Overland Park council signals more tax breaks coming for CityPlace corporate campus
CityPlace developers may have yet to secure tenants for the second of four office buildings planned near U.S. 69 and College Boulevard.
But Overland Park City Council members, eager to attract businesses that pay higher rents and salaries, have already pledged tax breaks for the next phase of the mixed-use development under construction.
Council members approved a resolution Monday declaring the city’s intention to issue up to $30 million in economic development revenue bonds — which provide sales tax exemptions on construction materials — for the CityPlace Corporate Centre I building developed by Block Real Estate Services.
The resolution also authorized a 10-year, 25 percent property tax abatement for the proposed 125,912 square-foot office building. Of the four office buildings, this one is expected to be built closest to College Boulevard. Once the building is completed, its annual property taxes will increase from $11,500 to $90,000, city staff estimate.
The vote was 10-2, and several council members said the incentives would help draw tenants. Council members Faris Farassati and Gina Burke voted in opposition.
The city has also offered to increase that property tax abatement to 50 percent for tenants occupying at least 20,000 square feet and paying employees an average annual salary of $65,000. Any potential tenants currently based in Overland Park would need to show they would create 100 new jobs to be eligible for the additional abatement.
The incentives are contingent on several factors that have yet to be negotiated, including a payment in lieu of taxes agreement and a lease agreement between the city and developers. Overland Park would not be on the hook for repayment of the bonds, and city staff have reserved the right to approve tenants occupying more than 10,000 square feet of space.
Overland Park would not issue the bonds until late 2020, when the building is nearing completion.
Curtis Holland, the Polsinelli attorney representing the developer, said the project is providing a solution for what is a “dire need” for Class A office space in the city.
“We are, whether you know it or not, losing tenants to adjoining cities because of really stronger abatement policies in other adjoining cities,” Holland said. “…It is something that we do hear from tenants frequently.”
Holland said the developers have yet to secure tenants, and Corporate Centre I is being built on a speculative basis. But he indicated that developers are in close talks with a company that could be wooed by the incentives.
The first CityPlace corporate building has leased three of its four floors, according to the CityPlace website.
The council last year approved $31.6 million in economic development revenue bonds for that building, CityPlace Corporate Centre III, where Lenexa-based health care technology company WellSky will makes its new headquarters.
The city also offered a 10-year, 50 percent property tax abatement on the space occupied by WellSky, formerly known as Mediware Information Systems. WellSky must maintain average salaries of $90,000 after the first five years, among other requirements.
WellSky, which will occupy three floors of the building, is expected to employ more than 360 local workers in the next decade. Construction on the building is expected to conclude this summer.
In addition to its corporate centers, the CityPlace plan calls for more apartment buildings in addition to the Royale apartment buildings already constructed. Developers have said they also plan to add retail shops.
Councilman Dave White called the CityPlace offices a “booming thing” and said he felt confident that the second building could draw tenants that could create jobs.
“We’ve taken a very conservative philosophy on tax abatements, and I think that this is in that realm, but it’s also recognizing some of the economic realities that are out there,” White said. “You gotta give them a little bit of something and then hopefully they’ll come in.”
This story was originally published April 2, 2019 at 4:31 PM.
