Tax exemptions on millions of dollars in Coleman Co. industrial revenue bonds could be in jeopardy today.
Wichita city staff issued a report recommending against the exemptions, saying the company hasn't lived up to its end of the agreement.
The Wichita City Council will hear the issue today.
The company agreed to hire 200 workers for a plant expansion as part of its approval for a series of IRBs beginning in 1999. The bonds relieve the company of paying property, sales and interest income taxes associated with the project up to 10 years in exchange for hitting economic development goals.
The company expanded the Wichita facility, but it never hired the workers it thought it would. Today, the company says it has grown, outsourced operations and changed in a way that compensates for the nonexistent jobs.
Several council members contacted Monday said that companies should adhere to their agreements, but they added that they want to hear the arguments before making a decision.
"It's a gray area," said council member Jim Skelton. "I got to say it's a tough thing. If they do not meet their commitment as they said they would, it'll be hard to give it my stamp of approval."
Efforts were being made Monday to reach a deal with the company to improve its chances for renewal, said council member Jeff Longwell. He didn't offer specifics.
The council has faced the same dilemma with Coleman's IRBs every year since 2005 and each time voted for a one-year extension. Last year, the council passed a new policy to make its IRB policy more flexible, making it easier to hit the jobs number, but Coleman still fell short. The council approved the extension anyway, 5-2, with Skelton and Janet Miller voting no.
The new policy asks companies to hit the promised job target at some point after the bonds are approved. Coleman would pass if it had hired the 200 at some point since 1999, but it hasn't. In 1999, the company employed 1,127 in Wichita. Employment peaked in 2002 and has fluctuated since then. At the last check in May, the company employed 1,093 in Wichita, of which 283 were contract workers.
Coleman officials respond that its payroll in 1999 was $38 million. In 2010 it is $43 million.
Average pay has risen from $34,054 to $49,664 as the company has grown and acquired other companies.
Coleman has become more of a headquarters than a manufacturing plant, said Marlyn Ash-Potter, Coleman's vice president and controller.
The company still has a few product lines in Wichita, but most are elsewhere in the world, she said. Instead, Wichita has more engineers, designers, market researchers, accountants and executives. The higher wages have a greater economic impact on the community.
The intent of the bonds is economic development, she said, rather than just jobs.
"We have shifted to become more of a global sourcing company than a manufacturing company," she said, "so we think we have met the intent of the bonds."
A perfect example, she said, is Coleman's purchase this fall of Aero Products International, a provider of air-filled mattresses and chairs under the name Aerobed and Aero Sport.
The acquisition will mean 15 to 20 jobs moving to Wichita, she said.