A variety of public and private programs are in place to provide financing alternatives to growing and relocating companies. We offer competitive industrial and commercial financing programs, tax incentives and assistance plans with an eye toward long-term, low down-payment packages. Best of all, we will customize a financing package to meet your individual needs.
The qualifying wage standard is the county median wage or regional North American Industrial Classification System (NAICS) average wage. An average wage for PEAK Jobs may be used to qualify for limited benefits In addition, eligible applicants must make available to full-time employees adequate health insurance coverage and pay at least 50 percent of the premium for full-time employees. The Secretary of Commerce is designated to determine the eligibility and approve the benefits of companies qualifying for the PEAK program.
PEAK for new jobs includes two types of projects: Basic and High Impact
Basic: At the time of application, all PEAK jobs must be paid an aggregate annual median wage of at least 100 percent of the most recently published annual median wage for the county in which the project will locate in Kansas. An average wage for PEAK Jobs may be used to qualify; however, qualifying through the use of the average wage limits the benefits received. A minimum of five jobs (in non-metropolitan counties) or 10 jobs (in designated metropolitan counties of Douglas, Johnson, Sedgwick, Leavenworth, Shawnee or Wyandotte) must be hired within two years from the PEAK agreement date.
For a PEAK Basic project, the Secretary can approve up to 7 years for the retention/refund of payroll withholding tax of PEAK-Eligible jobs.
High Impact: To qualify, companies shall meet the minimum program requirements as outlined above for a Basic project, but firms must also locate a minimum of 100 jobs within two years from the PEAK agreement date. For a PEAK High Impact project, the Secretary can approve up to 10 years for retention/refund of payroll withholding tax of PEAK-Eligible Jobs.
Companies using a median wage equal to or greater than the regional NAICS industry average wage standard to qualify may receive a refund or retain 95 percent of payroll withholding taxes for PEAK-Eligible Jobs, for a period of up to five years, if approved by the Secretary.
The PEAK program also has a limited amount of funds available for qualifying business retention projects. The funding available for PEAK retention projects has been extended through 2018.
In IRB financing, the bond issuer either directly loans the bond proceeds to a private business or acquires ownership of the property financed and leases it to the business. The loan payments or lease rentals are used to repay the bonds with interest. Typically, in a lease structure, the business is given an option to purchase the property at the end of the lease term for a nominal sum. Proceeds from the sale of the bonds are placed in escrow with a bank and used as directed by the business to pay eligible costs of constructing, acquiring and installing the facilities. The business may have up to three years to spend the proceeds of tax-exempt bonds on eligible property.
One benefit of IRBs issued by cities and counties is eligibility for full or partial property tax abatement for the financed facilities for up to 10 years and a sales tax exemption for labor and materials purchased for new facilities. These benefits apply to both tax-exempt and taxable bonds.
Issuance of IRBs by cities and counties is governed by Section 12-1740 et seq. of the Kansas Statutes Annotated. Kansas Development Finance Authority bond issuances are governed by Section 74-8901 et seq. Many bond issuers also have their own policies and regulations regarding issuance of IRBs and the granting of property and sales tax exemptions for the financed facilities.
Projects Eligible for Tax-Exempt Financing
Under current federal tax law, specific projects eligible for tax-exempt financing include manufacturing facilities; airports, docks and wharves; mass commuting facilities; certain facilities for furnishing water, sewage and solid waste disposal; qualified residential projects; local district heating and cooling facilities; facilities furnishing electricity or gas on a local basis; high-speed inter-city rail facilities and certain hazardous waste disposal facilities. The use of tax-exempt bonds for manufacturing continues to be subject to restrictions as to the size of the financing, what may be purchased with the bond proceeds and the amount of issuance costs that may be paid from bond proceeds.
Under Kansas law, taxable bonds may be issued for agricultural, commercial, hospital, industrial, natural resources, recreational development and manufacturing.
Customized Lease Agreement
Under a typical IRB issued by a city or county, a company enters into a lease of the facility from the bond issuer (the Kansas city or county where the financed facility is located). The rental payments are used to pay the principal and interest to the bondholders. When all bonds have been paid, the company may exercise an option to purchase the project for a nominal price, such as $100. The bonds are not general obligations of the issuer, payable from taxation; rather, they are sold on the strength of the company’s ability to pay principal and interest when due.
The basic security agreement for bondholders is a net-net-net lease. The lease is a company’s unconditional obligation to pay the bonds and interest through specified payments throughout the term of the lease. Because the financing is a lease/purchase, the company can take advantage of applicable depreciation guidelines, receive available tax credits and deduct interest payments as a business expense. The bond issuer does not exercise control over any aspect of the building’s construction or the company’s operations. During the term of the bond issue and within specified limits, a company may make structural changes to the building, replace equipment and machinery and even sell portions of the land no longer needed for future expansion.
Most bonds are structured to be repaid over 10 to 15 years. Principal repayment terms are flexible and can be structured to meet your company’s specific cash flow needs. Availability of bond financing will depend entirely on the creditworthiness of your company, as determined by the prospective purchaser of the bonds.
Property and Sales Tax Exemption
Whether your property is financed through tax-exempt or taxable IRBs, Kansas law (K.S.A. 79-201a) permits exemptions for your project from ad valorem (real and personal) property taxation for up to 10 years, commencing with the year after the year the bonds are issued. Cities and counties often require that all or a portion of the abated taxes be made available to local taxing jurisdictions in the form of payments in lieu of taxes. However, nearly every IRB issuer will provide property tax abatements to your company as an additional incentive to locate in the community. Unlike real property and real property improvements, business personal property acquired after July 1, 2006, is not subject to ad valorem personal property tax. Statute K.S.A. 79-3606 exempts the cost of building material and labor, as well as fixed items of machinery and equipment, from state and local sales taxes.
Simple Application Process
Most issuers use a simplified form to apply for IRBs. In some cases, it doubles as the form used to apply for property tax abatements.
Getting Your Bonds Issued
The bond issuance process can take as little as 60 days and generally follows these steps:
The Kansas Bioscience Authority (KBA) was created by the Kansas Economic Growth Act of 2004 to accelerate growth in the bioscience sector. Originally designed to be funded by the Kansas income taxes generated by bioscience jobs with a 2019 sunset, KBA has been repositioned as a market-based, self-sustaining venture capital organization with an unlimited future.
KBA invests its own funds, attracts co-investors, consults on the management of its portfolio companies, calls on its network of partners to bring on additional expert resources as needed, and looks to generate a return on, and of, KBA capital.
Focused on the industry sectors where Kansas has outsized advantages – agribusiness, animal health and human health, KBA brings deep industry expertise and capital raising experience to each opportunity.
As KBA prepares to invest more than $100 million in the bioscience sector, it looks to follow founding investors with its own investment in the early-to mid-term growth phase of the company. KBA attracts co-investors who bring added value while supporting the entrepreneur with its own management counsel as well as that of other experts. This approach drives to the successful launch of a company’s innovation and a strong return of, and on, capital for KBA and its co-investors.
Entrepreneurs who work with KBA’s investment team can expect a hands-on, personal approach by industry experts who are energized by the story-how the idea came to be, the state of its technology and the unmet market need.For more information regarding available programs please visit, KansasBIOAuthority.org.
A Community Improvement District (CID) is a real estate economic development tool which can be used to finance public or private facilities, improvements and services within a local city or county. The CID funding mechanism can be used to finance a variety of locally approved development-related activities, including: property acquisition, infrastructure development, parking and building construction within the district, and can also extend to certain infrastructure improvements outside the designated district, if those improvements are contiguous to the district and are deemed necessary to implement the development plan. A CID can derive revenues through special assessments, a district-only sales tax, or other funds as appropriated by the city or county.
Financing is provided through bond issuance or can be project generated on a pay-as-you-go reimbursement basis. Businesses within the district must approve the imposition of a district sales tax or property tax special assessment prior to its establishment. Those sales tax and special assessment proceeds are used to pay off bonds issued and/or contribute to the direct reimbursement of project-related costs. These special district taxes and special assessments have a maximum term of 22 years.Contacting the local governing body should be a first step if there is interest in considering the establishment of CID to assist in funding project-related needs.
Funds from the B&I program may be used to finance business construction, business acquisitions, expansions, machinery and equipment purchases and working capital. A company is required to provide sufficient cash or other assets as an assurance of its commitment to the project’s success and to meet minimum loan requirements.
B&I loans may be made in areas outside the boundary of cities with a population of 50,000 or more.
Rural Economic Development Loans and Grants Program (REDLG) – This program finances economic development and job creation projects in rural areas based on sound economic plans. Rural Economic Development Loans and Grants are available to any Rural Utilities Service (RUS) electric or telecommunications borrower to assist in developing rural areas from an economic standpoint, to create new job opportunities and to help retain existing employment.
Rural Business Enterprise Grants (RBEG) – Rural Business Enterprise Grants help eligible entities (public bodies, nonprofit corporations and federally-recognized Indian tribal groups) finance and facilitate development of small and emerging private business enterprises located in rural areas. This includes all areas other than cities of more than 50,000 people and the urbanized area contiguous and adjacent to such a city. Grant funds, which go to an eligible entity as noted above, help provide assistance to small and emerging private business. Projects that are regional in nature, collaborate with local and state resources and display a plan for sustainability are given the highest priority.
RBEG funds may be used for the following activities: