Shopping center incentives advance
The Shawnee City Council on Monday established a tax increment financing district for the proposed $16.5 million redevelopment of Shawnee Parkway Plaza, a long-stagnant shopping center at Shawnee Mission Parkway and Pflumm Road.
Minus Councilman Dan Pflumm, who was absent, the council voiced strong support for what would be the city’s first use of tax increment financing, or TIF, before voting 7-0 to create the TIF district.
But the vote was just one, early step in the process of approving $7 million in tax incentives requested by Shawnee Plaza Redevelopment LLC, which plans to purchase, expand and reconfigure the 92,000-square-foot center if the incentives are approved.
The City Council isn’t scheduled to vote on the developer’s project plan and incentives request until March 11. And at least one official, Ward 2 City Councilman Neal Sawyer, voiced opposition Monday to the $3.75 million being requested for one type of incentive: a transportation development district, or TDD.
The TDD, if approved, would allow the sales tax rate paid by Shawnee Parkway Plaza shoppers to be raised by 1 percent for about 15 years, with the proceeds going toward transportation-related project expenses.
“I’m against adding sales tax at any shopping center in Shawnee,” Sawyer said, adding that the Swedish furniture retailer IKEA had declined the offer of a sales tax surcharge for its new Merriam store because it “didn’t want to penalize its customers.”
As the Shawnee Parkway Plaza project moves forward, Sawyer said, he would like the city to investigate the use of its own funds, instead of a TDD, to pay for the public improvements associated with the project: the realignment of Midland Drive in front of the center and a new signalized entrance road off Shawnee Mission Parkway.
But Sawyer joined the rest of the government body in supporting the $3.25 million in TIF requested. TIF is a development tool that captures increases in tax revenue, in this case both property and sales tax revenue, generated by a project to reimburse developers for eligible project costs.
Councilwoman Dawn Kuhn said TIF would not cost the city anything. The levels of tax revenue currently being generated by the shopping center — more than $100,000 a year — will still flow into city coffers, she said, and after the TIF improvements are paid off in about 15 years, the center will generate additional tax revenues.
Without TIF, the project simply “is not going to happen,” Kuhn added, referring to finding by the city’s financial adviser that the developer, without the proposed incentives, would reap a return of investment of only 0.74 percent. With the incentives requested, the return is projected at 10.08 percent, which falls within the range of 6.5 percent to 12.5 percent for strip shopping center projects nationwide. The average rate of return for such projects is 8.41 percent.
Despite those findings, three residents spoke against the proposed tax incentives Monday.
Michael Chapman gave four reasons for his opposition, starting with his disagreement with the finding that the shopping center site is blighted — a condition that must be met before TIF is approved. Like Sawyer, Chapman also spoke against a sales tax increase at the center, which he said many shoppers would pay unwittingly. He also opposed favoring one developer at the expense of existing local businesses, including the four Shawnee hardware stores that will see some of their sales go to a new 30,000-square-foot Nuts and Bolts store that incentives are expected to lure to Shawnee Parkway Plaza.
Finally, Chapman spoke against the proposed traffic signal, “which will affect thousands of residents every day for the sole benefit of one developer.” Councilman Mickey Sandifer noted that the traffic light also would make it safer for moving vans from a nearby company to enter Shawnee Mission Parkway.
“Are you willing to see that center remain (largely) empty for another 20 years?” Sandifer asked Chapman after his remarks.
“Yes, if it means not giving tax dollars to this developer,” Chapman responded.
Councilman Jim Neighbor said he supported the shopping center project because it would attract new tenants and help build the city’s commercial tax base, which currently accounts for only about 27 or 28 percent of city property tax revenue.
“I’d like to see it push 40 percent,” Councilman Jeff Vaught said, adding that even a 30 percent rate would likely allow the council to lower residential property taxes.