Lawrence. Very few light bulbs are produced in the USA, most in China, S. America and Germany. This company is cool, but won't be generating a ton of jobs in the USA.

LED prices are literally dropping every month and household LEDs are becoming pretty affordable (considering most have a 35000 hour life span). I've got my house almost completely done in LEDs and encourage others to start doing the same. Just keep in mind that you probably want 2700K color temp so they resemble incandscent lighting.

ChuckFInster 1 year, 4 months ago

And some people actually wonder why Lawrence has such a hard time attracting business outside retail.

Charles L Bloss Jr 1 year, 4 months ago

LED lighting is a very up and coming technology. Now used in cars, flashlights, and many other areas. In a few years, as prices become more affordable, our light bulbs will be led. I am against tax abatement, to anyone. Our taxes keep going up. This is a real serious problem for retired folks on fixed incomes, such as myself. We can and probably will ultimately be taxed out of the home we worked our whole lives to have. I am totally against property taxes. They should be done away with. They penalize people who worked hard to own their own homes. They should be replaced by increased sales taxes, so everyone pays their fair share of running the government.

Ken Lassman 1 year, 4 months ago

Sales taxes are regressive and I'm not at all convinced that they are a better way to raise revenues to run our government-provided services, especially if you dump all the revenues raised by income and property taxes onto sales tax. What would that even mean: a 15 or 20% sales tax? And I suppose you'd be against a food exemption, too, if you don't like tax abatements.

I agree that Lawrence has a very questionable history in giving out tax abatements, not that any other town has done much better as far as I know. But to be totally against all tax abatements seems dogmatic and does not recognize the few but real benefits they could provide, such as provide financial stability for a young and growing local business which is long on potential but a bit short on cash and can't attract the financial borrowing resources that national, larger business interests have access to. Seems to me that Lawrence has at least tried to scrutinize more closely tax abatement requests, and if they use criteria like I'm talking about, I'd be for those kinds of abatements.

nick_s 1 year, 4 months ago

Being a small business, will they also be protected from paying income tax under Brownbacks tax plan? So they're seeking tax abatements & wont have to pay income tax? What a deal.

David Reynolds 1 year, 4 months ago

Lynn731 I totally agree. The problem Lawrence has is it has no long term tax base that pays taxes other than housing. It has to be built.

Did you realize the top 10 employers do not pay any taxes, even sales taxes on purchases? This includes our Wonderful University of Kansas. Heck, they do not even necessarily buy local.

The incentives they seek should be granted but only on a reimbursement basis. That is, they should be granted their tax abatement based on performance achieved. Once it is verified each year than they get a tax credit for the following year, with actual cash reimbursement in the 11th year. Agreement to this type of tax credit reimbursement would ensure the company really does believe in their numbers and they will work toward compliance.

The world of tax credits is the world we live in.

rtwngr 1 year, 4 months ago

Why not tie the tax abatement to the jobs and manufacturing process. The more jobs it produces the larger the abatement. The more manufacturing taking place, in house, the greater the abatement. Make the tax abatement retroactive as these steps occur.

Ken Hunt 1 year, 4 months ago

OK....but with a claw-back agreement if job gains are not obtained by a set time period.

Larry Sturm 1 year, 4 months ago

Any tax abatement should be tied bringing manufacturing jobs to Lawrence.

gatekeeper 1 year, 4 months ago

Totally agree, but you'll never get a company to set up this kind of manufacturing here. Chinese factories on average (descent ones) pay $0.50 - $1.00 hour. Compare that to minimum wage here and relatively cheap shipping costs (if full container load). Company owners are greedy and want the largest profit and all lighting companies have their goods priced so they couldn't survive if they paid USA wages. There is still one plant in KS that makes linear fluorescent bulbs, but they most likely won't be around in a couple more years. Most of what they make is becoming illegal under the Energy Act signed by Bush.

hipper_than_hip 1 year, 4 months ago

I'm not interested in seeing my property taxes rise so someone else can pay less taxes. If you can't start and run a business without a 50% tax abatement, then you need to raise more capital.

Liberty275 1 year, 4 months ago

I have a Sunlite brand flashlight. Pretty nice, but a little pricey. Like $120.

Charles L Bloss Jr 1 year, 4 months ago

Is that an LED flashlight? If you want a good flashlight, with a lot of lumens, that runs on a lithium or rechargeable lithium battery, you have to pay around $ 100 for it. That is the brand the SN county sheriff's office uses.

Liberty275 1 year, 4 months ago

LOL. I have three $100+ flashlights, one is old school with a $50 LED conversion. It's the third backup.

I want this one: 500 lumens in the palm of your hand.

http://www.surefire.com/illumination/flashlights/e2d-led-defender-sup-reg-sup-ultra.html

It's $265

tomatogrower 1 year, 4 months ago

If they were going to build a factory and make the lights here, I would be all for it, but it looks to be like they are going to set up a "headquarters" here with just a few employees, so they don't have to pay state taxes.

tomatogrower 1 year, 4 months ago

They were at the home show this spring, and had some interesting products, but were very pricey. I've bought an LED flashlight, and I'm real sure it didn't cost over $100. There desk lights were incredibly priced.

Richard Heckler 1 year, 4 months ago

Profits from goods produced abroad remain tax free until such time profits are traced back to the USA.

How many more tax breaks does this company need? What type of sweet tax deal did this business acquire through the current location?

How about bringing manufacturing to Lawrence.Kansas and allowing the taxpayers to place a lien on the property in the event company does not meet obligations to taxpayers?

$26,000 a year is not enough to raise a family in Lawrence,Kansas. $64,000 dollars a year is necessary as a low dollar salary in Lawrence,Kansas.

$26,000 a year would still require state provided medical insurance and food stamps. IF this company is currently paying taxes in Douglas County then taxpayers are better off NOT authorizing any corporate welfare.

I say let those involved in the for profit real estate transaction provide the welfare NOT the taxpayers.

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