City council discusses joining tax incentive program
The Baldwin City Council focused on economic development during its meeting Tuesday as it discussed a possible new program to aid local businesses.
Council member Bonnie Plumberg, representing the community development committee, informed the rest of the council of the program Network Kansas. The program would be for Douglas County cities with a population less than 50,000 people, which would be Eudora, Lecompton and Baldwin City. The cities would form a co-op and sell tax credits and then loan the money to businesses that either want to begin or expand.
“It’s all about generating jobs and helping people get their businesses off the ground and creating jobs in these cities,” Plumberg said during the meeting Tuesday.
Each city must make a verbal commitment to the other cities, but do not need to make any written agreements. The cities commit to selling a certain amount of tax credits, and if that amount is achieved then that is the amount of money that can be used to loan to businesses. If the city cannot sell as many credits as pledged, it does not receive the money.
The money given by businesses for the tax credits are donations that would go to the state and would be 75 percent deductable.
“If they, for instance, buy a $1,000 donation, they in turn get $750 of that back in tax credits to the state, and most likely through the federal government as well,” Plumberg said.
The program would have a board of directors that would make all the decisions on the loans. A leadership team, which will be made up of two representatives from each city, will also exist to oversee the program. The board would also be given 5 percent of the money to promote the project.
“You receive the money, you completely, you make the decisions on the loans, you make the decisions on if it’s a grant or a loan, you make the decision as to the interest rate,” Plumberg said. “It’s totally run by the board of directors.”
If Baldwin City decides to participate in the program, the city must fill out an application and sell a percentage of the credits by August 15. Dec. 15 would then be the deadline to have the rest of the tax credits sold.
Plumberg said an opportunity exists for Baldwin City to enter the program by itself and not with the other cities, but it would be in the city’s best interest to begin as part of the co-op with Eudora and Lecompton.
Since a portion of the credits must be sold in just more than a month, the council didn’t want to wait to the next meeting to decide.
Although no action was taken Tuesday, members of the council had a conference call Wednesday to receive more information on the program and could make a decision at a special meeting later this week.