A private development group that has constructed the building for Deloitte's future Smart Factory on Wichita State University's Innovation Campus will ask for industrial revenue bonds from the city to help finance the project.
The City Council on Tuesday will vote whether to approve a letter of intent for the issuance of up to $20 million in IRBs, including a property tax abatement for the Deloitte portion of the building and for a sales tax exemption for construction materials.
The IRB request comes from MWCB LLC, which includes Wichita developers Steve Barrett and Ivan Crossland. The group has developed several Innovation Campus buildings at WSU, including the Law Enforcement Training Center, Partnership Building 1 for Airbus, and Partnership Building 2 for Spirit and Textron.
Their latest is the Partnership 7 building, a 53,000 square-foot shell at 1960 N. Innovation Blvd., to the south of the Law Enforcement Training Center.
MWCB plans to lease most of the building, about 40,000 square feet, to Deloitte for its Smart Factory.
Deloitte, a U.K.-based audit, consulting, tax and advisory firm with locations in more than 150 counties, announced its plans in September to partner with WSU to create The Smart Factory @ Wichita. The center, expected to open early this fall, will offer clients, industry partners and WSU students an opportunity to explore Industry 4.0 technology — things like automation and machine learning.
The space is expected to have more than 40 robots, 26 augmented and virtual reality assets, 10 types of 3D printers, as well as equipment for reverse engineering, robotic programming and cyber applications.
As part of its move into Wichita, Deloitte plans to hire at least 15 employees with an average annual wage of $100,000.
Scot Rigby, assistant city manager and director of development services, says the center's opening means Wichita will host companies from all over as they find ways to incorporate new processes and advanced technologies into their existing manufacturing processes.
"For Wichita and the region, to have Deloitte... stake a flag in Wichita — and as much as we're excited with the 15 employees and the $100,000 wages — the bigger thing is the exposure that Deloitte is going to bring as they bring in both national and international clients into Wichita.
"There's an opportunity for Wichita and our partners to get in front of them and say, 'Have you thought about Wichita for a potential location?' And even if they don't choose Wichita for a location, at least have a positive attitude about Wichita, as well as maybe they do business with some of our businesses here in town."
Rigby said Deloitte also plans partner with local school districts, including Wichita Public Schools, to deliver manufacturing kits to students to supplement STEAM curriculum.
The $20 million in IRBs is for tenant improvements in Deloitte's portion of the building, Rigby said, which right now is just a shell. Tenants in the remaining square footage will pay the standard property tax rate.
MWCB is requesting the property tax abatement on a five-plus-five-year basis.
According to city documents, a payment in lieu of taxes will be placed on the property during the abatement period for roughly $145,000 — the equivalent of annual property taxes — where each taxing jurisdiction will continue to receive those taxes on a pro-rata basis.
IRBs require no taxpayer commitment and the city is simply a pass-through entity. However, using IRB financing can help the company secure a lower interest rate on projects.
According to an analysis by the Center for Economic Development and Business Research at Wichita State University, the IRBs would have a benefit-to-cost ratio of 1.45 to 1 for the city.
