This story is part of an ongoing series, Powering Change: Panasonic and De Soto. If you'd like to share your excitement or concerns about the electric vehicle battery plant, you can do so here.
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Panasonic's multi-billion, roughly five million-square-foot facility is just months away from opening in De Soto, Kansas.
Kansas Gov. Laura Kelly has lauded the project as a first-of-its kind investment and the largest economic development project in the state's 161-year history.
The plant, with an estimated April 2025 opening date, is expected to be the largest battery factory in the world.
How did we get here?
It all started with Senate Bill 347, the Attracting Powerful Economic Expansion Act (APEX) in 2022.
The goal of the now-expired legislation was to create tools for success in Kansas when competing for large economic development projects, the governor's office said at the time.
According to the bill, the APEX funding mechanism provides tax incentives for firms that agree to invest at least $1 billion in Kansas within a five-year period.
The legislation allowed the state to enter into one agreement in 2022 and 2023. All of the APEX incentives were utilized for Panasonic.
Expert researchers from the economic development nonprofit Good Jobs First said data from the IRS shows local tax incentives are only a small portion of the average major company in America's total cost structure.
The researchers believe local incentives don't usually determine where companies go but governments overspend in "mega deals" like Panasonic to be competitive.
"Individual battery plants will get more than $1 billion per year, per factory, from the federal government for several years early in their production cycles," said Greg LeRoy, executive director for Good Jobs First. "That one kind of incentive alone could pay for the factories and pay for the payrolls, even pay for raises in the payroll before the revenue the company is gonna take in for selling the batteries."
Government tax incentives are 'rare'
Panasonic's capital investment into the De Soto facility totals $4 billion.
The plant is receiving far more than their initial investment from state, local and federal governments. The incentives are a rare occurrence, according to Good Jobs First.
"It’s not a regular deal," LeRoy said. "Uncle Sam is already paying these companies a great deal of money, paying for every battery they take off the loading dock."
Panasonic could earn $6.8 billion in federal tax incentives from the Inflation Reduction Act (IRA).
READ | De Soto, Panasonic's APEX incentive agreement
The IRA's Advanced Manufacturing Production Credit, the "45X credit," is expected to pay over $1 billion per year to Panasonic and seven other factory deals.
Kansas' total APEX investment is $829.2 million, indicating a huge stake in the success of the plant.
While there's a dollar amount committed to the incentives, they aren't guaranteed.
The incentives are only provided on a reimbursement basis after Panasonic hires workers and makes its own investments.
The Kansas Department of Commerce provides a breakdown of the investment on their website:
- Investment Tax Credit — $500 million (12.5%) over 5 years;
- Payroll Rebate — $234 million (10%) over 10 years;
- Training and Education — $5 million per year over 5 years;
- Relocation Investment — $1 million per year over 10 years;
- Sales Tax Exemption — $60.2 million over 5 years
The Department of Commerce believes with every $1 of Kansas APEX incentives, it will generate $26.06 of private investment.
The De Soto City Council unanimously approved a development agreement with Panasonic in October 2023.
The city offered:
- A 25% reduction in Panasonic's water and sewer utilities since the company will be their highest water purchaser;
- A 50% reduction in building permit fees;
- A 20-year Tax Increment Financing incentive
The city's TIF incentive for the company is in exchange for more than $200 million in public infrastructure projects.
TIF financing uses property tax collected from the increased value of the development to reimburse the developer for the costs of infrastructure improvements needed to make the development possible.
READ | De Soto, Panasonic's development agreement
"Through the TIF, what we're forgoing over the 20 years is roughly $40 million in property tax and at the end of the project, initial construction, we're going to have $248 million worth of infrastructure that's brought to us all at one time and complete," De Soto Mayor Rick Walker said.
Walker explained the company will still pay the taxes every year but they will be reimbursed because of the initial investment.
"The taxes they're paying are used to pay them back because they paid up front for infrastructure and development," he said. "They've paid roughly $200 million on city projects, so over the next 20 years, they’ll collect that back."
City projects being supported by Panasonic are: the redevelopment of the former Sunflower Army Ammunition Plant, significant infrastructure and services to support the new facility and future growth in the area.
A breakdown of the projects:
- $40 million sewer treatment plant expansion;
- $28 million sewer line extension;
- $47 million water treatment plant expansion;
- $19 million new fire station and truck;
- $84.2 million road improvements;
- $11 million new water tower
According to the city's development agreement, the formation of a community improvement district requires Panasonic to remit annual payments of $800,000 to fund the operation of a new fire station, police services and road maintenance.
Twenty-eight mills of property tax for education are protected, per Kansas law.
Of that, 20 mills will go to the state of Kansas and eight mills will go toward USD 232.
The city's latest estimate is a tax payment of approximately $14 million to USD 232 and estimated $35 million to the State of Kansas for education over the 20-year life of the TIF.
In the meantime, if you want to track the local impact, LeRoy said people can educate themselves by asking questions.
"If I were a local neighbor of this project, I would say, 'Who are the building crews building this? Are the construction companies local? Are they union? Do they have an apprenticeship program with more women and people of color gaining access to pre- apprenticeship and apprenticeship programs? Is it mostly being built by itinerants, traveling construction workers, who are going to send most of their money back to Texas and Tennessee where they actually reside?" he said.
Walker said Panasonic is already making a tangible difference and return on their investment.
According to him, the city was able to cut six mills out of the 2025 budget, which reduced city property taxes by roughly a third for taxpayers.
"The things we're gonna see are quality of life enhancements, the ability to provide projects while maintaining a low property tax burden on the citizens of De Soto," Walker said.
Panasonic is required to make a minimum $1 billion investment in the project and employ at least 2,500 full-time employees to maintain the incentive level.
The incentive agreement will be measured every year, according to the mayor.
Panasonic isn't expected to have all of their employees at once, but every year they will have to provide documentation showing their commitment is being met.
Will these investments be worth it?
Researchers with Good Jobs First have been tracking economic development deals like Panasonic for 27 years.
According to the research group, when a package crosses the $1 billion mark, financial risks are much higher for states and communities.
Good Jobs First believes local governments take on the biggest risk in these deals since they are obligating property taxes over a long period of time.
There is a subsidy tracker database on their website, but LeRoy said it is also up to residents to remain educated on the project and government officials to make sure the company is fulfilling their obligations.
"I think it's up to, you know, the mayor, the county executive, the Congress member, the senators, to be held accountable about who's getting the jobs? Is there local hiring? Are the jobs as good as they were said to be?" LeRoy said.
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KSHB 41 reporter Alyssa Jackson covers portions of Johnson County, including neighborhoods in Overland Park, Shawnee and Mission. Share your story idea with Alyssa.