City Council votes to eliminate excise tax on new development
The Shawnee City Council voted March 5 to suspend the city’s excise tax on newly platted properties for two years in an effort to spur development.
The move, to be achieved through individual agreements with developers, was approved by a 7-1 vote, with Ward 2 Councilman Neal Sawyer casting the lone “no” vote.
During a Dec. 4 meeting, Sawyer voiced support for not only suspending the excise tax but permanently eliminating it. But he changed course during the March 5 meeting, noting his opposition to a portion of the suspension plan that authorizes city payments to developers that would have qualified for excise tax waivers under the old policy.
An example would be the developer of Shawnee Golf and Country Club near Shawnee Mission Parkway and Kansas Highway 7. Under the old excise tax policy, that developer’s $279,932 excise tax for a 30-acre second phase would have been waived because of the developer’s $2.6 million cost of extending Clear Creek Parkway.
Under the new policy, the developer would be reimbursed for major road improvement costs up to the amount of the waived excess tax, in this case the $279,932.
Ward 3 Councilman Jeff Vaught, who proposed the excise tax suspension, noted that the reimbursement payments to qualifying developers would come from the city’s new Economic Development Fund. The fund is being financed through recently renegotiated landfill impact fees, which are being stepped up from $300,000 to $3 million a year. The plan is to use half the proceeds for street maintenance and half for economic development, Vaught said, and he believes the roadwork reimbursements are a fitting use of the funds earmarked for economic development.
Sawyer said he would rather see that money go toward curbs and gutters.
But in the end, the City Council satisfied Ward 1 representative Jim Neighbor’s goal of suspending the excise tax prior to the spring building and development thaw.
Neighbor has been a leading advocate for reducing the tax burden on Shawnee homeowners by increasing the percentage of property tax revenue the city collects from commercial real estate. Currently, commercial properties account for only 23 percent of Shawnee’s real estate tax base. In Lenexa, commercial properties account for 49 percent of the tax base.
Prior to Monday’s vote to suspend the excise tax, both Sawyer and Vaught had supported eliminating it. But Ward 3 Councilwoman Dawn Kuhn argued for the two-year suspension, which will keep the tax available for future use should economic conditions merit it.
Andrea Bough of Stinson Morrison Hecker LLP said the Kansas Legislature had voted to prohibit new excise taxes a few years ago. Therefore, elimination of the tax would mean it could never be reimplemented, she said.