Panasonic KS factory gets millions more from state, city and county

Crews recently felled trees in an area northeast of the former Sunflower Army Munitions Factory in Johnson County.  Panasonic plans to build a $4 billion factory there to make batteries for electric vehicles.  The factory and the four water towers are at the top.

Crews recently felled trees in an area northeast of the former Sunflower Army Munitions Factory in Johnson County. Panasonic plans to build a $4 billion factory there to make batteries for electric vehicles. The factory and the four water towers are at the top.

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Johnson County will add another $15 million to a growing pot of incentives dedicated to Panasonic’s planned new $4 billion plant for De Soto.

The County Board of Commissioners voted on Thursday to spend $7.5 million on local road improvements and commit an additional $7.5 million to build a new fire station with hazmat capabilities for factory.

Kansas officials have already committed $829 million in incentives to lure the Japanese electronics maker to De Soto. This includes $500 million in refundable tax credits, allowing the company to not only reduce its tax burden, but also receive money directly from the state.

But the state’s unprecedented incentive program was just the start.

De Soto also endorsed a local incentive for the company. The city’s tax increment financing deal is expected to divert more than $202 million to the plant developer from Panasonic.

And the Kansas Department of Transportation will add another $26 million to build new roads around the plant.

Only two Johnson County commissioners questioned the incentive plan at Thursday’s meeting.

Michael Ashcraft, who represents the county’s Fifth District, said he didn’t understand why Johnson County was being asked to contribute fire services. The property is within the city limits of De Soto, but the Northwest Consolidated Fire District provides fire services for the area.

“It puts the county potentially in a precarious funding or support position with very little oversight,” he said.

Maury Thompson, deputy county superintendent, said the fire district does not have the resources to fully fund the new station. He pointed out that the county’s $7.5 million would not be enough to build the new fire station, which must have special capabilities for the hazardous materials used at the battery plant. The fire station will also need more funding for equipment and ongoing operations.

Charlotte O’Hara, who represents the Third District, said the county doesn’t need to multiply incentives.

“My question is, how much is too much?” O’Hara, who is running for chairman of the commission, asked during a meeting last week. “We have other needs.

O’Hara said she fears more grant applications will come as the larger Sunflower site grows. Panasonic’s giant factory is expected to take up only part of the 6,000 acres that De Soto has already annexed from the former munitions factory that the military has been clearing for years.

‘I’m shocked’

Panasonic chose to build its plant in De Soto after fierce competition between Kansas and Oklahoma.

The competition pushed both states to pass legislation creating new incentives specifically for the battery factory.

In Topeka, Governor Laura Kelly’s administration kept the details of the project secret and forced lawmakers who wanted to know the details of the legislation — and the company behind it — to sign non-committal agreements. disclosure.

Kelly and a panel of lawmakers secretly voted on the $829 million incentive package, not releasing details until the company’s official announcement.

On Thursday, O’Hara read a Star article that revealed Kansas hadn’t secured any hiring or salary commitments from Panasonic — a common requirement in many incentive deals.

“I’m shocked,” she said. “Boy, are we babies in the woods. We can’t even read a contract.

County Commission Chairman Ed Eilert described Panasonic’s incentive program as “pay-as-you-go.” For example, he said state incentives would be adjusted downward if Panasonic didn’t hire 4,000 people or invest $4 billion.

But that’s not exactly how the state’s agreement with the company reads. As long as Panasonic invests $1 billion, it will be eligible for $500 million in refundable tax credits. The company will also receive a 10% discount on its entire payroll for 10 years, although it can hire any number of workers at any salary it chooses.

Johnson County The $15 million contribution will come from a special county fund created after receiving millions in federal pandemic relief funds.

The county received $117 million from the American Rescue Plan Act. But Thompson said the funds no longer had federal conditions attached because they were transferred to a special countywide stimulus fund after the county said it lost revenue during the pandemic.

“There are special requirements for how we use these funds, so we have to be very careful with our terminology,” he said. “So it’s not ARPA dollars now. They really lost their identity.

Several members of the public have called on the county to reject the incentive proposal or at least slow down approval after raising concerns about rising property taxes and potential safety issues with lithium used at the facilities. battery manufacturing.

“I would just say that this project isn’t quite ready for prime time,” said Overland Park resident Will Hoerl. “You have to take it back and watch it some more.”

Commissioner Becky Fast, who represents Johnson County’s First District, said the county probably should have upgraded the two-lane roads surrounding the old munitions factory anyway.

“So it was going to happen,” she said. “And we’re getting $26 million from the state that we wouldn’t have gotten if we had to do it ourselves.”

Millions for new roads

The Kansas Department of Transportation will contribute the state’s $26 million Transport program inherited from Eisenhower.

The department has planned to spend $20 million per year over 10 years as part of a special economic development fund within the program. So the $26 million to help Panasonic’s factory will cut funding for other years of the program, said Calvin Reed, KDOT’s senior director of engineering and design.

In De Soto, KDOT plans to reconfigure approximately 4.5 miles of two-lane roads into split four-lanes. The funding will target W. 103rd Street and is expected to improve travel from three exits off the K-10 Freeway.

“This is the biggest development in state history,” Reed said. “And it’s really important that we have these transport solutions in place so that they can get their workers to the site efficiently and effectively.”

This road project could cost about $35.5 million, including Johnson County’s $7.5 million contribution and another $2 million expected from De Soto.

While the state and county fund most of the initial costs, Reed said the city would be responsible for ongoing maintenance and repairs.

Last week, De Soto city council approved its 20-year tax increase financing plan for the Panasonic factory.

The city’s TIF agreement will allow Sunflower Redevelopment LLC, which plans to build the plant for Panasonic, to be reimbursed for approximately $202.6 million in project costs. TIF grants work by redirecting some or all of future property tax increases to developers to help cover construction costs.

De Soto Mayor Rick Wagner said the TIF will protect De Soto’s $232 income. But the deal effectively means the city and county will receive no property taxes on the project for the next two decades.

The city also expects to approve a sales tax exemption on building materials. The state has already approved $60.2 million in sales tax exemptions under its $829 million incentive program.

During the municipal council of July 21, a resident asked if the TIF plan would lead to an increase in residential property taxes.

Councilman Kevin Honomichl said the TIF was intended to broaden the city’s tax base. He noted that the city was not spending from its general fund for the project, but was relying on future property tax revenue from the plant.

“Without the public-private partnership there is really no opportunity to increase the tax base because nothing is happening,” he said. “…I know this council is really motivated to diversify our tax base, to increase our tax base for the purpose of lowering taxes instead of giving out money that’s going to raise property taxes.”

This story was originally published July 28, 2022 5:39 p.m.

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Kevin Hardy covers the Kansas City Star business. He previously covered business and politics at the Des Moines Register. He also worked for newspapers in Kansas and Tennessee. He graduated from the University of Kansas

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