Lee’s Summit approves $4.8M tax incentives package for warehouse expansion
Lee’s Summit City Council members gave a green light to a $4.8 million tax incentives package Tuesday for Mid-States Distributing, which has proposed a large expansion to its warehouse off Thompson Drive.
The company operates a network of farm, ranch and home retailers around the country and has floated a 465,000-square-foot addition on property just north of its existing 650,000-square-foot warehouse off Missouri Route 291. The current warehouse, which the group purchased from Toys’R’Us in 2019, employs 165 people, and the company has said the expansion would add about 90 new jobs.
Under a plan advanced unanimously by City Council at their Tuesday meeting, Mid-States would receive a package of incentives that includes a 100% sales tax exemption on construction materials (value to the company of around $555,000), a 75% real property tax abatement on the increased value of the site over a ten-year window (value of around $3.5 million) and a 50% personal property tax abatement on new equipment for the warehouse in three phases over five year windows (value of around $683,000), according to city documents.
The package will still need to pass a second reading at a future council meeting.
The company indicated it could look elsewhere to build its new facility and pitched the incentives package as a way for Lee’s Summit to retain its jobs and keep the company from leaving.
“Companies do shop when it comes to incentives,” said David Bushek, the city’s chief counsel for economic development and planning. “That is certainly the case with industrial, and the company that is requesting the incentives tonight first approached the city by saying, ‘We would like to stay here, we would like to stay in this facility, and we would like to expand.’”
Curt Peterson, an attorney representing Mid-States, told council members that the company was in serious need of more warehouse space and said company leadership had told him, “We have a major problem. We have got to supply more of our stores, we need more volume. We either have to be here, or we have to be somewhere else.”
“Anything of this scale is hotly pursued by other jurisdictions,” he said.
The benefit of the package approved by council members would be about 6% of the total project costs of around $80 million, according to the city. That $80 million figure consists of about $55 million in property and improvement costs, including land acquisition and the cost of the existing warehouse, and around $25 million for equipment the company is planning to install, according to city documents.
The city would offer the incentives under the state’s Chapter 100 bond program, which allows a municipality to loan out its tax-exempt status to incentivize economic development. Lee’s Summit would hold the title to the Mid-States property and lease it back to the company, which would finance the project through $80 million in bonds issued by the city, according to a project plan.
Mid-States would still be required to make special payments to cover taxes on the existing facility and that were not exempted by the incentives.
Mayor Pro Tem Beto Lopez said it wasn’t long ago that the city struggled to recruit and retain companies like Mid-States.
“It’s a net gain in taxes and benefits to the city and to the residents,” he said. “It’s not a burden on our residents at all. I think, to me, it makes complete sense. It’s very logical.”
Said council member Hillary Shields: “It’s a lot of good-paying jobs. It’s very important to our local economy. I think, especially given the low level of the incentive request compared to a lot of others that we see, it’s a really great return on investment for us.”
Mid-States would plan to begin construction on the expansion this year and finish work in 2027, according to a company presentation.
