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Archive for Friday, February 5, 2010

Lawrence residents now find higher sales taxes in certain shopping areas around town

Lawrence has 2 areas where items cost a bit more

The CVS Pharmacy near Sixth Street and Wakarusa Drive is one of several Lawrence businesses with an additional 1 percent sales tax.

The CVS Pharmacy near Sixth Street and Wakarusa Drive is one of several Lawrence businesses with an additional 1 percent sales tax.

February 5, 2010

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Lawrence sales tax altered for select businesses

Lawrence's sales tax structure is changing for several new businesses. Enlarge video

Sachi Hamada has eagle eyes.

There was something amiss about the receipt she’d just received for the $20.47 worth of purchases she made at the new CVS store at Sixth Street and Wakarusa Drive.

There it is. A sales tax rate of 8.85 percent. That’s not Lawrence’s sales tax rate, she asks her husband, Tom Kurata. No, Lawrence’s rate is 7.85 percent.

Hamada thought the discrepancy was interesting. Kurata thought it was something else.

Was this a typo? Some sort of scam?

Nope. None of the above. Just the new reality in retail. You may think you know what sales tax you’re paying, but you may very well be wrong. The days of one sales tax applying for an entire city are quickly disappearing.

“I don’t think the general public really knows anything about this,” Kurata said.

A special tax

What’s going on here is that Lawrence now has two special sales tax districts in the city. The Bauer Farm development on the northeast corner of Sixth and Wakarusa — currently home to a CVS and a Taco Bell — comprises one district. The Oread hotel — and all the businesses inside of it — at 12th and Indiana streets is the other.

Both districts are legally authorized to charge an extra 1 percent sales tax on all purchases made inside the district. The extra sales tax money is used to reimburse developers for public infrastructure improvements — such as streets, sidewalks and storm sewers — that the city requires as part of the development.

But Kurata believes there’s a problem with the new districts: There’s no good way for consumers to know about the tax until after they’ve purchased something — and that’s only if they take the time to examine their receipts.

“There are no signs out there that I can see,” Kurata said. “I think it needs to be more transparent. There already is so little trust in the environment we live in.”

A public process

But it is legal, and was all done out in the open. The City Commission in October 2008 approved the special taxing district — called a Transportation Development District — for the Bauer Farm Development. The commission approved the same type of taxing district for The Oread in April 2008. Both special taxing districts were the subject of Journal-World articles prior to their passage, but neither districts drew large amounts of public comment.

At least one city commissioner believes many residents likely have forgotten about the districts, especially since they were approved more than a year in advance of any sales taking place on the sites.

“I think it is only fair to consider ways to help people adjust to the fact that we have different sales tax rates now,” City Commissioner Mike Dever said. “I think that is a fair request, but how we implement something like that needs to be discussed.”

Requiring businesses in special districts to post a sign stating the higher rate, could be problematic and might not be overly effective, Dever said. A representative with the Lawrence-based group developing Bauer Farm said he was not in favor of city government telling businesses what type of signs they must post.

“We think the best thing that can be done is to make sure that the people who work out there understand it and can explain it to customers,” said Bill Fleming, a partner in the Bauer Farm development.

Fleming said he’s offered to talk to Kurata and anybody else who has concerns about the special taxing district. He said he thinks the public will be accepting of the district once they understand the special tax is being used to create new pieces of public infrastructure, such as streets, turning lanes, sidewalks, lighting and storm water ponds.

Fleming said he also believes the type of development will make the tax palatable.

“For most people buying a taco, I don’t think the tax is a big deal,” Fleming said. “The type of development we’re doing is centered on neighborhood convenience. It is nice to have those type of activities close to home so you don’t have to drive far to get those items. But you also have to pay for it.”

A manager at CVS referred all questions about the tax to CVS’s corporate office. Attempts to reach the designated spokesman were not successful.

Across the state

Lawrence is far from alone in creating special taxing districts for new retail developments. Several communities started offering the incentive to retail developments — which under state law can’t receive property tax abatements — in 2006.

According to the latest report from the Kansas Department of Revenue, there are now 29 of the transportation development districts scattered across the state. Among cities that have the special districts are: Basehor, Ellsworth, Hays, Kansas City, Lansing, Leawood, Manhattan, Olathe, Overland Park, Pittsburg, and Roeland Park.

The Kansas City and Johnson County area has multiple special taxing districts. The area around the Kansas Speedway in western Wyandotte County has at least six of the special districts, with sales taxes in the area varying from 7.55 percent to 8.55 percent.

Olathe has several districts along the 119th Street corridor; Overland Park has districts near 135th and Metcalf and near Quivira Road and 95th Street; and Leawood has districts near Nall Avenue and 117th Street and near 119th and Roe. The Leawood districts charge a tax rate of 9.05 percent, currently the highest in the state. Lawrence’s two special districts, at 8.85 percent, are currently the second-highest sales tax locations in the state.

Figuring out exactly where the districts are, though, can be difficult. For people who take the time to look at the Department of Revenue’s quarterly listing of sales tax rates, there is a list of the special taxing districts with a brief geographic description.

But sometimes those descriptions are vague. In the Kansas Speedway District, the department listing says “various addresses within the range of 10500 to 10824 Parallel Parkway, even only,” charge a rate of 8.15 percent. That’s the exact same description for a separate district that charges 8.55 percent, meaning that within one block there are two separate sales tax rates.

Thus far, the issue hasn’t been drawing concern at the Statehouse. Sen. Tom Holland, D-Baldwin City and a member of the Senate’s Assessment and Taxation Committee, said he hasn’t heard from constituents concerned about sales tax confusion.

“There probably is an awareness issue, though,” Holland said.

Kurata knows how he’s going to deal with that issue.

“I tell people they really need to check their receipts,” Kurata said.

Comments

skinny 4 years, 5 months ago

I won't be shopping at any of those places. Screw them!

I love shopping on the interent. No sales tax and free shipping. Can't beat it!

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Sue McDaniel 4 years, 5 months ago

So if I go to CVS on 23rd & Iowa I won't be paying the 8.85, I'll pay 7.85 correct? Who knew?

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dubstep 4 years, 5 months ago

Regarding people complaining they don't know about the sales tax, if they performed their civic duty of paying attention to what's going on at city hall, they would know about the taxes.

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guesswho 4 years, 5 months ago

skinny - technically you are supposed to report unpaid sales tax on Internet items as a 'use tax' on your income taxes.....

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Melissa Sigler 4 years, 5 months ago

yay! More of a reason NOT to go to CVS :D

There are two more awesome hometown pharmacies to go to if you just drive a bit east on 6th or south on Wakarusa...just saying.

:)

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Ricky_Vaughn 4 years, 5 months ago

I'll be sure to go to the old WalMart in that case.

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cantbelievemyeyes 4 years, 5 months ago

Yeah, but Skinny will gladly use all the ammenities (ie: fire, police, roads, bridges, ect...) while everyone else foots the bill. What a mooch! Makes me sick.

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MattressMan 4 years, 5 months ago

I agree with Fleming in that the type of items you are paying for in the district is not going to be a big deal. The fact this couple went to the paper about 2 cents amazes me.

And Ricky you can shop at the new Wal Mart as it is not in the district.

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skinny 4 years, 5 months ago

cantbelievemyeyes, want to bet I pay three to four times more in taxes then you do??

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ralphralph 4 years, 5 months ago

This is a scam. Period. If you have the guts to do this, post a sign saying you are doing it.

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skinny 4 years, 5 months ago

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it." Dr. Adrian Rogers

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ralphralph 4 years, 5 months ago

This is still eating at me ... Are you serious? Do you have to provide tax incentives to get someone to build a taco shop on a busy corner near a high school in an established and growing retail area? Hell no. No one would have built a drug store around 6th & Waka without a kickback on the sales tax? BS. The monster hotel wouldn't have forced its way into the Oread neighborhood without this sanctioned graft?

Make them post the tax rate prominently at every register. Better yet, ban this kickback scheme.

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parrothead8 4 years, 5 months ago

"The extra sales tax money is used to reimburse developers for public infrastructure improvements — such as streets, sidewalks and storm sewers — that the city requires as part of the development."

Don't worry, I'm sure the developers will lower the sales tax back to normal once they've finished paying for...snort, snicker, guffaw, tears, LMAO.

Sorry, I just couldn't finish the sentence with a straight face.

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Richard Heckler 4 years, 5 months ago

Wal-Mart is among those with a higher sales tax.

These were not done with a lot of fanfare and where this money may or may not go can be interesting.

". And this is a good example of where the news media hasn’t done a good job. I have tons of news clips that say, oh, this new shopping mall is coming or a new Wal-Mart or a new Cabela’s store, and thanks to tax increment financing, this store is going to be built. Well, what is tax increment financing? I’ll tell you what it is.

You go to the store with your goods, you pay for it at Wal-Mart, and there’s a very good chance that that store has made a deal with the government that the sales taxes you are required to pay, that government requires you to pay, never go to the government. Instead, those sales taxes are kept by Wal-Mart and used to pay the cost of the store. And typically in those deals, the store is tax exempt, just like a church."

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Richard Heckler 4 years, 5 months ago

"Now, there are two ways that it’s important to think about this. One is, that means your kid’s schools, your police department, your library, your parks are not getting that money.

And you’ll notice we keep saying we’re starved for money. We’re twice as wealthy as we were in 1980, but we’ve got to close hospitals, and we’ve got to close schools, and we don’t have money for all sorts of things like after-school programs, even though we’re twice as wealthy.

The second thing to think about is, imagine that you own Amy Goodman’s or Juan’s department store across the street. You suddenly have to compete with people whom the government is giving a huge leg up on. You think you would go broke after a while? Well, in fact, you will."

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cantbelievemyeyes 4 years, 5 months ago

Skinny, I'm very sure that you don't. Even if you didn't avoid taxes by shopping online and bragging about it.

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Richard Heckler 4 years, 5 months ago

"We pay billions of dollars in taxes that never get to the government." Much of the sales tax we pay at big box stores and shopping centers is diverted to the large companies that own the stores.

It's just one of the many swindles these chains have learned to perpetrate against city and county governments. This is so effective that the Cabela family, which owns a chain of big-box sporting goods stores, receives 137% of its profits from taxpayer subsidies. If they couldn't work this scam, they wouldn't be in business at all.

The heart of the wealth transfer is tax increment financing (TIF). Store owners come to town leaders and offer to build a new store that, they promise, will "create jobs." In exchange, the city gives them the land, builds the store to their specifications, and finances it all with tax-free municipal bonds (which are usually held by associates of the store owners).

To cap it all, the store keeps the sales tax generated in the store to pay off the bond holders. If the store is built on government land, it's also exempt from paying any property taxes.

Why do city governments take such a blatantly bad deal? Many of them are struggling, and believe that a new Wal-Mart will bring in shoppers from all over—shoppers who will stick around and shop in their town. It never works out that way. Under stiff competition the small shops go out of business, taking the town's tax base with them.

Schools, parks, recreation programs, and libraries are starved. Almost always, these city councils would be far better served putting the money in upgrades to local Main Street businesses, rather than financing the competitor that will kill them."

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MustHaveSalt 4 years, 5 months ago

For what it is worth, the sales tax rate was 7.35% before the 2008 election, when local voters approved additional sales taxes for the T system. The 0.50 increase to 7.85 percent represented a 7% increase in our sales taxes. Sales taxes are regressive and impact the poor more than the wealthy (even if the services being supported by the tax help the poor).

If the voters wanted the tax increase for the T, fine; that's democracy. But please remember the impact of sales taxes the next time we get to vote on a proposed increase.

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jobohe 4 years, 5 months ago

Use taxes are out there, to be sure...

Let's all buy a pack of Juicy Fruit from amazon.com and then file the paperwork in Topeka for the use tax! Make them work to get it!

As for the increased sales tax in these two areas in Lawrence, I'm sure this tax will be reduced once the infrastructure costs are recovered. Just as the toll will be removed from the Turnpike after the original bonds for its construction are paid off. Or maybe not.

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Richard Heckler 4 years, 5 months ago

“We pay billions of dollars in taxes that never get to the government.” Much of the sales tax we pay at big box stores and shopping centers is diverted to the large companies that own the stores.

To cap it all, the store keeps the sales tax generated in the store to pay off the bond holders.

If the store is built on government land, it's also exempt from paying any property taxes."

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puddleglum 4 years, 5 months ago

can someone help me out?

if the extra 1 % goes to the developers for their pain and suffering for pouring those pesky sidewalks.... how long can they charge the extra 1%? Do they just get to keep the extra money like the turnpike did?

i want in on this deal.

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avoice 4 years, 5 months ago

If there's any confusion about whether or not the Wal-Mart is in this special sales tax district, I have a receipt dated Feb 4 that shows a sales tax rate of 7.85%.

“A government with the policy to rob Peter to pay Paul can be assured of the support of Paul.” - George Bernard Shaw

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Richard Heckler 4 years, 5 months ago

Then Lawrence Taxpaying Voters should weed out the city hall “Free Lunch” program:

http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

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BorderRuffian 4 years, 5 months ago

Wow!!! One more chink in the Larryville wall of "pay more." Why is it that everything about Larryville is all about money, more money, and still more money? Pretty soon Larryville will simply price itself out of business. If it hasn't already...

Dang - I think I'll just move to Manhattan.

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Richard Heckler 4 years, 5 months ago

The Flint Hills are beautiful....

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Orwell 4 years, 5 months ago

Ruffian:

"Dang - I think I'll just move to Manhattan."

I'll hold the door for you. Just don't take too long – it's cold outside.

Me, I'll stay here and vote for candidates – and support businesses – who don't try to put this stuff over on consumers.

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kansasmutt 4 years, 5 months ago

A good solution is to shop the small locally owned businesses or go to the small towns close by. They have lower tax rates in Eudora , Baldwin , Perry and Lecompton. Another bonus for shopping small stores, is they will barter with you. If something is $19.00 offer them $17.50 and they will take it. You just saved $1.50 on that item and if you buy 10 items you can save more. That money stays in this area, not like a big box store who sends the money to a bank in Arkansas to be spread out to the CEOs to live large. Also those small stores don’t get off on TIFs and get the tax break like the big box stores. Small stores pay their way. As a small business owner i see the sales tax check go out every 23rd of the month and i know it’s going to help out locally. No tax breaks, no kickbacks, no specials for us, just honest hard work and try to outdo the big box guys. Shop local small businesses and shop smart. Those big guys will fall down soon, they don’t care about people, only your dollars.

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Jim Eckler 4 years, 5 months ago

I BOUGHT A BATTERY ONLINE FROM RADIO SHACK AND THEY CHARGED ME TAX!!!!!

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Taxman 4 years, 5 months ago

What about the new Lowes lumber yard Bauer Farms is bring in the City for approvals soon, smack dab in front of Free State High school . Will the extra sales tax be an issue for those shoppers. Student drivers and lumber trucks should be interesting. What happened to the residential planned for that location?

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thebigspoon 4 years, 5 months ago

So do the employees at these stores wear patches on their uniforms that say 1% like the outlaw biker gangs ?

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Richard Heckler 4 years, 5 months ago

Gotta keep an eye on those developers and city hall. They cost taxpayers a lot of dough.

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redmoonrising 4 years, 5 months ago

While not a Walmart lover, I have shopped at the new one a few times and each time the sales receipt shows a sales tax of 7.85%. Anyone trying to tell you that Walmart is in Bauer Farms is wrong. It is just across the street from them but not a part of it.

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Richard Heckler 4 years, 5 months ago

"The extra sales tax money is used to reimburse developers for public infrastructure improvements — such as streets, sidewalks and storm sewers — that the city requires as part of the development."

The taxpayers are subsidizing the developers that which increases their wealth. They want local taxpayers to pick that expense instead of including the cost in lease agreements to retail tenants.

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Richard Heckler 4 years, 5 months ago

Wal-Mart it seems to me was suppose to be among those but somehow are receiving preferential treatment???

Oh well whatever works.....

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Keith 4 years, 5 months ago

No preferential treatment 'Merrill' they were not, are not, remain not, in the Bauer Farms development.

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ralphralph 4 years, 5 months ago

Wal*Mart doesn't need LOCAL govt favors ... they own the Feds.

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sherbert 4 years, 5 months ago

So, you I guess you even pay the extra tax on the prescriptions??? Aren't they expensive enough already!! I remember when this was in the paper and people (me included) we're recommending then that they should have to post it on the front door. If they think it's okay and won't hurt their business, then don't hide it!!

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Confused2010 4 years, 5 months ago

Hey, somebody said a Lowes lumber yard is going to Bauer Farms. Where will fit, maybe next to the car wash...

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jackpot 4 years, 5 months ago

Musthavesalt: The tax rate was 7.30 before the .55 for the T was added. I maybe wrong but that's how I remember it.

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vuduchyld 4 years, 5 months ago

They are going to tax me extra....to reimburse DEVELOPERS? Reverse Robin Hood?

I'm not playing. Thank you, LJW, for this article. I honestly did not know. I learned something...and what I learned will definitely affect my actions.

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pace 4 years, 5 months ago

What a scam. We are paying for the developers fees. The next step is a city wide sales tax for "special developers cost" like the bourbon or scotch they need after a hard day of wheeling and dealing.

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Alwaysajayhawk24 4 years, 5 months ago

Sherbert- You don't pay sales tax on prescriptions in Kansas!

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scaramouchepart2 4 years, 5 months ago

It is very simple math. The taxpayers paid for Bauer Farms to build the infrastructure and now the taxpayer are paying the taxpayers back for the cost to the city to build the infrastructure. All so the developer does not have to pay!

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scaramouchepart2 4 years, 5 months ago

Mercato at 6th and George William Ways is where Lowes is going and a Cosco. Or at least that is the reason they stole commercial land from Brian Kubota across 6th street.

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scaramouchepart2 4 years, 5 months ago

Walmart is not in Bauer Farms, but Doug Compton is now a member of the BF development group. They however, ignored several pages of legal documented codes in order to build where they did. Now there is possible bank going on the property just east of Walmart, but if the bank does not build. Walmart could pull a build permit without public debate and build an addition.

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scaramouchepart2 4 years, 5 months ago

Davy; Did you vote in the last city election? Good for you if you did, but those that complain but don't vote. It is not just the city commissioners fault.

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svenway_park 4 years, 5 months ago

davy, you sued the school district last year and ran up your neighbors' legal bills.

So are you going to sue the Oread Inn this time?

What a Cool idea.

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grimpeur 4 years, 5 months ago

MustHaveSalt (Anonymous) says…

For what it is worth, the sales tax rate was 7.35% before the 2008 election, when local voters approved additional sales taxes to cover the costs of the single-occupancy drivers now abusing the privilege of driving. The 0.50 increase to 7.85 percent represented a 7% increase in our sales taxes.... If the voters wanted the tax increase for the welfare queen recreational drivers in this town, fine; that's democracy. But please remember the impact of sales taxes the next time we get to vote on a proposed increase."

There. Fixed that for ya, ya damn liar.

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gccs14r 4 years, 5 months ago

IMS, we were told that the developers were supposed to pay for infrastructure improvements in exchange for a building permit. Now we find out that while the developers may have paid for the improvements up front, they're getting their money back--from us.

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BigPrune 4 years, 5 months ago

Walmart isn't part of the Bauer Farm district. Nice misinformation there merrill and others.

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ralphralph 4 years, 5 months ago

thebcman ... Would you pay an extra 1% for another drive-through taco shop or redundant drug store?

This is a bad program and should be ended. If it is not ended, it needs the bright light of day to shine on it, so people can make informed decisions about whether to patronize businesses taking advantage of it.

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