Today we begin running the Overland Park mayoral candidates’ responses to our general election questionnaire. Here’s the first item, which had two parts:
Part 1) Overland Park’s use of public tax incentives in recent years has become a hot button issue. Proponents, like the Chamber of Commerce, say that “public-private partnership” on projects leads to high-quality developments that attract businesses and create jobs. Critics, however, say that the practice puts public money in the pockets of private developers, and point to underperforming projects like the Prairiefire development as evidence they aren’t warranted. Where do you stand on the use of public tax dollars to help get private development projects moving forward?
Part 2) Have you ever invested — directly or indirectly — in a commercial or residential development project that received local, state or federal development incentives?
Carl Gerlach (incumbent)
Part 1) Overland Park has been and must remain a competitive place to locate a business, so that we can offer good paying and high-quality jobs for our citizens, and so we can continue to re-develop areas of our city like 95th and Antioch. We are constantly reviewing our incentives to assure they are: a) required to level the playing field against local, regional and national competitors, b) only used when necessary as to close a real financial gap and maintain the highest development quality and c) all developments continue to pay at least the current tax levels. Cities must have tools to invest in public private partnerships or else concede job growth to other cities. Only a portion of the increment (the increased taxes created by the developer by investing millions of dollars into the City) is invested into the project. This strategy has been successful in the last 12 years while we have added over 23,600 new jobs and over $1.1 Billion in capital investment while maintaining the lowest mill levy tax rate of any city in Johnson County. In a perfect world, we could eliminate all incentives nationwide and Overland Park would do well with its already low taxes, great public services, and quality of life. But if we unilaterally disarm, other cities in the region and nationally will be the winners and Overland Park will have lost its competitive edge.
Part 2) No, that would be a conflict of interest. The City has a code of ethics which would prevent this.
Part 1) This is my number one issue: tax incentives/abatements are unnecessary and are making Swiss cheese of our tax base. Currently there are $178 million in outstanding tax incentives on 135th St. between Nall and Metcalf, of which $106 million run through 2036. This is outrageous to be subsidizing retail on the “Gold Coast” of Overland Park.
Subsidizing apartment complexes is ridiculous as according to HUD stats the vacancy rate in O.P. is 3.6%. Adara apartments at 133rd and Westgate, just sold and in a press release the company, PAC, announced they had a $32 million dollar 3.9% non-recourse (no personal guarantee) loan with 30-year amortization, balloon in 10 years. Obviously subsidies are not necessary with this type of financing available and vacancy rate. And since the city council cannot create a market it is never appropriate to subsidize retail or residential.
San Jose has quit the game of handing out Corporate Welfare; it’s time for Overland Park to do the same.
Part 2) Yes, in Olathe they had (have?) a policy of 50% property tax abatement for all industrial/manufacturing projects over $1 million. We did an expansion project 13 years ago for our metal fabrication tenant and the property tax abatement was passed through to our tenant. For the original term of abatement (7 years), 100 percent was passed through to tenant, our attorney found an error in the city documents that extended the abatement period to 10 years and we split the abatement for the last three years. The City of Olathe offered our tenant another incentive package at the end of the 10-year abatement, which they took, and they built another facility in Olathe. This is a reflection as to how this abatement/incentive game works as companies jump from one to the next.
I learned my lesson well, never again. Unfortunately our city council did not learn from their first BIG mistake, Sprint, which has gone from 14,000 down to 6,000 employees. Landing the big whale is not the answer; they leave a big hole when the big bet of giving away huge incentives or abatements goes horribly wrong. The market works, it’s not city council who is the engine of job creation/growth, but rather the private sector.
Tomorrow we’ll publish the candidates’ responses to item two: Overland Park is the second biggest city in the state by population, and is one of the main economic drivers of the metro region. Should the position of Mayor of Overland Park be a full time position and compensated as such? Why or why not?