Policy would require developments with special sales tax to post signs

It is appearing more likely that if developments want to charge a special sales tax in Lawrence, they’ll have to post signs notifying shoppers of the higher rate.

Whether such signs will signal a change in Lawrence city commissioners’ attitude about the controversial special sales taxes is far less certain.

Commissioners at their Tuesday evening meeting will consider approving a new policy that requires the signs and makes several other changes related to special taxing districts.

But one city commissioner said he still doesn’t see the special taxing districts being very popular in the city.

“The first thing we need to decide is whether we are really ever going to be willing to use this incentive in Lawrence,” said City Commissioner Mike Amyx. “From the people I talk to who really don’t like this, I’m not sure when it is ever going to be appropriate.”

Commissioners will consider several changes to the policies for both Community Improvement Districts and Transportation Development Districts. The two districts allow businesses to charge a special sales tax that is used to help pay for costs associated with the development. Among changes up for discussion are:

• Requiring any establishment that charges a special sales tax to “prominently” display a sign at each public entrance that reads “Community Improvement District sales tax of X percent collected here.” The sign must be at least 8.5 inches by 11 inches in size.

The sign requirement also will apply to Transportation Development Districts. Of the two special taxing districts that currently exist in Lawrence — the Bauer Farm development at Sixth and Wakarusa and The Oread hotel near Kansas University — both are TDDs. The city originally believed it could make the sign requirement retroactive, which would require both of those developments to post the signs. But now the city’s legal staff advises the city does not have the authority to make those businesses post the signs. .

City Commissioner Bob Schumm — who made the idea of “sneaky taxes” a major issue in the last City Commission campaign — previously had proposed developments charging the tax have a sign that is visible from the road. But city staff members are recommending against that idea. They say it would detract from the city’s sign code, which places a strong emphasis on “minimizing exterior sign clutter.”

• Establishing a “but for” analysis that would require applicants who want a special tax to show that the project could not happen “but for” the help of a special tax. Applicants would be required to provide detailed financial data to the city’s economic development planner as part of the analysis.

• Requiring that projects meet at least three of the city’s four criteria for granting a special tax. Currently, the policy only requires one of the four criteria to be met. The criteria includes factors such as the uniqueness of a development, its ability to capture lost retail sales, its impact on tourism, and that it adds exceptional infrastructure to the community.

• Limiting the ability of special taxes collected through CIDs to be used for private development costs. The new policy would require that CIDs primarily be used to pay for public infrastructure like roads, sidewalks and stormsewers. But the policy would continue to allow the special tax revenue to pay for exterior enhancements of a building or landscaping that goes beyond what the city code requires. Under the current policy, CIDs could be used for some private, operational expenses such as advertising, security and other similar ongoing costs.

City Commissioner Mike Dever said he thinks the proposed changes could make the special taxing districts more palatable to some — especially the sign requirement that will make it clear to customers they’re paying a higher than normal tax rate.

“I’m not willing to go so far to say that I won’t use this type of incentive in the future,” Dever said. “When we have a chance to attract a business to Lawrence instead of watching it go to Topeka or Johnson County or some other community, we need to consider it. Those other communities are going to consider it.”

Commissioners meet at 6:35 p.m. on Tuesday at City Hall, Sixth and Massachusetts streets.