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Wichita city council to address misunderstanding

The Wichita city council will address a misunderstanding regarding imprecise language in an economic development incentive agreement.

This week the Wichita City Council will address a mistake or misunderstanding regarding an economic incentive. Briefly, a company that received a tax abatement believed that land was included in the abatement. When it received a bill for tax on the land, it paid it and inquired to the city as to why it received a bill for taxes it believed it would not owe.

Documents for the meeting state: “The agenda report and Economic Development Incentive Agreement did not specifically state that the land would not be exempt from property tax.” The agreement, which was approved at the January 16, 2018 council meeting, states: “… it is the City’s intention that the acquisition and equipping of a building by the Company pursuant to Section 1.A., above, shall be entitled to an 100% exemption from ad valorem taxation …” (Section 1.A. specifies a time frame and amount of investment, which it appears the company satisfied.)

The ordinance that the council passed states: “5. Tax exemption will be given only for the acquisition and equipping of the building.” It seems that the term “acquisition” is the source of uncertainty. Another source of confusion might be the original agenda packet which refers to “estimated value of the real property tax exemption.” The usual definition of real property is buildings and land.

The recommended action is that the council side with the company, that is, grant the tax abatement on land as the company believed it would receive, and apply the abatement to the remaining years of the agreement. Additionally, the city will reimburse the company for the taxes it paid on the land.

In the agenda review meeting on Friday, the city manager said that the documents are not clear regarding land and that the city is taking steps to clarify language in future agreements. Also, at least two staff members will be involved in calculations.

City staff assured the council that the cost-benefit analysis has been revised. But the numbers contained in the agenda for this week are exactly the same as in the original agenda from January 2018.

Of note, this is not the only correction the council may want to address this week. In a different agenda item regarding tax increment financing for the Chester I. Lewis Reflection Park, a table is titled “West Bank Redevelopment District Delano and Stadium Project.”

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