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.