Market Insight - Spec Industrial Program (August 2018)

SPECULATIVE INDUSTRIAL BUILDING PROGRAM Market Insight AUGUST 2018

City of Wichita Economic Development Policy and Incentives

In 2017, the City of Wichita adopted a Speculative In- dustrial Building Program. The Spec Industrial Program provides an incentive to provide large industrial/warehouse space needed in Wichita for Economic Development re- cruitment. Upon city council approval, eligible projects—see build- ing requirements below—will receive sales tax exemption on all materials, as well as a 95% tax abatement for the first five years. The following five years 50% tax abatement will be granted contingent upon an occupancy rate of at least 50%. The Center for Economic Development and Business Research (CEDBR) of Wichita State University will conduct a Cost/Benefit analysis on each project ensuring a ratio of benefits to cost of no less than 1.3:1 to guarantee the bene- fits to the city outweigh that of the tax abatement. The project must have architectural plans, engineering plans, proof of funding, and proof of control of ground be- fore the initial meeting with the City of Wichita Economic Development Office and the City of Wichita Bond Counsel. Upon approval from the Economic Development Office, the Cost/Benefit analysis will be conducted by the CEDBR. Building Requirements • At least 100,000 square feet industrial warehouse • At least 28 foot ceiling clearance • Issuance of Industrial Revenue Bonds from the City of Wichita Bond Council • Project to start within 120 days of city council approval • Limit of 15 months to finish construction • Located anywhere within the Wichita city limits Steps to Abatement • Create architectural plans, engineering plans, proof of funding, and proof of control of ground • Meet with City of Wichita Economic Development Office and City of Wichita Bond Counsel to disclose plans • Send project details, in form of a Firm Data Sheet, to CEDBR to conduct a cost/benefit analysis, with a re- quirement of a ratio minimum of 1.3:1 with city benefit exceeding the cost of abatements

• Set meeting with City Council where a presentation of the project summary, prepared by the Economic Devel- opment Office, as well as a Resolution, prepared by the Bond Council, will seek approval from the Mayor. • Upon approval, the developer will be granted a sales tax exemption form • Construction begins and ends within the city’s mandated timeline • Bonds will be issued upon completion of the project as the developer is able to produce all receipts of costs re- sulting from materials and construction • Tax abatements are granted for the following tax year post construction completion Additional Details • 95% tax abatement for years 1-5 • 50% tax abatement for years 6-10 contingent upon a minimum of 50% occupancy • $5,000 application fee through Industrial Revenue Bonds • $2,500 annual fee for maintenance of Industrial Revenue Bonds Accounts • Cost/Benefit analysis charge of $771 to CEDBR of Wich- ita State University • Minimum lease is 25,000 square feet of the 100,000 square foot speculative warehouse • Maximum division of the warehouse is four tenants, each with a minimum of 25,000 square feet of the 100,000 square foot warehouse • Annual reporting requirement to the City of Wichita Eco- nomic Development Office in terms of leasing status and occupancy

Shane Pullman Commercial Advisor spullman@naimartens.com 316 262 0000

435 S. Broadway, Wichita, KS 67202 www.naimartens.com

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