Lenexa council approves $1.8 million tax abatement for expanded UPS facility

Photo credit Takahiro Nagao. Used under a Creative Commons license.

United Parcel Service Inc. will receive a 10-year, 55-percent property tax abatement valued by the city of Lenexa at $1.8 million for the company’s $40 million expansion of its sorting facility at 14650 Santa Fe Trail Drive.

The Lenexa City Council unanimously approved the abatement, to go into effect Jan. 1, as part of its consent agenda at its meeting Tuesday. The council also authorized the city’s issuance of up to $40 million in industrial revenue bonds (IRBs), to close by Dec. 31, for UPS subsidiary BT Property LLC for the expansion.

BT Property built and equipped a 157,000-square-foot addition to the facility to upgrade its infrastructure and improve existing sorting equipment with the latest technology to increase its capacity for future needs, Lenexa City Attorney Cindy Harmison said. The project started in early 2017 and was recently completed. It also included expansion and improvement of employee parking and offices.

The tax abatement is limited to the building’s expansion and equipment improvements. The company will make a payment in lieu of taxes (PILOT) equal to 45 percent of the expansion’s property tax valuation, according to a Nov. 20 memo to the council from Chief Financial Officer Doug Robinson and Harmison. The improvements’ valuation will be included in the 2019 assessed valuation, Harmison said.

Paul McMullan, indirect tax manager for UPS, said the $40 million was for the building expansion and land only; the company spent additional money for conveyor systems and increased automation. He said he believed UPS would hire more employees as part of the expansion.

The company also recently bought two parcels of land adjacent to the facility for additional trailer-staging improvements, expected to occur in 2019 and 2020, which will not be included in the tax abatement.

Ward 1 Councilmen Steve Lemons and Joe Karlin were absent from Tuesday’s meeting.