Politics & Government

New rules give "spec building" developer a bigger tax break

A week after passing new guidelines giving tax breaks to developers of speculative industrial buildings, the City Council granted a 100 percent property tax abatement to a builder planning a middle-size warehouse in south Wichita.

The decision on the tax abatement was delayed a week because developer David Shannon had originally been projected to get a 90 percent tax abatement.

That changed and Shannon became eligible for the extra 10 percent after the council passed new policies last week offering full tax abatement for speculative buildings of 50,000 square-feet or more.

The original request was delayed from last week to this week so that paperwork could be redone to increase the subsidy for Shannon's planned building, a 90,000-square-foot warehouse-type building.

City staff had proposed a sliding abatement scale based on square footage with less-risky smaller buildings getting less of a tax break.

The city is trying to encourage developers to build "spec" industrial projects – buildings that are put up with no identified user — because of complaints from the business community that Wichita lacks business-ready industrial space.

City officials say the lack of spec buildings hurts Wichita's efforts to attract new companies that don't want to absorb the delays and cost risks involved with building their own facilities.

The tax abatement will save the developer about $100,000 a year.

It will run for five years and be renewable for a second five if the building's future tenants meet job-creation goals.

Conservative activist Bob Weeks told the council he thinks the new policy gives an unfair advantage to new construction. He said it hurts owners of existing — and taxpaying — buildings “when City Hall sets up competitors with a large cost advantage.”

The council unanimously approved the tax break for Shannon’s building.