Development incentives and tax breaks will be key issue in Overland Park mayor’s race

Kansas City, Missouri, in 2007 had a mayoral race where development incentives emerged as a central issue. Almost a decade later, it will be Overland Park’s turn.

Charlotte O’Hara, a former Kansas House Representative, filed last week to run for Overland Park mayor in a race that will pit her against three-term incumbent Carl Gerlach.

It will mark Overland Park’s first competitive mayoral race since 2005, which started Gerlach’s first term as mayor after defeating Neil Sader in the general election that year.

Gerlach, who took over for Ed Eilert after 24 years as Overland Park’s mayor, won subsequent four-year terms without a challenger in 2009 and 2013.

O’Hara said ending development incentives will be a priority in her campaign.

O’Hara, who served one term in the Kansas statehouse as a conservative Republican, leveled criticisms at Overland Park’s use of development incentives for large businesses like Black & Veatch and substantial retail projects like Prairiefire.

“I’m not going to argue with anyone who says property taxes are too high — they are; but it’s bad public policy to give a few the tax breaks so they don’t have to bear the burden of property taxes and the normal Joes don’t get anything,” O’Hara said in an interview.

O’Hara cited philosophical differences, not personal disagreements, for her decision to run against Gerlach.

“It is apparent that Carl and I have a 180 degree difference of opinion on tax incentives, so I’m just bringing that to the public’s awareness,” O’Hara said. “This is not just an issue in Overland Park. I’m focusing on it here. Hopefully if I’m successful, I can use this as a platform to say to the rest of the state of Kansas, yes, you can have a city that functions quite well without tax incentives.”

Gerlach said Overland Park does not award tax incentives in a manner that’s out of line with other nearby cities.

“The city of Overland Park has given fewer incentives than most other sister cities around here,” Gerlach said.

Gerlach said Overland Park over the years earned high scores in several national rankings that measure a city’s success.

“We continue to gain awards,” Gerlach said. “We don’t want to sit still. We want to continue to build the quality of life.”

O’Hara once received a tax break in the form of industrial revenue bonds, a method whereby a development can receive property tax abatements for 10 years, on an industrial property expansion in Olathe in the late 1990s. She said she viewed tax breaks favorably for manufacturing and industrial uses at the time.

O’Hara said her view changed when Overland Park granted substantial tax breaks to Sprint for development of the telecommunication company’s world headquarters. Since then, she said, Overland Park’s property tax rate has grown while more companies and retail developments have been recipients of various tax incentive programs.

“I’m not criticizing anyone in the industries who are applying for tax giveaways,” O’Hara said. “It’s public policy, it’s well within their purview to do so. But it’s bad public policy.”

O’Hara voted against the extension of sales tax revenue (STAR) bonds in 2012. She’s critical of the tool that allows approved developments to retain state and local sales taxes that it generates to pay for certain project costs. In Overland Park, the Prairiefire mixed-use project at 135th Street and Nall Avenue is financed partly by nearly $65 million in STAR bonds. That project has had to use a reserve fund to make interest payments on its bond debt because it hasn’t generated enough in sales.

“On 135th Street? Are you kidding me? That’s the most prime property in the Kansas City metro area, and yet it’s littered with incentives,” O’Hara said.

Overland Park in 2015 adopted a policy governing tax increment financing, a mechanism that allows development projects to capture new taxes that it generates to pay for eligible costs. Among the policy’s guidelines are that developments should not receive more than 30 percent of its financing from TIF and discourages the city from guaranteeing the debt on TIF projects.

Gerlach said the policy was developed by the Overland Park City Council. He said it was adopted to ensure that the city works well with taxing jurisdictions like school districts, whose budgets can be affected by the use of tax breaks (another tenet of the city’s TIF policy asks that developers present their plans to taxing jurisdictions early on in the application process).

Terry Goodman, an Overland Park council member who chairs the city’s finance and economic development committee, said he views the city’s use of incentives as judicious and meant for projects that otherwise might not happen.

“The best example has been the use of incentives to spur multifamily development around downtown Overland Park,” Goodman said. “Those projects are somewhat more expensive because they require property to be torn down and land to be reclaimed to build new. That’s a more expensive process than green field development.”

O’Hara’s comments echo those made for years by tax incentive critics in Kansas City. It’s a metro area that straddles a state line and where both Kansas and Missouri, as well as cities in the area, use tax incentives to attract business and development, often from one city to another.

O’Hara said Overland Park could still compete for business and development without incentives.

“Overland Park has location, location, location,” she said.

Goodman said that might not be the case in all instances.

“Certain projects are going to happen without them,” Goodman said. “The Metcalf South property is happening without any public incentives being considered. For other projects, it would not happen without them. If Overland Park were to establish a no-incentive policy, everything has to be no public-private partnerships, we would be at a very definite disadvantage.”

O’Hara lives in south Overland Park. She ran twice for Johnson County Commission chairwoman in 2002 and 2006, losing both times to incumbent Annabeth Surbaugh.

The primary election for Overland Park, if there are more than two mayoral candidates, will take place Aug. 1. The general election is Nov. 7.

This story was originally published January 18, 2017 at 10:51 AM with the headline "Development incentives and tax breaks will be key issue in Overland Park mayor’s race."