Lenexa council approves 1% community improvement district sales tax for Sonoma Plaza development

A rendering of the proposed Sonoma Plaza development, which would sit just east of I-435 in Lenexa.

Developers of the Sonoma Plaza retail center, proposed for one of the last big tracts of vacant land inside the Interstate 435 loop in Johnson County, received unanimous approval from the Lenexa City Council Tuesday night for the creation of a community improvement district (CID) and the provision of a $1.35 million economic development grant.

At its meeting, the council:

  • Held a public hearing to consider creating a CID, within which a 1 percent sales tax will be levied for 22 years; the developer, Sonoma Plaza Inc. (a unit of Lenexa-based Oddo Development), will use the estimated $8.1 million in tax revenue for approved costs within the district.
  • Passed an ordinance establishing the CID;
  • Approved a CID development agreement with Sonoma Plaza Inc.;
  • Approved an economic development grant agreement with McKeever’s RJB LLC for a 61,000-square-foot McKeever’s Market and Eatery within the project’s boundaries.

City staff had recommended approval of all the measures. Ward 3 Councilman Dan Roh was absent.

According to a Tuesday memo to the council from Assistant City Attorney Sean McLaughlin, Sonoma Plaza will occupy about 25.8 acres at the southeast corner of 87th Street Parkway and I-435 and contain about 143,700 square feet of retail, restaurant and office space in multiple buildings. The project also will include private streets and parking facilities.

Sonoma Plaza Inc. and the Earl M. Hoehn Trust together own all the land within the CID, McLaughlin said in a July memo to the council. The trust doesn’t intend to develop its portion of the CID property, and Sonoma Plaza owns the rights to eventually develop the trust’s portion of it.

Construction is under way on the residential portion of the development on one of the last major vacant swaths of land inside the I-435 loop in Johnson County.

On June 5, the council approved tax-increment financing (TIF) plans for Sonoma Plaza and the multifamily residential development Sonoma Pointe. The 20-year TIF plan for Sonoma Plaza will reimburse the developer using up to 40 percent of the TIF increment for up to 12 years for a maximum of $4 million, after which the city will be entitled to receive 100 percent of the increment and any balance for the remainder of the 20-year TIF term.

TIF is a public financing tool by which a developer of a blighted property is reimbursed for eligible development and infrastructure costs using the increment of new property or sales tax revenue generated by the development. Consideration is given to whether a development wouldn’t be financially feasible but for TIF.

The council also approved on June 5 the city’s issuance of up to $20 million in industrial revenue bonds for the project.

Sonoma Pointe will have about 320 multifamily units in multiple buildings on roughly 29 acres near Loiret Boulevard and 87th Street Parkway. Construction started late last year, Ryan Powell, Oddo Development’s director of construction, said in May. The residential complex is being marketed as Sonoma Hill.

Sonoma Pointe’s 20-year TIF plan will reimburse the developer for eligible costs using up to 50 percent of the increment of new taxes generated by the development, with a maximum reimbursement of $3 million, starting when at least one of the buildings with at least 150 units is completed. After that, the city will be entitled to receive 100 percent of the increment and any balance for the remainder of the 20-year TIF term.

Last October, the council approved having the city pay an estimated $4.4 million for road improvements for Sonoma Plaza.