City commissioners have opened the door to a new type of tax to be charged at future Lawrence retailers, and a development group along 23rd Street may soon walk through it.
Commissioners unanimously agreed to create a new policy that would allow developers and businesses to apply for special Community Improvement Districts where an additional 2 percent sales tax could be charged by businesses inside the district to pay for everything from buildings to janitors.
“As a city we either want to encourage investment and development here or we don’t,” said Commissioner Lance Johnson. “Just telling people we want development to happen here is not enough. In the times that we live in, we have to offer them tools. That’s what this would be.”
City leaders confirmed Tuesday night that one development group is ready to apply to create such a district on property near 23rd and Ousdahl that includes vacant property where the Kwik Shop and a Subway restaurant were located on the north side and the current Hobby Lobby store is on the south side.
Karl Capps with Mission-based MD Management said two restaurants are interested in going into the vacant locations, and that improvements need to be made to all the buildings. Creating a special taxing district to help provide for some of those costs would make the project more feasible. The group is proposing to charge an extra 1 percent tax instead of the full 2 percent allowed under the law. City commissioners are expected to formally receive the request within the next two weeks.
State legislators in 2009 approved a law giving cities the ability to allow the new type of taxing districts. Olathe, Hays, Salina, Wichita and Shawnee all have adopted regulations allowing the districts.
The districts are unique in that they will allow public tax dollars to pay for private business expenses. The state law allows the 2 percent in collections to pay for a variety of items including building construction, maintenance activities, security services, and more traditional public improvements such as streets and parking.
City commissioners, in a departure from the state law, will not allow developers to use city-issued general obligation bonds to finance the projects. Instead, developers will pay for the costs and be reimbursed as the sales tax dollars materialize.