Government & Politics

Olathe uses tax incentives to draw aircraft supplier’s manufacturing plant from NKC

Orizon Aerostructures plans a 207,000-square-foot manufacturing facility on 15.5 acres in the 56 Commerce Center Industrial Park at Old 56 Highway and Lone Elm Road in Olathe. The Opus Group is the developer of 56 Commerce Center, above.
Orizon Aerostructures plans a 207,000-square-foot manufacturing facility on 15.5 acres in the 56 Commerce Center Industrial Park at Old 56 Highway and Lone Elm Road in Olathe. The Opus Group is the developer of 56 Commerce Center, above. The Opus Group

Kansas City-based Orizon Aerostructures plans to relocate its North Kansas City manufacturing operation to Olathe as the company seeks additional space to accommodate new contracts.

The Olathe City Council on Tuesday signed off on tax incentives that will help Orizon build a 207,000-square-foot manufacturing facility on 15.5 acres in the 56 Commerce Center Industrial Park at Old 56 Highway and Lone Elm Road. It caps off a three- to six-month process by city leaders to attract the aircraft supplier to Olathe.

“We have been looking forward to this day,” said Mayor Michael Copeland. “We’re so glad to partner with you on this very important project.”

Orizon CEO Charles Newell told the council that once the building is completed, the company will move up to 65 employees from the North Kansas City facility to Olathe and add 100 more by the end of 2018. Newell said the company could create an additional 100 to 200 jobs in the next few years after that.

“When you are in the aerospace business today, it’s a great place to be,” Newell said. “There are backlogs of planes we build structural components for that go back eight, nine, plus years. We have a lot to do.”

In an interview, Henry Newell, the company’s president, said Orizon acquired the North Kansas City plant in 2014. He said the 70,000-square-foot space became too small once Orizon received contracts to work on the Boeing 737 and other projects for Wichita-based Spririt Aerosystems.

He said the company hasn’t determined what it will do with the North Kansas City facility.

“A transition of this kind often takes a long time, maybe six to 12 months,” Henry Newell said.

Orizon also has manufacturing locations in Chanute, Kan., and in Owasso and Grove, Okla.

Under the package approved by Olathe on Tuesday, Orizon will receive a 10-year, 50 percent property tax abatement and up to $23 million in industrial revenue bonds. These bonds allow the company to buy land and equipment without having to pay sales tax, but the city is not obligated to repay the bonds.

There were no speakers during a public hearing about the incentives.

In documents filed with the company’s incentives request, Orizon said it would create 400 jobs over the next decade with an average salary of $54,912.

The company is also receiving state tax incentives through the High Performance Incentive Program and the Kansas Industrial Training program.

In other business:

▪ The council held public hearings for two requests by developer Opus Development Corporation LLC for tax incentives for two speculative buildings at the 56 Commerce Center Park. These are separate from the Orizon development.

Opus is seeking 10-year, 50 percent tax abatements and industrial revenue bonds to build a 231,000-square-foot distribution warehouse facility and a 70,000-square-foot warehouse/distribution facility.

Documents do not provide details on potential users of the buildings, but Opus said the distribution warehouse would create 132 jobs over 10 years while the smaller building would create 84 jobs over 10 years.

No one spoke during the public hearings, and the council is expected to vote on the incentives at its Sept. 19 meeting.

▪ Councilmembers also heard from a group of residents asking for the city’s help in opposing a planned cold storage plant at New Century AirCenter because of concerns about the potential of a leak or spill of highly toxic anhydrous ammonia.

The Johnson County Commission approved the Lineage Logistics plant in July. After the approval, neighbors who opposed the plant discovered that it will use anhydrous ammonia as a coolant. They have filed suit in Johnson County District Court to overturn the approval.

Speakers showed the council security video footage and television news coverage of two anhydrous ammonia leaks at other U.S. plants, including one that killed a woman.

They said that because a leak from the plant would require evacuating people up to three miles away, it would affect Olathe.

“I think we need to be awake to what’s going on, what they’re putting next to us,” said Mike Jensen, the lead plaintiff and a resident who owns property next to the airport.

Officials with the county and Lineage Logistics have said that anhydrous ammonia is highly regulated and that the chemical is already being used safely in other facilities in the Kansas City area.

Councilmembers did not commit to making any official action, noting they had little control over a decision by the county commission outside city limits. However, Olathe Fire Chief Jeff DeGraffenreid said his is one of only two fire departments in the county with hazardous materials training and equipment and would assuredly be called in an emergency.

“This new site is not in our jurisdiction, but we would respond,” DeGraffenreid said.

▪ The council also voted unanimously to approve a rezoning to create the Lone Elm Commerce Center, a 122-acre warehouse and larger office development at 167th Street and Lone Elm Road. Developers have said the project, once complete, would provide almost 2 million square feet of commercial space. The rezoning was tabled last month to give both sides more time to deal with an access road issue.

David Twiddy: dtwiddy913@gmail.com

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