An effort to rescind a tax abatement for an Overland Park architectural design company failed Monday night after two hours of testy exchanges and some uncomfortable moments between factions on the city council.
The discussion at times broke down into personal confrontation as new member Scott Hamblin, mayoral candidate Faris Farassati and Councilmember Gina Burke asked for reconsideration of a 50-percent property tax abatement for Dimensional Innovations.
It was an early look at how the council members may interact with each other on what is likely to become an ongoing philosophical debate on public financing of private development projects. Farassati has been skeptical of most tax incentives and argues against them at length just about every time they come up. He has also made them a campaign issue in his run for Mayor Carl Gerlach’s seat.
On Monday, he teamed up with Hamblin and Burke to question whether city staff and council members had looked with a sufficiently critical eye at a cost-benefit analysis that painted a positive picture of the incentives offered to Dimensional Innovations, a firm at the northern edge of the city with plans to expand.
The opponents insisted that they only wanted a deeper look at what they said was faulty methodology used to authorize the incentives. But some members who voted in December for the abatement took umbrage at the tone of the questions, especially those directed at city staff. They said the opponents’ presentation left out important facts and context, and that suggestions the staff hadn’t gone far enough in verifying information were unfair.
“Is your intent as a city council member really trying to do what is best for the city of Overland Park or is your intent to do what is best for yourself, Scott Hamblin,” said Councilmember Jim Thompson.
“That’s a pretty offensive question. I don’t think I even need to answer that,” Hamblin said.
Company says it plans to add 225 jobs in next decade
The vote to rescind failed 7-3, with Hamblin, Farassati and Burke voting no. Council members Curt Skoog and Fred Spears were absent.
Dimensional Innovations is a locally-owned national company known for creating distinctive architectural features. In the December 16 meeting, the council decided the company was eligible for $14.6 million in economic revenue bonds that would enable a 10-year 50% property tax abatement that would have the potential to increase to 65% under certain conditions.
The company plans to expand its work space at 3421 Merriam Drive and add 225 people to its 187-person workforce over the next 10 years.
When business owners ask for tax breaks, the city relies on a computer-generated analysis from the state, created from numbers supplied by the city to assess if they are worth the potential revenue sacrifice. The analysis for Dimensional Innovations said the city would get $3.51 for every $1 it invested in tax breaks. That’s based on the creation of 705 direct and indirect new jobs plus visitors to the company and improvements in the area over the 10 years that would result in higher property taxes.
Hamblin outlined several reasons he believed the information supporting the tax abatements is faulty. The multiplier used to figure the number of new jobs was based on an incorrect classification of the business, he said. He and Farassati also have said that the company is growing, and would not have needed the break to remain successful. The fact that the company leased a nearby building it plans to move into proves it wouldn’t have moved if the tax abatement didn’t come through, they said.
Prior to Monday’s meeting, Hamblin pointed out that one of the company’s officers is the son of former Councilmember Rick Collins, who Hamblin defeated in the November election. He noted that the application for the incentives was made just after the election and voted on before the new council members were sworn in (Collins abstained from votes on the incentives and did not participate in the discussion).
Hamblin didn’t make direct accusations about the ethics at the time, but left open the questions of timing, whether the company had been truthful about its option to move out of the city and whether the numbers were rigorously vetted.
But that didn’t sit well with some council members, who said the hanging questions unfairly implied malfeasance. Thompson said the city’s staff is known for professionalism and does look critically at all tax incentive deals.
Mayor challenges Hamblin’s presentation
After the meeting Mayor Carl Gerlach distributed a detailed handout refuting Hamblin’s points and explaining the analysis’ technical points. The city has been in talks with the company since June of 2019, well before the election, it said. And city leadership negotiated the company down from its original request of a 75% abatement. Councilmember Chris Newlin argued that a leasing a property on contingency is a reasonable and common way companies prepare for an eventual expansion while waiting for deals to go through.
In any case, milestones and claw backs for not meeting the new jobs figures are typically worked out in the second phase of negotiations with the company, other council members said. The council will get a chance to vote again on the particulars of that agreement.
“I’m deeply troubled by this new trend of standing in the way of progress for our city,” Newlin said, adding the DI expansion will attract educated and high paid employees into an area in need of improvements. “I believe this sends a dangerous message to our local business community that will ultimately harm the residents of Overland Park.”
Hamblin and Farassati said afterwards that they, too were disappointed. “Obviously I think I’d be a fool if I thought I was going to come tonight and make this presentation given the nature of this body and it not be a hostile environment. That being said taking a personal attack was below where I saw it going,” Hamblin said.
The process is at fault when city officials first vote their commitment to a project before all of the details are worked out, they said later. Too often, they said, city officials are asked to give their blessings without all the facts.
“We can’t screw up something and hope to fix it later,” Farassati said. “The vote on authorizing this negotiation to move forward should have been on a factual basis.”
Video of the meeting is embedded below: