Overland Park considers a new incentive to build $300,000 homes on vacant land

Clusters of empty land with a few small houses sit scattered along 151st Street in Overland Park. The long grass is bright green, with shrubs overgrown and tangled.

While it’s vacant now, the city, a developer and landowner are looking at the property to potentially build a new workforce housing project in Overland Park’s Stanley annexation area.

It’s something city leaders say they’ve been thinking about for years, but developers couldn’t figure out how to make the math work to pay for it. The cost of building new residential housing on the land would be higher than what a lot of working people would be able to pay to live there.

Now, a new state incentive program might be able to help.

“I think there are a lot of folks thinking about these kinds of things across the country,” Overland Park Assistant City Manager Jack Messer said. “It is hard to find success stories, there’s a whole terminology here, called missing middle housing. I think everyone is searching for a way.”

Missing middle housing refers to a gap in access to a range of homes like duplexes, townhomes and multiplexes that fit in the market between single-family homes and larger apartment buildings. The term can also include more affordable single family homes. The idea is to help increase the housing supply and present more affordable options – including “attainable housing,” or homes that cost $300,000 or less.

Attainable homes are harder and harder to come by in Johnson County as home prices continue to increase. Johnson County’s average home price sits at $508,000, and the average sale price is $557,000.

“We did the housing study in Johnson County and one of the elements … we have is: compression,” Messer said, meaning there isn’t enough supply to fill demand. “Every bit of supply we talk about is important to the market. The more supply we can get the more overall health we can have.”

A new tool to jolt development

That’s where the potential project on 151st Street and the new state incentives comes into the picture.

“It was probably two or two-and-a-half years ago … the landowner was having difficulty. They could not get something going on this piece of property,” Messer said. “We (the city of Overland Park), have been simultaneously going through this question of attainable housing, what is attainable in Overland Park?”

The city ultimately suggested infill on the lot to build smaller, predesigned houses based off of its Portfolio Home pilot program, which was established last summer. The portfolio homes established a catalog of small-scale homes available for Overland Park residents to use on any legal lot

The starting home price for the project on 151st Street would be $300,000.

While it was a more affordable project path, financing the new homes in the private sector alone remained a challenge for the landowner and developer, Messer said.

“It didn’t start with an incentive discussion, it’s come to an incentive discussion because they couldn’t make it otherwise,” he said.

The state incentive, called a Reinvestment Housing Incentive District, is a financing tool to help cities and developers close the gap between what it costs to build new residential housing and what people can afford to pay, said Robert North, Chief Counsel at the Kansas Department of Commerce.

The tool used to only be available for developments in rural Kansas, but the state recently expanded what kinds of places can qualify for it.

“Almost every community across the state needs housing of some kind,” North said. “RHID (Reinvestment Housing Incentive District) has evolved over the years, but the purpose is to incentivize developers into creating more housing.”

In June, the Overland Park City Council Finance, Administration and Economic Development Committee had its first discussions around the possibility of using an RHID to get the 151st Street project on its feet.

The project, which would develop 30 dwelling units and include single-family homes and twin villas, is still in its early stages with more discussions to come, Messer said.

Peter Murphy, the landowner, has paired up with local developer CRE Advisors to help bring a project to fruition. Murphy said in a written statement that he’s been engaged in the “very early exploratory conversations” with the city to better understand the RHID program.

“At this stage there are no further updates or details available to share. As we continue the process, and the project continues we would be happy to engage further,” Murphy said in the statement.

What is an RHID and how does it work?

RHIDs stemmed from the Rural Housing Incentive District program, which was enacted about 20 years ago to directly benefit rural Kansas communities “where housing needs are huge,” North said.

“The need for housing has become more acute. The Legislature has responded to that by expanding the program just fairly recently to make it available to larger cities like Overland Park, and renamed it to the Reinvestment Housing Incentive District Program,” he said.

The program is similar to tax increment financing (TIF), which is a common tax credit for commercial developments where the local government issues bonds to fuel construction, which are then paid back from the increases in property tax revenues that come from the development.

As the developer adds infrastructure and housing to the TIF district, the incremental gain in property tax over where it started is returned as reimbursement to help pay back the bonds for a period of time, often up to 25 years.

The RHID program works similar to TIF, but is paid back through the increased revenue from residential property taxes.

When Kansas expanded the rural housing incentive in July 2023, the Legislature also included some size limitations to projects. Cities and counties must complete a housing needs analysis, set boundaries for the housing district, pass a resolution to establish the district, apply to the Kansas Secretary of Commerce for state approval and create a development plan.

“I think almost every community that has utilized it has benefited from it. It’s not the complete answer to all housing related needs or issues,” North said. “It definitely helps the process come to fruition but when you’re looking at a financial structure of a large housing project it’s going to take other programs in addition to RHID.”

One of the first RHIDs was established in the Gary County area and intended to build housing for people leaving the army. Topeka also took advantage of the program in its early days, with several districts established to help build more housing.

“The program is intended to help finance all types of housing. I mentioned multifamily, single-family, senior housing, and so it’s not specifically designed to benefit any particular plat of housing,” North said. “There are communities who have used it to build half-a-million-dollar homes and others to build $175,000 homes. It’s flexible in that way where it can help develop low-to-moderate income housing in addition to suburban, subdivision projects.”

“It’s not the whole answer to every housing-related item, but it does help with all of these projects.”

More affordable homes in Overland Park

In Overland Park’s case, some of the size limitations built into the program can help push the Johnson County city into building a more affordable product.

“The RHID tries to attack that entry-level house, which we don’t really build in Overland Park. Our average square-foot home is around 5,000 square feet,” Messer said. “We build nice apartment complexes, but there’s nothing in between.”

For Overland Park, this project could give the city an arm to reach teachers, police officers, firefighters, nurses and other individuals who might not be able to afford to own a home in the city’s current housing market.

“That’s what we’re trying to attack with portfolio homes, but now with RHID as a tool,” he said.

Overland Park has approved tax incentives in the past for other developments around the city, but the difference this time is that the city would be fronting the costs for construction, not the developer.

“Our incentives are primarily done in a way where you’re (the developer) taking the increment of the new value produced and you get reimbursed. It requires the developer to pay everything up front and rely on payment later,” Messer said. “The question of the council was, ‘Is the city willing to front financing of the cost and the city gets reimbursed that financing of the costs.”

This wouldn’t affect the city’s taxes or budget in any way, since the city-issued bonds would be paid back through the tax revenue that the new homes generate.

During the Council Finance, Administration and Economic Development Committee meeting in June, members shared concerns about corporate ownership and wanted to find ways to ensure that this project would stay affordable for the long-term.

Those concerns can get baked into future conversations and eventually be a part of the project agreement and negotiations, Messer said.

A lot of the details are yet to be worked out.

“Supplying options and diversification throughout your city is a particularly positive thing, and I think this opportunity — if we can do it, if people find it financially doable and are able to build it — I think it will be a good thing and provide other kinds of housing opportunities in these areas,” Messer said.

This story was originally published July 21, 2025 at 6:00 AM.