11.1 percent sales tax at Edison District in downtown OP would be among highest in Kansas

Roxie Hammill - July 10, 2018 11:00 am
A street level view of the proposed five-story office complex.

A new four-level parking garage won’t solve the parking crunch in downtown Overland Park during the day, city officials said. In fact, daytime weekday parking for the public will stay about even with what it is now, said City Manager Bill Ebel.

But council members still agreed to a $14.4 million public financing package for the Edison office and retail development, saying the influx of office workers and entertainment will be good for business and bring more people to shop downtown.

The package includes $10.6 million in tax increment financing to build the parking garage and a two percent additional sales tax within the district to help the developer on other building expenses on the $54 million project at 80th and Marty Streets.

A rendering of the plan as approved by the city council earlier this year.

The 2 percent sales tax approved by the council is the highest ever for an Overland Park community improvement district and would bring the tax rate for that area to 11.1 percent. That is among the highest sales tax rates in Kansas, according to the state department of revenue. In Johnson County, Olathe’s Conference Center Hotel CID is higher, with an 11.475 rate. The higher rate would only apply within the Edison area and does not include existing downtown businesses.

The downtown parking shortage dominated the discussion Monday as council members and the public weighed in on the finance package. A few neighbors of the development told the council that parking is already at a critical shortage because of construction on other downtown projects. Projects like Market Lofts and The Vue have taken away some of the private lots where owners allowed the public to park, said Kat Lyman, a downtown business owner.

The site of the planned Edison District project in downtown Overland Park that fronts 80th Street.

What the city really needs is more parking during the daytime hours for businesses, Lyman and others said.

“I don’t know about anybody else but I need more than one customer to pay my bills,” said Lyman, owner of Crescent Springs Tools for Enlightenment. “Where are all the customers of this going to park?”

The Edison parking garage will have more than 300 spaces that will be used by the office employees during the day, but will be available for free public parking at night and on weekends. But public parking open at all times is more limited. The developer will provide 24 of those spaces in the garage plus 37 in a surface lot and 52 on the street, a number that is considered “equity” to current spaces available and does not lose any existing spaces, Ebel said.

Some at the public hearing, including resident Mark Campbell, said the city should have asked for an extra couple of levels on the parking structure. Ebel said that was discussed with the developer but did not get traction. Councilmember Richard Collins pointed out that the extra levels would have made the structure taller, and height was one of the neighbors’ original objections to the project.

Other neighbors worried that the changes to downtown could flop.

“They’re trying to create a walkable environment in a county that is a culture of driving,” said Sandra Campbell. Many shoppers might be deterred from downtown if they know they can’t park near a business front door, she said.

Resident Joan Norman, who lives about five blocks away, agreed. “It’s just too much too fast down there,” he said.

Ebel said a parking study indicates the city might need to consider building its own parking garage some day as parking problems persist. “That notion is not out with the building of this parking structure,” he said. “What we have is an interim improvement. It isn’t ideal, we understand that,” he said, but for the city money invested, “it is a huge, huge positive benefit for the city.”

Mayor Carl Gerlach agreed that the investment will create a more vibrant downtown. “For us to put the lug on one project to solve all our parking problems downtown is not fair,” he said.

The council voted 11-0 for a tax increment financing plan that appeared to violate its recently adopted policy limiting the amount of increment used for development to 90 percent. (The increment is the amount property taxes would increase because of the project.) The council approved a 100 percent capture for Edison. Changes in state law that ensure a certain percentage of TIF money will to go schools for capital expenses do what the city was trying to accomplish with the limits, they said.

However the 2 percent sales tax add-on got a little more opposition. Three council members objected to the proposal to set up a community improvement district that would generate up to $3.8 million for the developer.

Developers asked for the higher tax because it was “absolutely necessary” to the project, said attorney Curtis Petersen, representing Overland Park Real Estate, LLC. And some city council members agreed.

Councilmember Logan Heley said he couldn’t support a sales tax rate that high for a development in an area with many middle-income residents.

Councilmember David White said he was opposed to the higher sales tax at first but has become convinced it’s necessary. But he said he had message for developers: “This is not a precedent, folks. This is a unique set of circumstances. Any time people say you’ve done it once, you can do it for me again, that’s going to be an argument that falls on my deaf ears.”

Petersen also reassured council members that the public money won’t bestow unseemly riches on the developers. “There is a failsafe, iron-clad process to make sure that a 2 percent CID and a 100 percent TIF couldn’t lead to something more than a fair, average market return for a developer,” he said. He called the development agreement contract “tight” and “fair” in its controls on how much goes to developers.

However Councilmember Logan Heley said he couldn’t vote to allow sales tax to reach 11.1 percent because it hurts people the most who can’t afford it, especially in a part of town that has a bigger population of moderate income residents.

Councilmember Faris Farassati disagreed that the higher tax won’t be considered a precedent. “You haven’t established anything unique here so you cannot defend it,” he said.

Farassati, Heley and Councilmember Gina Burke voted against the sales tax. Councilmember Chris Newlin was absent.

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