Shawnee Mission district paying new attention to tax diversion on development; won’t intervene in Metcalf projects

An overhead view of part of the proposed redevelopment. Rendering via LANE4.
An overhead view of part of the proposed redevelopment at 95th and Metcalf. Rendering via LANE4.

The Shawnee Mission School Board this morning decided it will not intervene on two tax increment financing (TIF) projects that are in the process of developing along Metcalf Avenue in Overland Park.

Dr. Kenneth Southwick
Dr. Kenneth Southwick briefed the board Wednesday on meetings with developers.

Deputy Superintendent Kenny Southwick briefed the board on meetings with developers or attorneys for the projects, at 91st and 95th Streets, each of which is expected to include a residential component. The district, Southwick said, has not “paid much attention” to TIF projects in the past, but that it should start to pay attention.

This morning’s session was unusual because TIF projects have not been brought to a board discussion in recent years. Some city officials have privately expressed concerns about the district’s recent interest in TIF plans, feeling that they need unencumbered economic development tools at their disposal for redevelopment.

Superintendent Jim Hinson said the district receives more operations money if the assessed value declines. “That’s what doesn’t make any sense,” he said of the school finance formula. If the value rises and the new property taxes are diverted to a TIF, then the district also loses the increased capital outlay levy and doesn’t have the additional money to build schools to handle the new capacity, he said, reminding the board that some schools are now at capacity in Shawnee Mission.

Under a TIF, the additional property taxes generated by the improvements are commonly returned to the developer to defray the cost of the project. The terms for each TIF development, including the amount of taxes forfeited, are negotiated individually. Excluded from the TIF funds is 20 mills that is earmarked for schools. That 20 mills, however, is passed directly to the state, not available for used at the district level. Other tax levies, including the capital outlay levy by the school district, would not receive the benefit of the additional property value, but would get taxes on the value of the property before improvements.

The first step in a TIF agreement is to establish a TIF district. The school district is one of the few entities that has 30 days to veto a TIF district before the deal is negotiated. Today was the 30th and final day for the district to intervene if it wanted to block the Overland Park move.

Hinson told the board that potential TIF projects, including those in Westwood, Prairie Village at Meadowbrook and on Metcalf could add 2,000 residential units. Even if new apartments don’t fill with children, the new units free up existing housing that does attract families. That has been the history with a development in Lenexa, the board was told.

The district, while not recommending intervention, told developers “we expect you to be a real partner in this community” that the schools can count on for support, Southwick said.