By ALICIA FEYERHERM
Tiger Media Network
On Thursday, the Hays City Commission approved a resolution to start the process for the Lincoln School Reinvestment Housing Incentive District (RHID), as well as two resolutions evidencing intent to issue industrial revenue bonds (IRBs).
The commission started with the Lincoln School RHID. Developer Mike Graham purchased the Lincoln Elementary School property after it was closed in May as part of the USD 489 Bond projects. Graham plans to convert the school building into one and two-bedroom apartments and then construct seven 4-plex buildings on the open space. Graham is seeking an RHID to help offset costs.
Assistant City Manager Jarrod Kuckelman reminded the commission of the basics of RHIDs.
RHIDs are established by cities or counties and require a housing needs analysis. The RHID then captures 100% of the incremental real property taxes (less the state and school district mills) and returns those gains to the developer for up to 25 years. The property tax increment can be used to reimburse costs such as site preparation, streets, water mains, storm sewers and gas/electrical services. At the expiration of the RHID, the full valuation is restored to all taxing jurisdictions.
“This RHID will be a bit more unique than some of the previous ones that Hays has done in that it does include an existing building along with some new construction,” Kuckelman said.
Kuckelman noted that the City agreed to a similar RHID for an existing building, the Frontier Apartments, located across the street from St. Joseph Catholic Church.
The projected RHID revenue is $1.325 million, which would only cover about 30% of the total RHID-eligible costs. The developer is also applying for IRB sales tax exemption to be discussed at a later date.
The adoption of the resolution is only the first step towards establishing the RHID, with final action not scheduled until March 2026. The resolution passed 5-0.
Kuckelman then reviewed the issuance of industrial revenue bonds for the proposed 24/7 truck stop.
The developer plans to construct a 9,000 square-foot travel plaza and convenience store near Exit 157. The space would include gas and diesel fuel pumps, EV charging stations, a fast-food restaurant, dog park, and RV camp sites.
“IRBs are kind of a unique bond issuance, which are meant to provide at least one of two incentives: either a property tax abatement and/or sales tax exemption on materials,” Kuckelman said.
In this case, the developer is only seeking a sales tax exemption on materials. IRBs do not impact the City’s debt limit or rating and do not require taxpayer commitment. The developer is solely responsible for payment obligations. The estimated benefit is valued at $125,687. The developer will also be seeking CID and TIF incentives at a later date.
The total investment for the developer is $11.1 million.
Citizens are allowed to comment on specific agenda items after they have been introduced. Citizen David Koshiol pushed back on this incentive.
“I think that $125,000 in sales tax might go a long way to a city who runs on sales tax,” Koshiol said.
Koshiol noted that if 24/7 was not to use the land, other truck stops or gas stations would take the opportunity.
“It just seems like we’re tossing out money to anyone who wants to come and invest here,” Koshiol said.
Koshiol ran for City Commission this year, but missed being elected by 63 votes. After attending last week’s work session, Koshiol also posted a video on Facebook criticising the commission’s use of IRBs and RHIDs.
Mayor Sandy Jacobs addressed this in a statement at the end of Thursday’s meeting.
“There was a clear attack on social media shared with me by others, because I stay out of the fray on social media, so someone would have to bring it to my attention,” Jacobs said. “From a personal perspective, I have served this community in various ways for 50 years. I ran for public office to continue serving, to work within my belief of doing the right thing every day.”
The resolution passed 5-0.
A public hearing was then opened regarding the issuance of the Agiliti Industrial Revenue Bonds and An Exemption from Ad Valorem Taxation.
Agiliti is a manufacturing and medical technology company located in Hays that is looking to expand its operations. Agiliti currently employs 91 employees and is anticipating adding another 140 jobs.
This project is eligible for a 10-year property tax abatement in addition to the sales tax exemption..
The developer’s total investment is estimated at $6.55 million.
The estimated sales tax benefit is $101,036. The City’s property tax abatement is estimated at $92,143 per year. The company has also worked with the state to secure other incentives
Since the property tax abatement component is in place, a public hearing is required. If the resolution is approved, the commission would approve the ordinance issuing the bonds in December.
Vice President of Agilit Larry Askew said there are a lot of options the company could have chosen and he appreciates the commission for considering options that will allow Agiliti to stay in the area.
“All of the incentives we have sought and are acquiring through the state are all performance-based,” Askew said. “So this is certainly not an attempt at any sort of a grab or to do anything other than grow organically and in a very healthy way in the community.”
Eddie Herman, president and CEO of Hays Medical Center, spoke in favor of the proposal.
“For me, for Hays Medical Center, we see this as a really great thing for our community,” Herman said.
Koshiol spoke up again, disagreeing with the issuance of the bonds.
“I believe that Agiliti would stay here regardless of the incentive,” Koshiol said.
Askew said it was not a guarantee the company would have stayed in the area, as the building is not currently theirs. Part of the expansion includes the purchase of their existing facility.
Askew further discussed how Agiliti is and will continue to support the community. He mentioned that he is working with Fort Hays State University to develop a pipeline of workers, ensuring that people who want to stay in the area have access to good-paying jobs.
“We’re not just an empty building full of minions run by some place in Minneapolis,” Askew said. “We are a thriving business and I’m very proud of it.”
The hearing was closed and a motion was made on the resolution.
Vice Mayor Mason Ruder thanked Agiliti for its commitment to Hays.
“A company as large as your guys’, you could go anywhere you wanted to,” Ruder said.
Koshiol made a final comment.
“I wouldn’t have as much of an issue with us giving out the IRBs and the other incentives if we weren’t just handing them out to everyone,” Koshiol said.
Koshiol noted this is not an issue with Agiliti.
“You guys are worth an investment like this,” Koshiol said. “Perhaps all the other businesses and developments that we’re giving these incentives to, maybe we should have held out for a business like this.”
The resolution passed 5-0.
Other items from the meeting included:
- Presentation of service awards to city employees
- Approval of health insurance for city employees
- Approval of authority to award contract for a multi-use path
- Approval of Midwest Energy Utility Agreement for Tallgrass Phase 4
The next City Commission meeting will take place on a different day due to the Thanksgiving holiday. The commission will meet at 4:00 p.m. on Tuesday, November 25.