Newton staff present overhaul of economic development incentive policy, seek direction on ROI, location and fees

City staff presented a consolidated draft of Newton’s economic development incentive policy at a recent work session, proposing changes to tax-abatement criteria, a new matrix for calculating abatements, a rural housing incentive district (RHID) section and a speculative-building incentive.

The draft, staff said, also includes a firm data sheet to show the inputs behind the cost-benefit analysis used to calculate return on public investment. Rebecca, staff member, told commissioners, “This is what is actually on the books as of today. And the 1 that says draft is what we're trying to take these policies and kind of create 1 more modern comprehensive policy.”

Why it matters: The policy sets the rules staff will use to recommend tax abatements and other incentives to developers and employers. Changes to the formula, the baseline return-on-investment (ROI) threshold, or the set of qualifying locations could alter how much tax revenue the city forgoes to attract projects and which parts of Newton receive prioritized development support.

Key elements discussed

- Consolidation and additions: Staff said the draft groups multiple incentive rules into a single policy and adds three new pieces staff flagged as significant: an RHID policy, a speculative-building policy and a tax-abatement matrix designed to generate a single, clearer percent for an applicant.

- Firm data sheet and inputs: The draft includes a firm data sheet intended to show the underlying inputs (city cost shares, applicant-provided capital and job numbers, and state incentives) that feed the ROI output. Rebecca said staff will “reach out to the city” for estimates such as water-line costs so the analysis uses both developer and city inputs.

- ROI threshold and scope: Staff noted the city’s working baseline had been a 1.0 return; the draft proposes a 1.3 ROI threshold for industrial projects, citing a common standard. Beth, EDC staff member, told commissioners, “1.3 is the standard, for the IEDC,” and staff said they would add language clarifying that the 1.3 figure applies to industrial—not retail—projects.

- FTE and wage definitions: Staff recommended removing a prescriptive definition of a full‑time equivalent job and retaining a statement that the city’s preference is for new jobs to be full time with competitive benefits. Rebecca said: “We proposed that we just take out the definition and leave the FTE portion of that.” Commissioners suggested that if a definition is needed later the city could refer to the Department of Labor’s definition at that time.

- Capital investment ratio and public investment: The draft includes a potential capital investment ratio (example discussed: 2-to-1 private-to-city), but commissioners asked staff to clarify that the public investment portion should refer only to the city’s direct investment (not other public or state funds) and to show whether city infrastructure extensions (water, sewer) count in that calculation.

- Location weighting and utility capacity: Commissioners pressed staff to explain how location points are awarded, and recommended tying location preferences to engineering findings and to the city’s water and sewer master plan. Susan, commissioner, asked whether an updated utility master plan would “lend itself to a more informed conversation” about which areas the city should prioritize.

- Special development areas named in the draft: Kansas Logistics Park (KLP), the airport area, and the Neighborhood Revitalization Program area were listed as possible locations that receive extra weight in the matrix; staff said the list can be adjusted and mapped for clarity.

- Speculative buildings: The draft introduces incentives for speculative (spec) buildings. Rebecca said a recommendation from a recent competitiveness report was to try incentives for spec building development because consultants and staff repeatedly see prospects lost for lack of available buildings.

- Fee waivers, PILOTs and application fees: The draft shortens the city’s fee-waiver policy and suggests that waivers or reductions be available by request. Commissioners discussed payments in lieu of taxes (PILOTs); Donna, city staff member, said the city’s existing PILOT with the housing authority brings in “about 22,000 a year.” Staff proposed evaluating application fees to cover administrative costs (examples from other communities included flat fees; staff will return with options and ranges).

Questions and directions

Commissioners asked staff to tighten language so developers will not misread the policy, to make clear which public dollars count in the capital-investment ratio, and to add reference to utility capacity and the master plan when awarding location points. Staff were asked to show examples, to clarify where the 1.3 ROI applies, and to produce a cleaner chart/table showing how points translate to a percentage abatement rather than leaving the calculation open to subjective interpretation.

No formal vote was taken at the session. Staff said they will revise the draft to address the commission’s questions and bring it back for more review at a follow-up work session.