February 12, 2013, 10:17 p.m. Updated: 13 February 2013, 12:00 a.m.
The Shawnee City Council Committee voted unanimously Feb. 5 to recommend suspension of the city’s excise tax on platted parcels.
The two-year suspension, scheduled for a City Council vote on Feb. 25, is aimed at spurring development as the economy begins to thaw.
But two council members didn’t believe suspending the tax went far enough. Before supporting Ward 4 council member Dawn Kuhn’s motion to recommend the suspension, Ward 2 council member Neal Sawyer moved that the committee recommend ending the excise tax permanently. That motion failed 6-2.
“I think we need to be more bold than that,” Sawyer said of the proposed suspension. “The development world seems to think (the excise tax) is a big hindrance to development. So let’s take the hindrance away in Shawnee.”
Sawyer, whose motion was supported by Ward 3 Councilman Jeff Vaught, argued that the excise tax, a charge of 21.5 cents per square foot of newly platted ground, had not been generating much revenue. But during the five years prior to 2009, when excise tax revenue plummeted to $42,144, it had brought in an average of about $692,000 a year.
Kuhn said the City Council should retain the option of tapping that revenue stream again during future boom years for development. That would be possible with a suspension of the tax, she said. But it would not be possible to end and reinstate the tax due to recent passage of a Kansas statute banning new excise taxes in the state, she said.
The proposed tax suspension, which the city could extend, would require developers to complete projects within three years unless city staff agrees, based on circumstances, to a longer term.
It also calls for tapping the city’s new Economic Development Fund as incentive to developers who would have had their excise taxes waived under current excise tax law.
Under the current ordinance, for example, the developer of the 30-acre second phase of Shawnee Golf and Country Club Apartments would have a $279,932 excise tax waived because of the developer’s $2.6 million cost of extending Clear Creek Parkway. Thus, mere suspension of the excise tax would not provide any incentive.
So the proposed ordinance also calls for reimbursing developers for major road improvement costs up to the amount of the waived excise taxes by tapping the Economic Development Fund.
Vaught noted that Shawnee is the only city in Johnson County with an Economic Development Fund. It is being funded with half of the city’s revenue from recently renegotiated landfill impact fees, which are being stepped up from $300,000 to $3 million a year.
Suspending the excise tax will provide Shawnee with another economic development edge over surrounding Johnson County cities, which all charge the tax, Vaught said.
Originally published at: http://www.shawneedispatch.com/news/2013/feb/12/shawnee-poised-suspend-excise-tax-development/