County and Prairie Village officials who want to preserve 88 acres of green space at the former Meadowbrook Golf and Country Club are seeing the project’s life flash before their eyes this week.
Months of careful negotiations among the city, county and developer VanTrust Real Estate could all come to naught Wednesday morning if the Shawnee Mission Board of Education decides to veto a critical financial aspect of the plan. The board will hold a special meeting at 7:30 a.m. to decide whether the district, with a big enrollment increase this year, can afford to live with the fact that it won’t reap property tax gains that could come from the project, perhaps for 20 years.
If the district vetoes, Prairie Village and the county park district will lose what may be their last chance to create a major park in the built-out northeast part of the county, an area where green space has been steadily shrinking.
At issue is tax increment financing, a vehicle that allows cities to pledge future tax revenue increases that come from development to pay some of the development costs. Typically the money goes to help developers pay costs associated with preparing the site but in this case, the money would pay off the purchase of the park.
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Tax increment financing plans, known as TIFs, have become common in Johnson County as a way to get development going. The problem for schools and county government is that often the TIF deals send all the future tax revenue increase to pay off up-front costs of the project, and other taxing entities end up losing out without having a say. Hence, state law gives them veto power.
Proponents of the special taxing districts have argued that the short-term pain is worth the long-term gain when the area is developed, surrounding property values go up and the TIF is paid off. Those property values wouldn’t be increasing anyway without the project, and the project wouldn’t happen without the TIF, the argument goes.
But so many cities are now using TIFs that several members of the Shawnee Mission school board appeared poised to put the district’s foot down at a recent meeting.
Since the district includes parts of 14 cities, TIF notices come in frequently. Recently the district got four such notices in a two-day period, Shawnee Mission Superintendent Jim Hinson said.
The development of a major park has the potential to draw in new students as well, and that can put school districts in a bind. The whole thing has the biggest impact on the district’s capital budget — money that goes for things like band uniforms, classroom furniture and building, said Hinson.
The district already is dealing with its biggest enrollment increase since 1992, he said.
“When a project goes in and it’s a 20-year TIF, there’s an entire generation of students in Shawnee Mission School District that have yet to even start school that will not see any revenue from that project into their school district,” Hinson said.
When Prairie Village Mayor Laura Wassmer and the city’s financial adviser, Jeff White, presented the Meadowbrook plan to the school board Sept. 28, they found themselves answering vigorous questions about the TIF from four board members and Hinson.
Board member Patty Mach asked why a city in wealthy Johnson County would need tax incentives to get the project going. Board member Cindy Neighbor said the county has enough money to buy the park out of its own budget, without the financing.
“The issue is, why would a school district buy a park, because that’s basically what we’re doing by giving the TIF on the park,” Neighbor said. “I have no problem with the rest of the project but I do have a problem with the park.”
Hinson also voiced that view at a later meeting with reporters. “Why is it you just can’t write a check for your portion,” he said of the county. “Why does it have to be publicly financed?”
Deputy Superintendent Ken Southwick also expressed concerns that the city might choose to extend the TIF in the future, using the proceeds for other parts of the development after the park was paid off. City officials have said they expect the park to be paid off and the TIF retired before the 20 years is up. He essentially asked Prairie Village officials to put something in writing addressing that question. A resolution to that effect has been drafted and is on the city council agenda for tonight.
City officials were surprised by the questions and their tone, which assistant city administrator Wes Jordan characterized as “aggressive.” City officials had met with school district officials several times as the plan was being developed and were under the impression the district would not oppose the TIF, he said.
If the school district vetoes the project, it could explode a complex deal that has been in the works for about a year.
The Meadowbrook project came about after a forerunner of VanTrust bought the golf course and country club property in 2010. The area bordered by 91st and 95th Streets on the north and south and Nall and Roe Avenues on the east and west has tennis courts, a clubhouse, swimming pool and a golf course, with ponds for water retention.
The area had long been on the radar of a city hungry for green space. Prairie Village residents fought to retain green space after the Mission Valley Middle School was closed and sold to developers. The green area there is expected to shrink under a plan recently approved, Jordan said.
The Homestead Country Club also sold off a part of its property at 64th Street and Mission Road.
Johnson County Park and Recreation District also saw a lack of park space in the northeast as a problem in need of fixing. The northeast is the most densely built part of the county, and a county park there has been a goal for a long time, said park director Jill Geller.
The development currently envisions housing on either side of the ponds in the southern part of the development. The plan presented to the school board was for single family homes, townhomes, apartments, senior living and a “boutique” hotel plus about 5,000 square feet of retail space. Development costs, including about $3 million to connect with the county wastewater district, would all be paid by VanTrust.
If everything falls into place, construction will begin in the spring of 2016 and be complete by the end of 2018.
All that will take a rezoning to allow for greater density. In return, the city would be able to buy the open space, including the pond area and the northern end of the property.
The park would be acquired by an agreement between Prairie Village and the county. The city would use the TIF proceeds to pay off bonds it would take out to buy the park and prepare the park for development. It will then give the park to the county, which will develop and maintain it.
City and county officials took issue with the assertion that the county could buy the park without financing. The money is not in the county’s capital budget, Geller said. In fact, no money is in the budget for major land acquisition, outside of some streamway extensions, she said. Putting it in would take a year or two and would need voter approval.
That’s time that VanTrust isn’t willing to risk. The company knows what the interest rate and land value market is today, but can’t commit to the unknowns of waiting, said executive vice president Rich Muller.
“There’s a saying, ‘Time kills all deals,’ ” he said.
VanTrust can build a lower-density development without a rezoning or formal city council approval. If the TIF deal falls through, that is the Plan B, Muller said.
The developer has been involved in talks with the school district for about a year and always received positive feedback, but only recently learned there might be problems, Muller said.
“We haven’t invested time looking with any sincerity at Plan B,” he added. But if the TIF falls through, the former golf course will most likely become estate-sized single family homes with no parkland, he said.
“It isn’t exactly what we think is best for the community,” Muller said. “We’re hopeful we don’t have to. We’re on track to be able to make a really fantastic suburban park become reality.”
As TIFs become more common, taxing entities find themselves playing catch-up. Neither the Shawnee Mission district nor the county has formal policies to evaluate the proposals. At the county level, special tax districts are often noted, but not discussed extensively,
Commissioner Michael Ashcraft thinks that should change. Although he says the Meadowbrook TIF makes sense, he often questions other special taxing districts that come before the county. Some of those projects might have happened without the tax incentives, he said. A staff analysis showed the county lost out on about $9 million in tax revenue in 2013 due to special tax districts, he said.
When Meadowbrook came up at the county commission last week, he said the county should be more thoughtful about the issue. “It’s going to be very important for us to make sure we understand the thought process and direction (of) the Shawnee Mission District, because they are at this point raising some issues and I think their issues may also be our issues,” he said.
Meanwhile, the Shawnee Mission District is also trying to come up with a policy on future tax increment financing districts.
“It is not a zero tolerance policy,” Hinson said. “What we are working on is policy that provides guidelines and recommendations. Our goal is to be a great community partner and collaborator. There are TIFs that are extremely beneficial and we’re going to look at all those individually.”
To reach Roxie Hammill, send email to email@example.com.