Kansas City Council member Scott Taylor joked that music should have sounded at a committee hearing Wednesday afternoon, marking the first public mention of Challenge Manufacturing Co.
The name of the auto parts supplier, based in Walker, Mich., had been veiled — referred to as “Project Walker” — until the council’s Planning, Zoning & Economic Development Committee meeting.
The committee recommended authorization of up to $56 million in taxable industrial revenue bonds for the automotive parts supplier to locate a new operation in an existing building on Kansas City International Airport property, purchase the machinery for it, and expand the facility up to 423,000 square feet.
Challenge Manufacturing, which says it will create 375 jobs at the facility, makes welded assemblies and other engineered metal products for the General Motors Fairfax assembly plant in Kansas City, Kan. The company had been wooed to the Kansas City area by a team of economic development officials and chose the KCI site after considering two other locations.
The city incurs no obligation or debt associated with the Chapter 100 industrial development bonds, which are to be issued over 10 years. The company purchases the bonds as needed over the 10 years and pays back the debt service with its revenues.
The deal was negotiated to include a clawback provision in case Challenge fails to meet specified investment and operational standards.
The plan gives Challenge personal property tax abatement for 10 years at 75 percent of all property purchased within the first 10 years. City Hall staff estimated that abatement to be valued at nearly $5 million over the 10 years. The plan calls for Challenge’s property taxes to be paid through a 25 percent payment in lieu of taxes.
The proposal, which requires City Council authorization, also aims for a sales tax abatement of nearly $4.6 million.
Taylor and other economic development officials celebrated the Challenge deal, which does come at some loss of revenue for certain taxing jurisdictions in Platte County. A cost benefit analysis estimated a 10-year loss of about $3.56 million for the Park Hill School District, for example.