Offering land at fair and consistent prices to companies that want to start in or expand into a city-owned industrial park will help economic developer Cyndra Lorey do her job, the Rolla City Council heard Monday night.
And with just a little discussion, the council adopted an industrial pricing policy that offers incentives to companies that pledge to create new jobs that will pay above the county average.
The policy was accepted with no negative votes. Ten council members were present; absent were Louis Magdits and Fran Mazanec.
"We've been talking about this for about a year," City Administrator John Butz told the council at the meeting.
In his written commentary to the council, Butz noted the plan will cover pricing for property at the Rolla National Airport and the Rolla Industrial Park West, the platted land behind the Rolla Recycling Center.
"With development plans actively under way (for those two sites), staff and (Rolla Regional Economic Commission) are in need of a solid policy that can be shared with industrial/business prospects interested in locating in those facilities," Butz explained in his commentary.
He noted the policy "establishes fair market value of the parcels including infrastructure/development costs, but then outlines incentives to the prospective business for employment ($2,000 per job), historical presence in Phelps County, grant leveraging, capital investment and technology development.
In discussion at the meeting, Butz said Lorey, the economic development coordinator for the Rolla Regional Economic Commission, had reviewed the plan and offered a couple of editing suggestions, which were included in the final version.
Lorey's suggestions were to remove a limitation that linked the definition of any local quality jobs to the definition offered by the Missouri Quality Jobs Act. The policy itself offers this definition of a quality job, which was decided sufficient: "a full-time job with at least 35 hours worked per week each year. The average wage of the newly created jobs must equal or exceed the county average wage."
However, in a section regarding technological start-up companies, the Missouri Quality Jobs Act was clearly spelled out as a qualification for companies seeking additional time to create a minimum number of five jobs.
There are also discounts on the land purchase price of $100 for each $100,000 capital investment in the property.
Butz said the discounts for being a Phelps County company creating new jobs, being a technological company and making significant investment will make the costs comparable to other public entities.
"It is not free land," Butz said, noting that incentives come with investment.
Councilman Don Morris asked, "With all the incentives, we never reach a point where we're paying them to take the land?"
Butz said it would never be possible for the price to go below zero.
Page 2 of 4 - In response to questioning from Councilman Kelly Long, Butz noted that companies offering technology jobs will qualify for an additional five years, giving them a total of 10 years, to come up with the minimum of five created jobs.
Butz also said that the amount agreed upon at the beginning will be the amount used to set the incentives, so if a company pledges to create 20 but creates 50, it will receive the incentive for 20.
Butz also noted that the state has set up a list of the technological jobs that qualify for the quality incentives. That list is not included in the pricing plan, but it is in another document.
Asked by Councilman Tony Bahr about the price of land at the two sites, Butz said the land at the airport has been appraised at $6,100-$6,200 per acre.
There is no specific appraisal for the platted property behind the Rolla Recycling Center, but it works out to an estimated $12,000-$15,000 per acre with the cost of infrastructure development added to the known purchase price.
Butz indicated the city is more interested in offering long-term leases than to sell the property outright.
Companies that receive incentives will be required to divulge payroll information to the city administration, just as Brewer Science did for the Chapter 100 bonds issue.
Butz said there remains a question of property taxes in the airport. It is city-owned property, so property taxes might not apply. However, the airport is in Maries County, and county officials there are interested in property taxes.
"There's a grayness there," Butz said. City officials are discussing the matter with the Maries County assessor, and if it ends up that taxes are assessed, that revenue will be paid by the companies to the Maries County collector.
"This is not an exact science, particularly when a lease is preferred over outright purchase, but an established policy would provide some much-needed direction on local incentives," Butz noted in his agenda commentary.
Mayor Bill Jenks said the policy is needed because "you can't treat each entity differently."
After the vote, Mayor Jenks spoke optimistically about industrial growth.
"We literally have five different entities with boots on the ground," he said. "They're taking second and third looks."
He attributed a state certification received by the city this summer.
"The whole ballgame has changed," he said.
The mayor also complimented Lorey for her economic development work, and he added that the state economic development officials are showing new willingness to work with Rolla.
"We've started getting state support," he said, noting that state officials come to Rolla with Power Point demonstrations to show potential companies what the state can offer them. "We never had that before," the mayor said. Before, it was just what Rolla could offer.
Page 3 of 4 - Arming Lorey with the pricing plan, Jenks said he believes Rolla has an excellent chance of a least a couple of industry startups.
In other business, the council:
• Authorized Jenks to sign a renewal agreement with state prison officials to provide work crews from the Licking State Prison for Rolla city projects.
• Authorized the mayor to sign an agreement with Pierce Manufacturing for a new fire pumper truck.
• Heard presentations from several Rolla residents on various issues.
• Reappointed Meghan Benton to the Board of Building Appeals.
• Held a closed session.
Text of the city's new industrial development pricing policy
In order to be consistent with the pricing of the city's industrial property (i.e. Rolla National Airport, Rolla Industrial Park West), the City of Rolla has developed the following guidelines:
1. CONSISTENT INDUSTRIAL PRICING: The price per acre for undeveloped industrial property owned by the City of Rolla, Mo., will be based on fair market value of the land including projected infrastructure development costs. The price per acre for developed industrial property owned by the City of Rolla, Mo., will similarly be based on fair market value (inclusive of development costs). The actual price will be set by the City Council based on appraisal information and input from the Rolla Regional Economic Commission. In no case will the accumulation of incentives provided herein go below zero dollars ($0) in lease or land costs.
2. HISTORICAL BUSINESS INCENTIVE: Phelps County industries that have conducted business with a physical presence in the County for a minimum of 5 years seeking to expand their established industrial operations shall be provided a $1,000 per acre reduction in price.
3. QUALITY JOB CREATION INCENTIVE: The total purchase price shall be reduced by $2,000 per each new quality job created. The total Quality Job Incentive amount will not exceed $200,000. A "quality job" is defined as a full-time job with at least 35 hours worked per week each year. The average wage of the newly created jobs must equal or exceed the county average wage.
a. To qualify for this incentive, the business must create a minimum of five (5) quality jobs within three (3) years from the issuance of the occupancy permit and those jobs must be maintained for at least an additional five (5) years.
b. This incentive will be subject to deed restrictive language requiring the business owner to show proof of the new jobs created 3 years after closing on the property as well as on the 4th, 5th and 6th anniversary.
c. If the business fails to produce or maintain the agreed upon number of quality jobs, the property will revert to the City or the business will be required to reimburse the City for any incentives (pro-rated) provided under this policy.
Page 4 of 4 - 4. TECH START-UP INCENTIVE: Start-up companies engaged in technology based industries who qualify for the Missouri Quality Job Creation Incentive will have an additional five (5) years from occupancy to create the minimum five (5) jobs requirement.
5. PRIVATE CAPITAL INVESTMENT; The total purchase price will be reduced by $100 per each $100,000 of verifiable capital investment in the property to include site preparation, infrastructure and utilities (if applicable), building construction and equipment. This reduction does not pertain to design/construction engineering or permit fees.
6. GRANT FUNDING ELIGIBILITY/CREDIT: It is the intent and desire of the City to pursue grant funding for infrastructure whenever possible. Doing so requires "assurances" from the industry to the granting agencies and requires considerable cooperation in planning and execution with the City and may require a delay in commencement of facility construction.
a. For business willing to cooperate accordingly the City will further reduce the total land cost with a one dollar ($1) credit for each three dollars ($3) in infrastructure grant awarded.
b. For businesses not willing or unable to cooperate with grant funding procedures all infrastructure costs shall be assigned on a per acre cost based on actual costs incurred divided by the total acreage served by said improvements. In such cases the City will charge said costs over a 15-year period.