Photo by Adam Vogler
Kent Heermann, president of the Regional Development Association, explains tax incentives available for retail development in the accompanying interview.
Monday Conversation is an interview with a local person. This week’s interview is with Regional Development Association President Kent Heermann, who talks about a new retail development that is being proposed in northwest Emporia.
Q Two weeks ago, Dave Christie, a developer with D.J. Christie, held a public meeting about this proposed development next to the water treatment plant. Where do things stand right now?
A D.J. Christie has contacted the community and has strong interest in pursuing a development at 24th and Industrial. Mr. Christie is working with a big box retailer along with some small box retailers to develop about 17 to 18 acres.
The project has to go through the process of being a planned unit development, which will require a zoning change. We are supposed to get a TIF and a TDD application today. It will be a long process. It is a process that starts today and goes all the way to the first part of January. We will do our due diligence and public notice requirements.
Q What are TIFs and TDDs?
A TIF stands for Tax Increment Financing and TDD stands for Transportation Development District.
One of the biggest misconceptions is that people think these are cash incentives to the developer, and they are not.
Tax Increment Financing is a method used to capture increased revenues and use them to pay for public improvement. The city commission may designate the retail development area a TIF District for improvement and then earmark any future growth in tax revenues (the increment) in that area to pay for the agreed-upon development expenditures in the area. Tax Increment Financing may be used for a qualified development project by using the new tax revenues (increment) to pay for some of the necessary improvements.
Money can be used for development costs like public infrastructure, site improvements and utility relocation. It cannot be used for the actual costs of the building by the developer.
A Transportation Development District (TDD) may be created by petition of 100 percent of the property owners in the district. If the district is approved by the city commission, then an additional sales tax shall be imposed only in the district to fund the transportation-related improvements for the district. Once the transportation improvements have been paid in full, then the additional sales tax is repealed.
The TDD can only be used for road improvements, drainage related to those road improvements, traffic lights, turning lanes and street lighting. It can’t be used for site improvements or storm water detention.
So let’s say our city sales tax is 7.8 percent and then they would add an extra 1 percent, so just for that district it would be 8.8 percent, and that is just for that district. Let me say that again — the only stores that have a higher sales tax are those ones located in the new retail development.
Q How common are TIF and TDD programs in development projects?
A These are quite common. In some comparable communities like Pittsburg or Hays they have used TIF projects. In fact, D.J. Christie did the projects there. In Pittsburg, they cleaned up an old foundry site and then developed it into a site with a Home Depot and lots of smaller retail stores. It was a very successful development. In Hays, they have Home Depot as well as one or two retail stores. D.J. Christie has also done some developments in Belton, Mo., which is on the edge of Kansas City and is a real growth area.
Q Typically, TIF’s and TDD’s are used by large retailers, but can any business use them?
A Anyone can use them, but you really have to have a fairly significant project to make cash flow. We have looked at some projects downtown or in existing parts of town, and really the Neighborhood Revitalization Act worked much better than creating a TIF district. There is a lot of time and expense that goes into creating a TIF district. To submit a TIF or TDD application to the city there is a $50,000 fee for each application. So a developer can spend $100,000 just to go through the process. So some smaller projects, like doing a block downtown, you just have to pencil it out and see if it justifies the cost and time and can generate enough to cover the expense.
Q What is your office charged with doing on this development project?
A Anyone can use them, but you reOur office will do the due diligence with regard to the TIF and TDD applications. Then we will have the RDA board review it and make recommendations to the city commission.
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Posted by sail (anonymous) on August 25, 2008 at 6:50 p.m. (Suggest removal)
AHHH CORP. WELFARE!!!! im sure that our current sales tax collectors just love the prospect of this!!!!
Posted by booker5m (anonymous) on August 26, 2008 at 12:30 p.m. (Suggest removal)
Dang fancy words for new tax!
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