Industrial Revenue Bonds (IRB) and Tax Abatements

Industrial Revenue Bonds (IRB)

Kansas law allows cities to provide qualified businesses an exemption of up to 100% of the new real property taxes for up to 10 years by the issuance of industrial revenue bonds. The issuance of industrial revenue bonds also allows cities to offer a sales tax exemption on the purchase of building materials in Kansas.

Industrial Revenue Bond/Tax Abatement Policy
Application-Existing Business
Application-Master Resolution
Application-Series Form

Tax Abatement Summary 2007

The City of Olathe may provide a 50% tax abatement to new and existing businesses on real property investments if the project meets the criteria listed below. Depending upon how the abatement is structured over the term, abatement may slightly exceed an overall average of 50%. Listed below are the precedents to granting property tax incentives.

1. Existence of Economic Benefit: Evaluation of the projects economic benefit may include but not be limited to the amount of capital investment, whether the project produces value-added products and services, and whether the project provides a positive fiscal impact and economic impact.
2. Type of Business: The project must be identified as desirable to stimulate the local economy and improve the quality of life for its Olathe citizens.
3. Targeted Industries: A 5% increase in the abatement may be considered for projects that are targeted industries by the State of Kansas, the City of Olathe, or the Olathe Economic Development Council. The current target industries include quality high technology businesses, office development, and location in the Downtown Core. Each year the Olathe Economic Development Council will provide the city with a revised target industry list for approval by the governing body.
4. Maintain Existing Tax Base: Assistance will be given to new industries that invest in new buildings, building expansion, or acquire new machinery and equipment but the amount of property taxes or special assessments on the existing land and facilities shall not be reduced for new development projects.
5. Definition of New Business: The business is new to Olathe or has not had facilities and operations in the city of Olathe for a period of at least one year.
6. Definition of Existing Business: The business shall have had facilities and operations in the city of Olathe for a period of not less than one year.
7. Transfer of Ownership: The property owner must obtain the City’s written consent before transferring majority ownership of the property, the city shall also determine if the owner and the property continue to qualify for the exemption.

Abatement Criteria and Adjustments:

All projects receiving an abatement must meet the following criteria.

1. Employment – Wages: The city expects projects that pay above average wages. Abatement percentage may increase or decrease up to 10%, depending on the projects conformance.
2. Location: A strong consideration will be given to an applicant’s business that will be located in an area targeted for economic development or redevelopment. An abatement adjustment of up to 10% may be considered for projects that do not meet this criteria.
3. Design Criteria: Projects must be in compliance with the city’s Comprehensive Plan and must utilize construction materials that meet or exceed the requirements set forth in the design guidelines as provided by the city’s Planning Department. An abatement adjustment of up to 10% may be considered depending on the projects conformance to this criteria.

New Business Tax Abatement Schedule:
Capital Investment Normal Term
$750,000 but less than $3 million………………3 years
$3 million but less than $4 million..…………….4 years
$4 million but less than $5 million….…………..5 years
$5 million but less than $6 million.……………..6 years
$6 million but less than $7 million……………...7 years
$7 million but less than $8 million……………...8 years
$8 million or greater...…………………………....10 years

Existing Business Tax Abatement Schedule:
Capital Investment Normal Term
$750,000 but less than $1 million..…………….3 years
$1 million but less than $1.5 million…………...4 years
$1.5 million but less than $2 million...………....5 years
$2 million but less than $2.5 million……..…….6 years
$2.5 million but less than $3 million…………...7 years
$3 million but less than $3.5 million…………...8 years
$3.5 million but less than $4 million…………...9 years
$4 million or greater.................……...…………...10 years

*See resolution for procedure, schedule and fee information.