The Leawood City Council tweaked its policy on tax incentives Monday night, making it more flexible and, as one council member put it, more developer-friendly.
The council unanimously approved a small but significant change in the timing of the approval process. The change makes it possible for council members and developers to adjust development plans as the tax incentives are being considered. From now on, the council can begin discussing public financing after a preliminary development plan is approved. Previously, that discussion didn’t happen until a final plan was approved.
The change was to the city’s Community Improvement District policy, which sets the rules for special taxing districts that fund some of the costs of developing or redeveloping a site. In a typical CID, a city sets up boundaries where an additional sales tax is charged with the proceeds going to fund some development costs. The districts are usually intended to encourage development on a difficult site that might not get investment without the additional help.
Leawood has a policy in place for these special districts. For instance, the city won’t fund more than 25 percent of the costs and the money must go for changes visible from outside, rather than interior work.
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Developers have sometimes questioned and tested the limits of that policy. In 2013, Hy-Vee sought financing that would have included interior work. The grocer backed away when the city balked, and eventually closed the store.
The policy also was an issue when the city’s first CID, at Camelot Court, was approved in 2014 and during talks about a redevelopment of Leawood’s corner of the Ranchmart shopping area at Mission Road and 95th Street.
Ranchmart had been under consideration for years. In 2010, the city approved a modest plan, but as that one neared its expiration last year, developers asked for a bigger plan that would involve public financing. Once again, the issue was the rule on exterior improvements. In that case, the developers wanted the city to pay for some costs of burying the power lines.
But eventually Ranchmart’s developer decided to go with the 2010 plan, which did not require a CID, said Leawood Mayor Peggy Dunn. In the meantime, Overland Park last fall approved a 1 percent sales tax for Ranchmart South, across the street.
The Leawood City Council vote Monday night does not change the rules on what sales tax money can be spent on, but does give the council more of an opportunity to work out differences with developers as a CID is being considered. Council member Andres Osman called it a “happy medium.”
Council member Carrie Rezac also approved. “I think this covers some of the problems we’ve had in the past and at the same time makes it more developer friendly,” she said. “I think it does a good job of walking down both sides.”
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