A long time ago, in a galaxy far, far away, the city of Overland Park looked down its nose at tax incentives for businesses and developers. I saw it firsthand as chairman of the Overland Park Chamber of Commerce in 1980, a post I was elected to elected exactly two decades after the city’s founding in 1960.
The general attitude then, among both business leaders and the city council, was that Overland Park didn’t need to offer incentives. What it offered instead was a high quality of life, good government, great schools and an economy that was steadily growing. It didn’t matter how Kansas City or other communities might contort themselves to lure businesses. Overland Park was above all that.
For the decade following my chairmanship, Overland Park held pretty firm. Then, things began to change. A few mega-projects, including Sprint, the expansion of the Black & Veatch engineering firm, and Burlington Northern Railway’s training center at Johnson County Community College, were granted tax incentives to entice them to move to Overland Park or to greatly expand. The key then was to create lots of new high-paying jobs.
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Overland Park continued to be very conservative in handing out incentives. But then attitudes shifted. The city began offering generous tax incentives, primarily to shopping center developers, large corporations and commercial areas in need of revitalization. Although attracting good jobs was still important, the city had other objectives as well. Redevelopment became a priority as a number of older shopping centers began to show their age. And stiff competition in surrounding suburban areas, as well as in Kansas City, was starting to make a dent in Overland Park’s growth.
Behind the scenes, though, other phenomena that would change the way the city looked at tax incentives rippled through the city council chambers and the business community.
The new school finance formula passed in 1992 radically changed the way Kansas schools were funded. Previously, tax abatements were viewed as robbing local schools of tax dollars. But with the new formula, that hardly mattered. Johnson County became an exporter of its tax dollars to Topeka, where school funds were redistributed across the state. There was no longer a real driving motivation to avoid tax abatements because there was little or no adverse impact to local schools.
Another jolt came after 2008, when lenders became much more stringent in the wake of the Great Recession, starving developers and businesses of needed capital. The city stepped in to help bridge the financing gap.
But if I were to point to the single most important factor that changed attitudes in Overland Park. it was the Kansas legislation passed in 2009 to allow for the creation of Community Improvement Districts.
Costing the taxpayers at-large nothing, developers were allowed to impose a little higher sales tax — usually one cent more — in their specific district, and all the extra dollars would go toward improving or developing that “island.” That incentive transformed declining shopping centers, helped build new retail developments and really ignited both an economic revitalization and expansion that almost assuredly would never have occurred otherwise.
The bottom line for Overland Park taxpayers is this: The use of tax incentives in Overland Park has made it a better city. Taxpayers are getting a good deal. Valuations of properties have continued to increase, allowing Overland Park to have the lowest mill levy in Kansas.
Today, it is a whole new world. Overland Park is playing in a different, highly-charged environment with new tools at its disposal. The city and its taxpayers are both winners. Everything else you hear is campaign rhetoric.