10 - Aequs Aero Machine formerly T & K Machine - tax collection in connection with a terminated tax abatementItem No. 10
memorandum
TO: City Council
Gene Anderson, Interim City Manager
FROM: Stephanie H. Harris, City Attorney
SUBJECT: AEQUS AERO MACHINE (FORMERLY T & K MACHINE) REPAYMENT
OF ABATED TAXES
DATE: February 4, 2020
BACKGROUND: In December, council terminated a tax abatement with Aequs Aero Machine
(formerly T & K Machine) pursuant to an understanding with the company that it would pay back
abated taxes without need for any legal action. The taxes abated under the agreement plus interest
total $9,631.31. In order to assist Aequs in its financial planning and capital improvements
program in order to be competitive in a changing marketplace, the city agreed to postpone a
demand for repayment to after April 1, 2020 and to accept repayment in two installments. Aequs
currently employs 36 people, with five hired on in the last month. The company has also purchased
one new $490K CNC machine that is being installed this month, and it is planning on spending $1.0-
1.3M on additional CNC machines and capital equipment this next fiscal year.
STATUS OF ISSUE: Aequs has now asked that they be allowed to repay the taxes with one
installment being due and payable in April, and the second installment being due and payable in
October, again, in order that they might responsibly plan their fiscal year and their capital
improvement program. As can be seen by the 5 new hires in the last month, Aequs is working hard
to grow the company and to restore it to fiscal health.
BUDGET: Minimal impact on the budget.
RECOMMENDATION: Provide direction to city attorney regarding repayment schedule of abated
taxes by Aequs Aero Machine.