Saturday, April 19, 2014

Development group secures PILOT funds

By DOUG CARDER, Herald Senior Writer | 6/21/2013

Franklin County Development Council has started building a war chest to assist with the recruitment of news businesses and industry to Ottawa and the county, economic development officials said.

And the City of Ottawa finalized an agreement with the development council Wednesday morning to assist the process.

Franklin County Development Council has started building a war chest to assist with the recruitment of news businesses and industry to Ottawa and the county, economic development officials said.

And the City of Ottawa finalized an agreement with the development council Wednesday morning to assist the process.

Ottawa city commissioners voted 5-0 to adopt an agreement with the group that stipulates the development council will use PILOT (payments in lieu of taxes) funds for recruitment of news businesses and industries and other economic development projects.

The contract formalized what already was an unwritten agreement between the two entities on how those monies would be spent, since the program began last year with the recruitment of Monoflo International to Northeast Ottawa Industrial Park.

To help Monoflo, a plastic products manufacturer, defray some of its start-up costs in the industrial park at 1550 N. Davis Ave., Ottawa., the city granted the company a 65-percent tax abatement for the first 10 years of operation. As part of the tax abatement agreement, Monoflo agreed to participate in a PILOT program. Under the program, Monoflo agreed to pay $9,300 per year — 10 percent of the taxes to be abated each year — to the development council, for a total of $93,000 over the course of the next decade.

In April, city commissioners gave the green light to a tax abatement for Astro Truck Covers Inc., 801 E. North St., which relocated to the Ottawa Industrial Park after a Feb. 8, 2011, fire burned part of its facility in Garnett.

Under the 65-percent tax abatement plan, Astro Truck Covers agreed to participate in a PILOT program that would direct about 12 percent of the abatement into the FCDC’s coffers

“It would result in a net abatement of about 53 percent,” over the life of the 10-year abatement period, Scott Bird, the city’s finance director, told city commissioners in April.

Astro Truck Covers, which employs about 50 workers, produces truck lids and caps, bed systems and other accessories,

With two companies now participating in the PILOT program, city and development council officials said they decided to adopt the PILOT payment agreement, which calls for the monies to be used for economic development projects. The group cannot use the PILOT funds to pay for staff salaries, office rent expenses or utility payments, Richard Nienstedt, city manager, told city commissioners Wednesday.

“It gives us one more tool in our toolbox to help with recruitment [of new businesses],” Jeff Seymour, Franklin County Development Council executive director, said Wednesday.

The PILOT program is a creative way to generate resources for economic development projects, Mike Skidmore, city commissioner, said.

Blake Jorgensen, city commissioner, pointed out that other communities — such as Topeka and Hutchinson — have offered large financial incentives to attract big corporations to their communities.

Topeka, for example, put together a $9.1-million incentive package, which included 190 acres of land, to bring chocolate maker Mars Inc. to the community, according to media reports.

Ottawa is ideally located to attract new businesses, but sometimes location and access to transportation are not enough, Jorgensen said.

While the city and the development council do not have the financial resources to put together multi-million incentive packages like Topeka, the PILOT program offers an opportunity to build a war chest to assist with the costs of recruiting new business and industries to the community, Jorgensen said.

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