They have been called everything from “Community Improvement Districts” to “sneaky taxes.”
Whatever you call them, they’ll be making an appearance again at City Hall on Tuesday. City commissioners at their weekly meeting are expected to have their most significant discussion yet about whether they want to offer financial incentives to attract retailers to Lawrence.
“I do have some concerns about whether we should be using these types of incentives right now,” said City Commissioner Mike Amyx. “If these are something we really don’t want to use, we should let the community know up front so we don’t create any false expectations.”
The incentive drawing the most questions from commissioners is one that creates a special taxing district called a Community Improvement District. The districts allow for up to an extra 2 percent sales tax to be charged on all goods sold in the district. The money from the extra sales tax can be used to pay for public improvements — such as roads and sidewalks — or for private improvements — such as store expansions or special marketing.
The idea of the special taxing districts was a hot-button issue during April’s City Commission election. Candidate Bob Schumm, who went on to take the top spot in the election, branded the districts a sneaky tax because he’s convinced many shoppers aren’t aware of the higher rates.
But whether city commissioners will outright ban the use of such districts in Lawrence is uncertain.
“I think we may want to take some steps to discourage providing incentives for retail development, but I would hate to issue a blanket no,” Mayor Aron Cromwell said. “I always want to have some flexibility for a project that is truly exceptional.”
But Cromwell said he does expect some changes to the city’s current policy. He said it is likely that wording will be added to require businesses that charge a special sales tax to post a sign alerting customers of the additional tax.
“I think it would be extremely unlikely for any type of CID project to go forward without a signage ordinance in place,” Cromwell said. “I think most developers understand that may be coming.”
Area retail developers likely will be watching what Lawrence does with the issue. Developers have told City Hall previously that incentives are becoming a bigger part of the equation when retailers or restaurants are deciding where to open new locations.
There are 13 Community Improvement Districts in the state, with three more in the development phase in Wichita. Kansas City, Lenexa, and Olathe each have one of the districts.
Cromwell said he doesn’t doubt that incentives are becoming more important to the national and regional retail chains that may be looking to locate in Lawrence. But he said it would be unfortunate if retail development became much like attracting a new industrial development, where incentives are often assumed to be something a community will offer.
“It might be heading in that direction, but I think it would be a dangerous direction for Lawrence,” Cromwell said. “I think as a community we just tend to really disagree with that type of philosophy.”
Lawrence does not have any Community Improvement Districts, but it does have two developments that use a different type of special taxing district called a Transportation Development District. The Bauer Farm development on the northeast corner of Sixth and Wakarusa and The Oread hotel development both charge a special sales tax to help pay for transportation-related improvements. Both charge an extra 1 percent sales tax.
Commissioners are expected to discuss their policies surrounding TDDs and also the use of the Neighborhood Revitalization Act, which provides a property tax rebate for certain types of development. The city recently offered that policy as an incentive for Lawrence-based Treanor Architects to relocate its offices into the downtown area.
Commissioners meet at 6:35 p.m. Tuesday at City Hall.