When I say the words “tax increment financing” (TIF), two things happen.
Community activists break out in hives.
Readers glaze over.
But stick with me.
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Flash back to 1995. At the corner of Johnson Drive and I-35 in Merriam in western Johnson County there were 65 acres of blight — about the size of Metcalf South’s property on both the north and south side of 95th Street and Metcalf.
Then Mayor Irene French had a vision. She would turn that blight into a gigantic, sparkling shopping district. Today it contains 889,000 square feet of retail space.
To make this happen, Merriam purchased and demolished 80 homes and duplexes, two apartment buildings with 160 apartment units, one condominium and a lumber yard. More than 500 residents were relocated. Not all were thrilled.
Here’s the catch.
All of the increased property taxes, due to higher value of the property, went for land acquisition, demolition, relocation, public improvements and other costs. This was accomplished by issuing 20-year bonds.
This is where critics holler. It drives them crazy that private developers get these kind of development costs covered by taxpayers. To them, it should all be private dollars, since it is a privately owned project.
Yet, Merriam City Administrator Phil Lammers said, “Merriam Town Center would never have happened without TIF.”
That doesn’t mean critics of TIFs are always wrong. Some TIF districts abuse the concept.
But critics are wrong to just attack all TIF districts all the time.
Merriam Town Center has been phenomenally successful. It remains fully occupied with such major tenants as Home Depot, Dick’s Sporting Goods, Hen House, Cinemark movie theatres, Old Navy, Petsmart and dozens more.
Even more significant, Merriam Town Center was the draw to capture IKEA across the street, one of the most successful furniture store chains in America, with 350,000 square feet of space.
It has been about 20 years since the TIF district was created. So, the TIF is expiring in February 2016, when the shopping district will go on the tax rolls.
Let’s just consider what this means to the Shawnee Mission School District. The superintendent, Jim Hinson, has been critical of some TIFs, contending they rob the district of property tax revenue while student enrollment increases.
Merriam Town Center did not directly increase student enrollment, inasmuch as there is no residential component to the project. But it may have made the surrounding areas more attractive for families, whose kids would go to Shawnee Mission schools.
For the 20 years of the TIF project, Shawnee Mission School District has received only $58,000 per year in property taxes.
Now, what happens when the TIF expires?
Hold on, Dr. Hinson.
Shawnee Mission School District will begin to receive an additional half million dollars or more every year in property tax revenue!
It would not be surprising if the future outcome of the TIF district created for Metcalf South did not result in significant tax revenue increases for the schools, when that development ultimately is completed and its TIF expires.
Other TIF projects throughout Johnson County will be coming on the tax rolls soon.
They require patience and taking the long-term view.
As I said, not every TIF is great idea. It is critical that the right elected people are exerting their best judgment.
But the naysayers who always attacks TIFs should weigh each project on its own merits.
Merriam Town Center proves the point.
Steve Rose, longtime Johnson County columnist: email@example.com