Notice of Public Hearing Industrial Development Project

Transcription

1 Re: Notice of Public Hearing Industrial Development Project On behalf of the City of Blue Springs, Missouri (the City ), please find enclosed a copy of the proposed Plan for an Industrial Development Project for Kohl s Distribution Center (the Plan ), which also contains a Cost Benefit Analysis on the affected taxing jurisdictions. The City anticipates considering an Ordinance to approve the Plan following a public hearing on the Plan at a meeting on March 6, 2017 at 6:00 PM at the Howard L. Brown Public Safety Building, 1100 S.W. Smith, Blue Springs, Missouri. The City invites all affected taxing districts to attend the meeting and to make oral comments on the proposed Plan to the City or to provide written comments to the City on the Plan prior to the meeting. All comments of the taxing districts will be fairly and duly considered by the City. A copy of the Plan and Cost Benefit Analysis for the proposed project is enclosed and also will be on file in the office of the City Clerk and will be available for public inspection during normal business hours. Any questions should be directed to Adam Norris, Deputy City Administrator of Development Services for the City at (816) Dated: February 14, 2017 CITY OF BLUE SPRINGS, MISSOURI 903 West Main Street Blue Springs, MO 64015

2 BEFORE THE CITY COUNCIL OF THE CITY OF BLUE SPRINGS, MISSOURI PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT FOR KOHL S DISTRIBUTION CENTER March 6, 2017

3 PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT FOR KOHL S DISTRIBUTION CENTER TO: THE CITY COUNCIL OF THE CITY OF BLUE SPRINGS, MISSOURI A plan for an industrial development project as described herein has been proposed to the City of Blue Springs, Missouri (the City ), for approval, to be carried out pursuant to Article VI, Section 27(b) of the Missouri Constitution, as amended, Sections to , inclusive, of the Missouri Revised Statutes, as amended, and in support of said application the following is submitted: 1. Description of the Project and the Company. The project consists of acquiring control and mechanical equipment (the Project Equipment ) for installation in the Kohl s Blue Springs Distribution Center located within the City. The Project Equipment will be located at 2015 Northeast Jefferson Street, and will be operated for commercial purposes in a warehousing and distribution facility. The Project Equipment is designed to be used in the warehousing and distribution of retail products sold by Kohl s Department Stores, Inc., a Delaware corporation headquartered in a suburb of Milwaukee, Wisconsin (the Company ) in its retail stores. The Company is the country s twenty-fifth largest retailer by revenue according to the National Retail Federation s numbers for The Blue Springs Distribution Center is one of nine distribution centers operated by the Company around the country. The Company currently employs approximately 219 full and part time employees at the site, with additional seasonal hiring of approximately 45 employees during peak times of the year. 2. Estimate of the Cost of the Project Equipment. The total cost of the Project Equipment, without freight, installation or sales tax, is estimated to be $7,500,000. The Project Equipment to be acquired will be installed in the company s existing Blue Springs Distribution Center. The Company will make improvements to the Blue Springs Distribution Center to accommodate the installation of the Project Equipment, but will not receive tax abatement incentives with respect to any real property improvements. The personal property abated will include only the Project Equipment to be purchased. Real and personal property currently owned and not part of the Project Equipment will continue to be taxed. 3. Source of Funds to be Expended for the Project Equipment. The source of funds to be expended for the Project will be the proceeds of $7,550,000 estimated aggregate principal amount of taxable industrial revenue bonds (the Bonds ), to be issued by the City for the project and to pay costs of issuing the Bonds. 4. Statement of the Terms Upon Which the Project Equipment is to be Leased and Otherwise Disposed of by the City. The City will take legal ownership of the Project Equipment as it is acquired. The Project Equipment will be leased by the City (with an option to purchase the City s interest in the Project Equipment) to the Company. The lease payments collectively will equal the principal and interest on the Bonds plus certain payments in lieu of taxes (see Section 9 below for a description of the payments in lieu of taxes). The Bonds will be payable solely from the revenues derived by the City from the lease to the Company or other disposition of the Project Equipment and the Bonds will not be an indebtedness or general obligation, debt or liability of the City. 5. Bond Purchase Arrangements. The Company or an affiliate or a related entity will purchase the Bonds in the estimated aggregate principal amount of $7,550,000.

4 6. Affected School District, Community College District, County and City. The Grain Valley R-V School District of Jackson County, Missouri; the City; and Jackson County, Missouri, will be affected by the project as well as the other taxing jurisdictions shown on the attached Cost Benefit Analysis. There is no community college district affected by the project. 7. Equalized Assessed Valuation. No real property is included in the project. The most recent equalized assessed valuation of the Project Equipment to be included in the project is $-0-. The estimated total equalized assessed valuation of the Project Equipment after completion of the project is $2,124, Cost/Benefit Analysis. Attached hereto as Exhibit A is the Cost Benefit Analysis for the affected school district, Jackson County, the City and the other affected taxing jurisdictions, which assumes 100% tax exemption with payments in lieu of tax equal to 50% of the personal property taxes otherwise due, as stated below, for a total period of 12 years from the first year in which the Project Equipment would be subject to taxation (2018) were it not for the tax abatement described in this plan. 9. Payments in Lieu of Taxes. The Company will agree to make payments in lieu of taxes during each year in which title to the Project Equipment is held by the City. The amounts shown below represent the value of such payments in lieu of taxes, subject to the option of the Company to purchase the Project Equipment from the City at any time during the abatement period and return such personal property to the tax rolls, in which case the payments in lieu of taxes will be terminated. Year Payment in Lieu of Taxes 2017 $ , , , , , , , , , , , ,504 * * * -2-

5 EXHIBIT A COST/BENEFIT ANALYSIS The accompanying spreadsheet shows the detailed cost/benefit amounts of the proposed project. It assumes a fixed schedule of payments in lieu of taxes for personal property taxes for the duration of the abatement period. The personal property is assumed to be depreciated over a 5 year period. The depreciated value of personal property is based on depreciation schedules designated by Section of the Revised Statutes of Missouri for such property. The 2016 personal property tax levy rates were utilized for all taxing jurisdictions. Amounts shown as payments in lieu of taxes attributable to any particular taxing jurisdiction are subject to change based on the then-current levy rates of all relevant taxing jurisdictions.

6 City of Blue Springs, Missouri COST BENEFIT ANALYSIS PLAN FOR INDUSTRIAL DEVELOPMENT PROJECT

7 Table of Contents I Project Assumptions 1 II Summary of Cost Benefit Analysis 2 III Projected Tax Revenues on Project Equipment Without Abatement 3 IV Projected PILOT Amounts on Project Equipment 4 V Projected Tax Abatement on Project Equipment 5 This information is provided based on the factual information and assumptions provided to Gilmore & Bell, P.C. by a party to or a representative of a party to the proposed transaction. This information is intended to provide factual information only and is provided in conjunction with our legal representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not a financial advisor or a municipal advisor as defined in the Securities Exchange Act of 1934, as amended. City of Blue Springs, Missouri Cost Benefit Analysis 12/23/2016

8 Project Assumptions Initial year taxes assessed on Project Equipment 2018 Total investment in Project Equipment (calendar year 2017) $ 7,500,000 Annual growth rate of appraised value of personal property 0.0% Assessed value as a percentage of appraised value (personal property) 33.33% Terms of abatement: Project Equipment Years 1 to 12 50% Project Equipment acquired in 2017 is depreciated using the following 5 year recovery period schedule: Year Recovery Period in Years % % % % % % % 85.00% 89.29% 92.50% 95.00% 96.25% % 59.50% 70.16% 78.62% 85.50% 89.03% % 41.65% 55.13% 66.83% 76.95% 82.35% % 24.99% 42.88% 56.81% 69.25% 76.18% % 10.00% 30.63% 48.07% 62.32% 70.46% % 10.00% 18.38% 39.33% 56.09% 65.18% % 10.00% 10.00% 30.59% 50.19% 60.29% % 10.00% 10.00% 21.85% 44.29% 55.77% % 10.00% 10.00% 15.00% 38.38% 51.31% % 10.00% 10.00% 15.00% 32.48% 46.85% % 10.00% 10.00% 15.00% 26.57% 42.38% % 10.00% 10.00% 15.00% 20.67% 37.92% % 10.00% 10.00% 15.00% 15.00% 33.46% % 10.00% 10.00% 15.00% 15.00% 29.00% % 10.00% 10.00% 15.00% 15.00% 24.54% % 10.00% 10.00% 15.00% 15.00% 20.08% % 10.00% 10.00% 15.00% 15.00% 20.00% City of Blue Springs, Missouri Cost Benefit Analysis -1-12/23/2016

9 Summary of Cost Benefit Analysis Tax Distribution Tax Rate Tax Revenue for Project Equipment Without Abatement Revenue Generated from PILOT Payments Value of Abatement City of Blue Springs $ 52,989 $ 26,495 $ 26,495 Jackson County- General ,571 18,285 18,285 Jackson County - Mental Health ,741 4,370 4,370 Central Jackson Fire District ,601 42,801 42,801 Grain Valley R-V School District , , ,607 Mid-Continent Library ,947 11,473 11,473 Board of Disabled Services ,371 2,685 2,685 State - Blind Pension Tax ,183 1,092 1, $ 611,617 $ 305,808 $ 305,808 City of Blue Springs, Missouri Cost Benefit Analysis -2-12/23/2016

10 Projected Tax Revenues on Project Equipment Without Abatement Estimated Assessed Value of Project Equipment $ 2,124,788 $ 1,487,351 $ 1,041,146 $ 624,688 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 Tax Rate Taxing Jurisdiction per $ Total City of Blue Springs $ 15,471 $ 10,829 $ 7,581 $ 4,548 $ 1,820 $ 1,820 $ 1,820 $ 1,820 $ 1,820 $ 1,820 $ 1,820 $ 1,820 $ 52,989 Jackson County- General ,677 7,474 5,232 3,139 1,256 1,256 1,256 1,256 1,256 1,256 1,256 1,256 36,571 Jackson County - Mental Health ,552 1,786 1, ,741 Central Jackson Fire District ,992 17,494 12,246 7,348 2,940 2,940 2,940 2,940 2,940 2,940 2,940 2,940 85,601 Grain Valley R-V School District ,969 81,178 56,825 34,095 13,643 13,643 13,643 13,643 13,643 13,643 13,643 13, ,214 Mid-Continent Library ,699 4,690 3,283 1, ,947 Board of Disabled Services ,568 1, ,371 State - Blind Pension Tax , $ 178,565 $ 124,996 $ 87,497 $ 52,498 $ 21,008 $ 21,008 $ 21,008 $ 21,008 $ 21,008 $ 21,008 $ 21,008 $ 21,008 $ 611,617 Personal Property Assessed Value (5-Year Property) ,500,000 2,124,788 1,487,351 1,041, , , , , , , , , ,975 7,500,000 2,124,788 1,487,351 1,041, , , , , , , , , ,975 City of Blue Springs, Missouri Cost Benefit Analysis -3-12/23/2016

11 Projected PILOT Amounts on Project Equipment Estimated Assessed Value of Project Equipment $ 2,124,788 $ 1,487,351 $ 1,041,146 $ 624,688 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 PILOT Payment 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Tax Rate Taxing Jurisdiction per $ Total City of Blue Springs $ 7,735 $ 5,415 $ 3,790 $ 2,274 $ 910 $ 910 $ 910 $ 910 $ 910 $ 910 $ 910 $ 910 $ 26,495 Jackson County- General ,339 3,737 2,616 1, ,285 Jackson County - Mental Health , ,370 Central Jackson Fire District ,496 8,747 6,123 3,674 1,470 1,470 1,470 1,470 1,470 1,470 1,470 1,470 42,801 Grain Valley R-V School District ,984 40,589 28,412 17,047 6,822 6,822 6,822 6,822 6,822 6,822 6,822 6, ,607 Mid-Continent Library ,350 2,345 1, ,473 Board of Disabled Services ,685 State - Blind Pension Tax , $ 89,283 $ 62,498 $ 43,748 $ 26,249 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 305,808 City of Blue Springs, Missouri Cost Benefit Analysis -4-12/23/2016

12 Projected Tax Abatement on Project Equipment Estimated Assessed Value of Project Equipment $ 2,124,788 $ 1,487,351 $ 1,041,146 $ 624,688 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 $ 249,975 Abatement Percentage 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Tax Rate Taxing Jurisdiction per $ Total City of Blue Springs $ 7,735 $ 5,415 $ 3,790 $ 2,274 $ 910 $ 910 $ 910 $ 910 $ 910 $ 910 $ 910 $ 910 $ 26,495 Jackson County- General ,339 3,737 2,616 1, ,285 Jackson County - Mental Health , ,370 Central Jackson Fire District ,496 8,747 6,123 3,674 1,470 1,470 1,470 1,470 1,470 1,470 1,470 1,470 42,801 Grain Valley R-V School District ,984 40,589 28,412 17,047 6,822 6,822 6,822 6,822 6,822 6,822 6,822 6, ,607 Mid-Continent Library ,350 2,345 1, ,473 Board of Disabled Services ,685 State - Blind Pension Tax , $ 89,283 $ 62,498 $ 43,748 $ 26,249 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 10,504 $ 305,808 City of Blue Springs, Missouri Cost Benefit Analysis -5-12/23/2016