Property owners in Overland Park will see lower tax rate
Buoyed by higher property values and a relatively stable economy, Overland Park City Council members proposed a budget Monday that would forgo some tax revenues so the taxing rate on property owners could be reduced.
The proposed 0.25 mill levy reduction from the current 13.8 mills would not mean cuts in services or programs but would reduce the amount the city has left in reserves. However that amount is still high enough that the city’s bond rating should not be hurt, council members said.
The tax rate rollback does not necessarily mean residents will get a smaller tax bill, because higher property values could still cause a higher overall bill. But if the rollback makes it through the final vote next month, the taxes would not be as high as they would have with the original 13.8 mills. A mill equals $1 of tax per each $1,000 of taxable value.
An estimate done by city staff showed a relatively small break for homeowners. Someone with a $200,000 home would save about $6 a year. On a $500,000 home the amount saved would be $14.
Commercial property owners also would see slight savings – about $62 a year for owners of a $1 million building, and $300 per year for a $5 million building.
At this point in the budget year, the mill levy is a target aimed at raising enough revenues to fund city programs. The final mill levy is determined in the fall, after property assessed values become final.
The lower tax rate would reduce the city’s cash balance by $3.7 million by 2022, meaning the city would have $42.4 million rather than $46.2 million projected by that year. The reduction also would affect the amount the city gets from the special courthouse sales tax, but that amount depends on other variables and has not been calculated yet.
The rest of the total $293 million budget was left basically unchanged from what was proposed last month. The public hearing will be Aug. 7 with the final vote scheduled for Aug. 21.
Despite the fairly small savings to homeowners, some council members said they wanted to show taxpayers the city would not overtax.
“I’ve been on this council for 10 years and during that time we have increased the mill levy twice that I can remember and have not reduced it,” said council member Paul Lyons, who had asked for an even bigger rollback of 0.5 mills. “I feel like now’s the time.
“It’s important to send a message to our taxpayers that we are doing our due diligence.”
Lyons and others who supported the rollback said they were comfortable with smaller revenues because the city is still able to fund everything the city manager and staff requested and have enough reserve to continue a good bond rating.
Council member Terry Goodman also said the message to taxpayers is important.
“At least we’d be sending the message that this council is not just interested in getting all the tax dollars that we possibly can,” he said.
However, not all were comfortable with the rollback. Council member Richard Collins cited a survey that said Overland Park residents prize good infrastructure and public safety.
“I understand we want to send a message, but the survey is a message our citizens have sent us,” he said.
Once the budget is reduced, state restrictions on tax increases might make it more difficult to raise money later if it is needed, he added. “I’m inclined to say, let’s keep those dollars now,” he said. Collins proposed a smaller reduction of three-eighths of a mill.
Dan Stock also asked for caution on the rollback, saying the city will need to be mindful of aging streetlights and traffic signals. The city needs to keep investing in those things to prevent blight, he said.
In the end, the committee voted 8-3 for the rollback.
Metcalf 108
In other action, the council unanimously OK’d three measures that advanced the Metcalf 108 project at the intersection of Interstate 435 and Metcalf Avenue.
The $70.4 million project would put a six-story office, parking garage and 123-room hotel on 4.4 acres that is considered a gateway into the city. The 435 Overland Park Place Hotel, built in 1972 and now vacant, would be razed.
The council set up a tax increment financing district and approved rezoning for the office and a special use permit for the hotel.
The developer, Metcalf 108 Redevelopment Investors LLC, plans to ask for a community improvement taxing district and sales tax exemptions on materials in addition to the TIF district. But the particulars of public financing will be considered by the council later.
The plan calls for building the hotel and its surface parking first, followed by the office building and garage, once there are enough committed tenants, said Curtis Petersen, lawyer for the developer. Hotel construction could be finished as early as the end of 2018, and the office would take another two years after that, he said.
Some council members had qualms about the action and asked for reassurance that public money would not go toward building a hotel. “I am not willing to compromise or donate one dollar of tax increment financing to the hotel,” said council member David White.
“Our hotels are struggling,” he said, adding that Olathe and Lenexa have taken some of the hotel business that used to go to Overland Park. “We do not need another hotel.”
Petersen said the public financing would be devoted solely to the structured parking needed for an office building on that space.
This story was originally published July 19, 2017 at 12:01 PM with the headline "Property owners in Overland Park will see lower tax rate."