Shawnee & Lenexa

Government watch: Tax break could help Shawnee tract develop but hurt De Soto school district’s finances

Updated: 2013-08-27T21:36:03Z

By ROXIE HAMMILL

Special to The Star

After nearly 20 years of dashed hopes, the Shawnee City Council has decided the best way to get some development at the troubled intersection of Kansas 7 and Johnson Drive is to put some public money into it.

The council recently approved a special taxing district that would help potential developers put storm drains in the area, which includes a steep ravine and stream. But though some were elated at the prospect of populating an intersection that had been deemed blighted and “undevelopable,” others worried. What would it do to the De Soto School District budget?

The arrangement in question is tax increment financing, which would send property taxes from the increased value of the new town homes and commercial buildings to pay for storm sewers and other infrastructure.

Shawnee Associates LLC wants to put 56 buildings — mostly quadplexes — with 222 town homes on the northwest corner as part of its Prairie Pines project. The development also includes about 30,000 square feet of retail and office space.

To encourage the development, the council is considering a three-part package to help pay for grading and filling around the nearby stream and ravine. The package includes industrial revenue bonds of $20 million and an excise tax abatement of $275,488, as well as tax increment financing of $3.8 million that the council approved.

The tax increment financing part of the package attracted attention recently when De Soto Board of Education President Mitch Powers spoke at a public hearing about the impact on the district’s budget.

Powers made it clear he was appearing as a private citizen and not on behalf of the school board. Then he pointed out that the development has the potential to hurt the district’s budget because the taxes that would have gone to the district will be going to the developer instead.

All those town homes would add about 50 students to De Soto schools, according to district estimates. The state average cost of educating one student is about $10,000 per year, bringing the cost to $10 million over the 20-year life of the agreement.

Part of that amount is covered by state aid, but the district would be missing the local property tax money it might otherwise have seen for that development, said district spokesman Alvie Cater.

Despite that, the district has taken a neutral position on the matter. Taxing bodies such as the school district and county can object to tax increment financing agreements, but De Soto officials said they neither supported nor opposed the plan, Cater said.

Unlike Shawnee Mission and other districts in the county with more commercial development, homeowners shoulder most of the burden of property taxes for the De Soto district, he said.

“We don’t want to stifle economic development, but we want to protect our homeowners as best we can,” he said.

Supporters of the special taxing districts say the influx of residents will draw commercial development to the area that will ultimately bring in more tax revenue, benefiting all districts.

The intersection has a long history of disappointment on that score. Annexed in 1984, the area has seen sputterings of activity that never came to fruition, mostly because of the topography of the plot, city officials said.

The original plan for a four-phase development 20 years ago was never completed, except for a small commercial strip. The three businesses that were there — a car wash, dry cleaners and convenience store — were all closed by 2010.

Curtis Petersen, who represented the owners at the public hearing, said experts had called the site undevelopable without an investment of $4 million to $5 million for site improvements “just to make it a normal site.”

If everything goes as planned, Shawnee Associates will demolish the buildings this fall and have at least 60 town homes built by July 2015.

That prospect elated Councilwoman Dawn Kuhn. “To me it’s a no-brainer,” she said in the council deliberations. Western Shawnee residents want new businesses to shop and eat in, but they haven’t flocked to the area so far, she said. “I can’t imagine why I wouldn’t be in favor of this.”

But Councilwoman Michelle Distler, who with Councilman Mike Kemmling voted against the taxing district, said she was uncomfortable with the plan — although not primarily because of the impact on the schools. Distler said she voted no because the development is mostly residential, and residential development uses more tax money than it takes in. She said that she has not seen proof that adding rooftops will actually draw new business.

The fact that it’s on difficult terrain also is a drawback, she said. “To me, if it’s too expensive to build there, fiscal responsibility suggests you shouldn’t do it,” she said.

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