Raymore council approves first reading to activate Chapter 100 tax abatement for Building 5 at Raymore Commerce Center South

The Raymore City Council on March 24 approved the first reading of an ordinance to issue taxable industrial revenue bonds under a Chapter 100 plan for KCI Raymore Building 5 LLC, a step that will activate a previously approved development agreement and a 20-year real-property tax abatement for Building 5 at the Raymore Commerce Center South.

City staff and bond counsel told the council the Chapter 100 mechanism requires the city to take title to the property, issue industrial revenue bonds and immediately lease the property back to the company; the company then makes rental payments equal to the bonds'debt service, and the company effectively purchases its own bonds in a paper transaction. "It's actually a paper transaction because the company buys their own bonds," Sarah Granath of Gilmore & Bell said during the presentation.

That process, Granath said, is structured to protect the city's interests: the development agreement requires payment and performance bonds, a Phase I environmental study, insurance, and a triple-net lease. Granath also noted events of default that would allow the city to unwind the transaction and return the property to the tax rolls if the developer fails to build as agreed.

The development agreement and plan were originally approved in March 2023. Under the terms described to the council, the abatement for Building 5 will be implemented by issuing a series of bonds for each building or phase constructed; the pilot payment (payment in lieu of taxes) will be calculated per square foot as-built, with staged per-square-foot rates that begin at three cents per square foot for the first five years and rise to 71 cents per square foot in years 16'20. Staff described the Building 5 footprint as an estimated 555,000 square feet; staff said that final abatement amounts will be based on the as-built square footage.

Grant Harrison of VanTrust Real Estate, the developer, told the council the company has begun site regrading and anticipates a fast delivery schedule if the project proceeds: a building shell completed by December 2025 and full occupancy ramping into summer 2026. Granath said taxes on the property would be paid as usual during the construction year, with the abatement period beginning after construction completion (estimated first year of abatement 2026 and running 20 years thereafter).

Council members had no substantive questions during the presentations. Council member Holman moved approval of the first reading of the ordinance; the motion was seconded and carried unanimously, 7-0.

The ordinance before the council tonight authorizes the issuance of bonds and related agreements to activate the tax abatement for Building 5. Final bond issuance and closing will be future steps and would be required to effectuate the abatement and the land transfer described in the development documents.