Opinion

Opinion

CID questions

Wichita officials and residents seem to have many of the same questions raised here in Lawrence about the use of special retail taxing districts

March 15, 2011

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It’s good to know that Lawrence isn’t the only Kansas city struggling with how to use its new authority to designate special retail taxing districts.

In the last two weeks, the Wichita City Council has acted on two requests to form Community Improvement Districts that allow retail businesses to collect additional sales taxes and use that money for various improvements to their property. It’s the same tool that has been proposed by owners of property near 23rd Street and Ousdahl Road in Lawrence.

On March 1, the Wichita council rejected a CID proposal for the aging Eastgate shopping center at East Kellogg and Rock Road, an area not unlike Lawrence’s 23rd and Ousdahl property. Eastgate owners wanted to collect an additional 1 percent sales tax for 22 years to raise an estimated $18.5 million to fund improvements to the center, including work to the parking lot and store facades. The council rejected the plan, saying the shopping center was not removing blight and was not in an area underserved by retail. One council member noted that no public purpose was served by the proposal, adding, “this is just another way to finance improvements.”

Eastgate officials argued that their proposal met the city’s existing CID criteria, and was told the city was not happy with those criteria. After the Eastgate vote, the council decided to revisit those criteria in a June meeting.

Nonetheless, a week later, the Wichita council approved a CID request for a new Cabela’s store in northeast Wichita. Cabela’s will be allowed to charge an additional 1.2 percent sales tax for 22 years. The expected $17.2 million that will raise will be used for construction expenses and infrastructure improvements, including new exit ramps on Kansas Highway 96. Some council members argued that CID financing shouldn’t be used for new construction and that it would give Cabela’s an unfair advantage over existing outdoor retailers in the Wichita market. However, a majority of the council saw Cabela’s as an important retail draw, a “home run” for Wichita. The taxing district will be not unlike the special district that includes the Cabela’s near the Kansas Speedway in Wyandotte County.

News reports didn’t include any information about how or whether Cabela’s would have to notify customers about the increased sales tax, as has been debated by members of the Lawrence City Commission. A bill that would require businesses in a CID to identify their additional tax rate on their sales receipts was introduced last month in the Kansas House but appears to be stuck in the House Taxation Committee.

It’s interesting how much the debate taking place in Wichita mirrors the debate here in Lawrence. Should CIDs be used for new construction or only for redevelopment of blighted locations? Is it proper to give taxing authority to private businesses rather than keeping that tool for public purposes? If a desirable retailer like Cabela’s is knocking on your door, should CID funds be used in the same way cities use property tax abatements to attract nonretail business and industry?

Neither Wichita or Lawrence officials seem to have clear answers for those questions yet. It will be interesting to see whether and how Wichita chooses to refine its CID criteria in a few months.

Comments

just_another_bozo_on_this_bus 4 years ago

Why should the ability to tag on an extra 1% sales tax be limited to certain districts? Why not just allow any retailer to tag on the 1%? The main argument for these taxes is that it allows the retailer to go to a bank and borrow against those collections. Why limit it to just a few retailers?

If no good answers to those questions can be supplied, why allow them at all?

jafs 4 years ago

Yep.

They shouldn't be used at all.

If the stores can get customers who will pay a little bit more for their products/services, then they can just charge a little more for them - there's no need for the "tax".

If not, then the "tax" won't work, as people won't be willing to pay a little more.

The only way they could work is if they don't notify people of them, and customers aren't aware of it, and are paying more without knowing that - that seems rather sneaky to me.

ralphralph 4 years ago

"rather sneaky" ? Nope ... blatantly deceptive and predatory.

Just ask the folks at TaxBurger if they'll give up their kickback.

ksarmychick 4 years ago

I would ask them...but sadly I refuse to shop at/eat at a business that charges this extra secret tax.

optimist 4 years ago

If this tool is to be made available at all it should be made available to all. However it should not be combined with sales tax as private business does not have the authority and should not have the authority to tax. It should be an additional fee on a separate line item on the receipt and posted at each customer entrance so that customers can decide for themselves whether or not they want to participate before they ever walk in the store. The other solution is to rely on the tried and true.

It used to be that a business would actually build into its prices the cost of doing business which includes funding future improvements and renovations. I realize this sounds like a novel idea but I cannot take credit for it. Giving some retail businesses the ability to hide expenses in a “tax” and then advertise lower prices to the consumer would put their competitors and the consumer at a disadvantage.

The only reason for these CID’s is to dupe the consumer by hiding this so called “tax”. That is exactly what our government does. When instead of all of us writing a tax check to the government by April 15th every year they force our employers to take it out of our paychecks every pay period. They count on the fact that we not only don’t miss the money but at the end of the year when we receive a refund of our own money, without any interest for lending it to the federal government, we are so excited we don’t even treat it like we’ve earned it and go out and spend it frivolously.

I want to be the first to warn private business that going down this path may backfire on them. It could in the long run cost them revenue and more importantly open up any future projects this money might be used for to even more public input and critique because we the tax paying public are funding it. I wonder if they’ve considered that. It’s only fair.

gr 4 years ago

Yeah, there should be required bright red sign saying that this store adds extra hidden charges to support themselves. Businesses that are too cowardly to advertise honest prices.

ralphralph 4 years ago

The bright red sign should be flashing, and you should have to sign a waiver of your right to be treated like a valued member of society and to give your consent to be lied to and flat out deceived by developers who have state and local government on the payroll and in their pocket.

Wait ... without CID we'd never have yet another Taco Bell and Burger King at a busy intersection near a high school (huh?) ... not to mention a redundant chain drug store and the very ho-hum-generic TaxBurger.

ralphralph 4 years ago

CID = Very BAD and misguided law.

It is unfair to existing business, deceptive to consumers, and just plain WRONG.

This law needs to find the "Office of the Repealer", and soon.

ralphralph 4 years ago

PS -- as used in Lawrence, the CID also is a total FAILURE.

Bauer Farms, with the benefit of the crooked and hidden kick-back, brings to Lawrence ... what? A chain drug store? A chain taco joint? A dime-a-dozen over-priced burger joint? But, wait .... there's something more on the way ... what is it ... Burger King !!!! There's some policy for you.

This is a crooked, deceptive and failed law. Repeal the bleeping thing NOW !!!

notajayhawk 4 years ago

I love all this griping about 'hidden' fees and 'dishonest' prices. There are only two factors that determine the price of any object, commodity, or service: What the seller is willing to let it go for, and what the buyer is willing to pay for it. That includes taxes, BTW. So if you don't think the products in the stores that are going to use these Community Improvement District taxes are worth the total cost to you, then don't buy them. Drive an extra 20 miles and save that 1% buying it elsewhere, or buy something else, or don't buy anything. As long as you keep shopping there, they'll keep charging whatever you'll keep paying.

just_another_bozo_on_this_bus 4 years ago

The problem is when the posted prices are the same as in other stores, but there isn't clear notification that your bill will actually be 1% higher than at those other stores.

There needs to be clear signage when you walk in, and at the cash register, and clear notification on the receipt. Otherwise, it's essentially a fraud perpetrated on the purchaser.

gr 4 years ago

That's amazing! Yet another time I'm in agreement with bozo.

2002 4 years ago

I consider myself a conservative and it is beyond my understanding how so many that have a conservative tilt scream about taxes like this. This type of tax is the clearest and most defined kind of tax that there is; you know exactly what it is going to support and you have a choice whether or not to pay it because you can shop elsewhere. I find it hypocritical to whine about taxes and subsidies for certain things but not others and too many righties do this. Taxes subsidize corporate agriculture and energy (read oil companies) and they also subsidize military "support" other countries (although many of you call it protecting our way of life). Personally, if I had a choice, I'd rather pay tax to improve the infrastructure of the local commercial area than I would supporting pedophile, drug lords in Afghanistan.

jafs 4 years ago

It's not a "tax", since the proceeds don't go to the government.

If businesses want to make a little more money in order to pay for any of their costs, they should simply increase their prices to do so - that's the transparent way.

2002 4 years ago

sorry, I was just under the impression that when it was classified as "sales tax" that it was a tax. As for it being more transparent to raise your prices. How is that more transparent? It is just a different way of collecting the same amount.

And if you think all tax proceeds go to the 'government,' I suggest that you do a little more research on where your taxes go, because there are a lot of special districts that might have a problem with that.

The truth is that too many conservatives have sold out to the idiot talking heads that sold the idea that taxes are bad, that government is bad and that spending is bad.

jafs 4 years ago

It is obviously more transparent, in that people will see the increase in prices.

Whereas, especially if there are no requirements to post the CID district information, people will not as easily see that they are paying more.

The idea of taxation is that we all pay into a pool, and the money is spent in ways that benefit all of us. These districts are using the ability to collect an extra 1-2% as "tax", but not using them in that way - they are instead using them for personal business expenses.

Many conservatives have sold out to many things in many ways - I won't dispute that fact. I, of course, am much more often called a liberal.

These are a bad idea, and won't work any better than simply raising prices, unless the fact that customers are paying a little bit more is hidden, which seems wrong.

jafs 4 years ago

And, from what I can tell, there are some businesses that don't even list the tax rate on their receipts.

Add that to the rest of it, and the whole thing looks like a big scam to me.

Do I have to ask every business that I enter whether they use this extra "tax" or not? What if the employees don't know? Etc.

gr 4 years ago

"It is just a different way of collecting the same amount. " But, it's honest to truthfully advertise it.

What do you think the purpose is for adding it and calling it a "tax"? It is to hide it so the prices "appear" the same, but the customer gets tricked into paying more. It's the same as when you go to the store and the prices are the same as before, but if you look closer, the package is now smaller. It's dishonest. Except in this case, they are getting the city's help in disguising it. And it's not the manufacturer, but the individual store.

The only reason NOT to raise prices to cover whatever good purposes you may think it goes for is to hide the increase. Otherwise, why not increase the prices and let the customer choose to support the increase or not. Hiding it doesn't let the customer know ahead of time to enable them to shop elsewhere. Believe me, I (though probably one of the few) if I should find out at the register that I'm paying an extra amount, I would walk out. But how will I know until I give the money? I'll have to ask for a refund. How will people know that aren't from around here? If it says 9.5%, they won't know if that's what Lawrence's taxes are or that if they go down the street a few blocks, it wouldn't cost as much.

It's deception.

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