City commission to act Tuesday on special tax district near Sixth and Wakarusa

City commissioners Tuesday will be discussing a sales tax proposal, but it may not be the one you expect.

As voters prepare to decide in November a trio of sales tax questions that would increase Lawrence’s sales tax rate by 0.55 percent, commissioners at their weekly meeting will decide the fate of a full 1 percent sales tax increase.

Developers of a proposed shopping area at the northeast corner of Sixth Street and Wakarusa Drive are asking commissioners to approve a special 1 percent sales tax that would help developers pay for streets and other public infrastructure needed for the project.

City commissioners have been receptive to the idea, in part, because the project – dubbed Bauer Farms – will be a unique development designed in a way to mimic older neighborhoods and downtowns.

“I think this really is a pretty reasonable way to raise money for infrastructure,” said City Commissioner Boog Highberger. “My only fear is that would create a perception that our sales taxes in general are higher than they really are.”

But the development group -which is led by Lawrence businessman Michael Treanor – have said the special 1 percent tax is necessary to pay for an extensive amount of public infrastructure needed for the project.

The way the new taxing district – called a transportation development district – would work is that the city would collect the tax, and then reimburse developers up to a total of $5 million plus financing costs for work done to build public streets, turning lanes, traffic signals, sidewalks, and sewer lines. The developers would be required to privately finance the work. None of the special sales tax money could be used to build privately owned facilities, such as retail or apartment buildings.

The special sales taxing district would become the second in the city. Earlier in the year, commissioners approved a special 1 percent sales tax to be charged at the Oread Inn once that hotel is completed at 12th and Indiana streets.

The new Bauer Farm project would be directly across the street from a Wal-Mart Supercenter that is under construction on the northwest corner of Sixth and Wakarusa. The Bauer Farm development is slated to be anchored by a CVS drug store, and also include several restaurants and other retailers.

The special taxing district would not extend to cover the Wal-Mart store. For example – if voters approve all three sales tax questions in November – the new Wal-Mart would charge a sales tax of 7.85 percent. The CVS and other developments across the street would charge a rate of 8.85 percent.

Mayor Mike Dever said he’s fine with that scenario because he thinks consumers will become aware of the difference and will be able to make their own decisions.

“I doubt that this extra tax will impact the development’s business in any negative way,” Dever said. “When they see the kind of infrastructure they’re putting in place, the type of common areas they’ll have, the general quality of the development, I think a lot of people will agree it is worth something extra.”

State law requires voters to approve increases to the citywide sales tax rate, but state law does not require voter approval of the special sales tax districts. The districts have become fairly common in parts of the Kansas City metro area.

Commissioners meet at 6:35 p.m. Tuesday at City Hall, Sixth and Massachusetts streets.