Cessna to ask Wichita City Council for $40.2 million in industrial revenue bonds
12/02/2013 5:35 PM
12/02/2013 5:35 PM
Cessna officials will ask the Wichita City Council on Tuesday to issue up to $40.2 million in industrial revenue bonds to finance 2013 expansion and upgrades on its local campus.
The company, which has a Wichita workforce of more than 5,400, pledges to add 50 jobs in the first salvo of improvements under a $513,600,000 letter of IRB intent issued by the council in August.
The bonds will finance capital investment on its Wichita campus, including improvements to production space for product development and aircraft manufacturing. Also included are computer hardware and software, tools, new furniture and fixtures.
Cessna also will receive a 100 percent property tax abatement on the improvements for five years, with a second five-year term subject to council approval.
Cessna reports it has invested almost $39 million in tools, computer equipment and furniture, fixtures and other equipment. In addition, it has invested a little more than $1.2 million in property improvements.
The value of the abated taxes could be as much as $37,197 for the first year, including $10,015 from the city, $17,637 from USD 259 and $9,545 from the county and state, according to city documents.
Council member Lavonta Williams called the IRB issue an important step in keeping Cessna invested in Wichita.
“It’s important for us to partner with all of our companies like this,” she said. “We can’t afford to lose any more businesses, lose any more jobs. This is the only way we can try to maintain the businesses we have.”
Williams compared the bond issue to Seattle’s efforts to retain the Boeing 777X work after the Machinists union turned down a deal to build the plane there in exchange for worker contract cuts.
“When you look at it and think about it, every city has their own way of maintaining the jobs they have,” she said. “We were in Seattle when Boeing was talking about leaving, and Seattle was doing the same thing we are: What can we do to keep these jobs here? Everyone is trying to maintain jobs and grow jobs to make sure their communities are employed.”
Industrial revenue bonds are issued by governments without any taxpayer liability, a type of municipal bond repaid from the proceeds of bond sales. They do not affect the tax revenue or the credit of the issuing governmental entity.
Cessna, incorporated in Wichita in 1927, has four major production and support operations, including the Citation line of business jets, the Caravan line of turboprop aircraft, a number of single-engine aircraft and its service and maintenance shops.
The company also builds aircraft parts.