Wichita approves $40.2 million in industrial revenue bonds for Cessna improvements
12/03/2013 10:40 AM
08/08/2014 10:20 AM
The Wichita City Council approved issuing $40.2 million in industrial revenue bonds for Cessna, a move the plane-builder says should create at least 50 more jobs.
The bonds approved unanimously Tuesday are the first installment of a $513,600 letter of intent for Cessna bonds authorized by council in August. The council has issued $1.2 billion in industrial revenue bonds to finance expansion and modernization of the Wichita Cessna facilities since 1981.
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. The company will buy its own bonds.
Proceeds will finance capital investment on Cessna’s 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 will receive a 100 percent property tax abatement on the improvements for five years, with a second five-year term subject to council approval.
The jobs created will average a little more than $52,000 per year, city officials said.
“I’d like to confirm to the public that what we’re doing is voting to allow Cessna to purchase $40 million of their own bonds for all these improvements,” Vice Mayor Pete Meitzner said.
“If we don’t, they could easily talk about purchasing the land, building and equipment in other areas of the country and state, and the jobs go with it.”
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.
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.
The bond issue drew no public opposition during the meeting.
Wichitan Lonny Wright urged the council to approve the bond issue, calling it “an easy decision for you to make.
“I’m proud to be pro-Wichita, home of the world’s largest manufacturer of general aviation aircraft,” Wright said.
“They have been a good neighbor to us, our families have been involved with them and they’ve done a lot here.”