It’s a new era for tax increment financing in Overland Park, Mayor Carl Gerlach said Monday night, as the City Council approved a policy that favors the tax incentive mainly in older parts of the city and projects where developers keep no more than 90 percent of new taxes.
It’s the first time Overland Park has set guidelines for tax increment financing, commonly called TIF. Previously, requests have been considered on a case-by-case basis.
“This is a very important move by the council,” Gerlach said. “We’re entering a new age. It’s the redevelopment era.”
TIF is a tax subsidy that allows local governments to pledge most, if not all, of any expected increases in property and sales taxes (the “increment”) within a defined redevelopment area and for a specified time (e.g., 20 years) to the developer to use for qualified costs of the development.
Councilman Terry Goodman led a committee that considered the guidelines and presented them to the council. The committee met with developers and representatives of the other taxing districts affected by TIF — including school districts and the Johnson County Library system — while considering guidelines, Goodman said. TIF subsidies take away money from those taxing districts too, not just the city setting up the TIF.
The resolution states that the city will use TIF to encourage private investment and redevelopment within downtown Overland Park; within a Vision Metcalf node; within the Vision Metcalf corridor; along Shawnee Mission Parkway within city limits; and within the boundaries of an adopted planning study calling for redevelopment.
Vision Metcalf is a set of guidelines for redevelopment along the city’s “main street” from Interstate 635 on the north to 123rd Street on the south.
The new TIF policy also says Overland Park will grant breaks to projects that are in the city’s best interest and “to shape the appearance, character and functionality of the community.” It says TIF is appropriate for projects that “promote successful economic development and job creation” and promote the successful development of certain commercial office space in any area of the city.
The council unanimously approved the resolution.
Goodman said the policy makes clear to would-be developers that the city believes TIF is most appropriate in certain areas of the city.
“We’re not going to rule out others, but know that your burden becomes greater if you ask for TIF in other areas,” he said.
Goodman noted the policy favors projects that allow developers to retain 90 percent of the incrementally increased taxes in a district.
“We won’t absolutely say no to 100 percent,” Goodman said. He said the limitation “may go far to alleviate the problems other taxing jurisdictions have.”
School districts, particularly, have begun to push back against TIF in areas that are not blighted.
But Gerlach said the policy takes those considerations into account.
“Johnson County became one of the best communities in the nation because the taxing jurisdictions work so well together,” he said. “We have to continue to work to build the community in a strong way. The schools, the county, the community college, the libraries all work together and say we’re not cutting into the (tax) base. The 10 percent increment will go back to them, setting a standard for future development.”
Before they passed the general policy, the Council OK’d a series of actions granting TIF to a long-gestating project near the downtown Farmers Market. The council first approved a TIF district for developer Paul Goehausen’s mixed-use project directly south of the market, at the corner of 80th and Marty streets, in 2007. Then the recession hit, and the project stalled. Now, Market Lofts calls for 36 rental units, rather than for-sale condos, in a four-story building with parking and retail space beneath. Goehausen said he hoped to begin construction in April and complete the project in one year.