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Archive for Tuesday, March 11, 2008

School board keeps tax financing plan alive

March 11, 2008

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School board ignores KU profs, supports Oread tax district

Despite arguments by two KU professors against the 12th and Oread tax increment financing district, the Lawrence School Board will not veto the project. Enlarge video

Lawrence school board members Monday night affirmed their position not to veto a tax increment financing, or TIF, district the city has approved for the Oread Inn project near 12th and Indiana streets.

"With two days to go in the 30 days that have run, I do not see any compelling reason to go back on what we have already done," board member Scott Morgan said.

Two members of the public had asked board members to reconsider. The city approved the project Feb. 12, and the board had one month to either veto the TIF or let it take effect.

In previous discussions, board members, like the Douglas County Commission, were against the veto.

"I think we're giving up money that we shouldn't be giving up," said Allen Ford, a Kansas University accounting professor, who addressed board members.

Ford said he supported the Oread Inn project, but he believed it could succeed without TIF. The TIF will allow the project to use future tax revenues it generates to help pay for parking, street improvements and other infrastructure projects in the area.

The development group, led by members of the Gene Fritzel Construction Co., would privately finance the entire $37 million hotel and condominium project, including about $11 million for parking and other improvements.

A city estimate had said that project revenues will cover only about $6 million, requiring the developer to cover the remaining $5 million.

School districts rely on property taxes for their budgets, including 20 mills that are levied and doled out by the state back to districts based on their enrollment. A TIF would not affect this. A mill is $1 in taxes for every $1,000 of assessed valuation.

Ford also said it would be an unfair subsidy given to one business over others.

Raquel Alexander, a parent and KU assistant accounting professor, said other states have had problems with TIF districts and education funding, and she asked for the deal to be reworked into a type of pilot project that would not include the school district.

But board members relied on an opinion they received from their attorney Gary A. Anderson on Monday that said the 20 mills used by the state and given back to districts for their general fund would be excluded from the TIF.

His opinion also said taxing jurisdictions could not be treated differently in a TIF district.

Alexander said her concern would be with what is taxed beyond the general fund. Currently the district also levies about 37 mills in local property taxes that mostly fund the district's capital outlay and bond and interest funds and the local-option budget.

"I don't think they got very creative in trying to find a solution to the school funding," she said.

Lawrence Superintendent Randy Weseman said the state formula protects the district through the state 20-mill levy and how it's divided among districts through the general fund.

He was also confident the other funds could be managed without factoring in the improved value of the project during the 20-year TIF.

"It's revenue neutral for us because we're governed by the state's school finance formula," he said.

A state education official also agreed.

"There is not a financial penalty to the school district for cooperating," said Dale Dennis, deputy state education commissioner, Monday afternoon.

Comments

flyin_squirrel 6 years, 9 months ago

Hawkperched,

I think this is a good project but I don't know if I agree with a drinking establishment getting tax credits. They plan to put at least one bar and possibly two in the hotel. Why should the city be giving tax credits to a drinking establishment?

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