A rift between some northeast Johnson County municipalities and the Shawnee Mission School District presented itself on Monday as administrators and city officials offered conflicting views of the benefits and drawbacks of tax increment financing projects in the area.
The board of education on Monday held a first reading of a new board policy on TIF deals that emerged in the wake of Prairie Village’s passage of the tax incentives package that made the Meadowbrook park project possible. Administrators at the time publicly postured that the district, which along with the county holds veto power on TIF deals, may not support the measure over concerns that it would divert funds from district coffers that Shawnee Mission would need to help educate new students.
Prairie Village-based attorney Fred Logan, Jr., was retained to help the district on the matter, and told the school board on Monday that the development of a formal policy was not intended to discourage community redevelopment, but rather to ensure redevelopment projects did no harm to “our community’s most important asset, its K-12 education institution.”
Logan framed the issue within the context of the financial struggles he said the district has faced under the school finance formula passed in 1992, suggesting that the lack of flexibility the district has in allocating its funds made it imperative to protect its revenue streams.
“Twenty-five years ago, who would have ever thought that this district, that its financial authority over operations would vanish?” Logan asked. “Twenty-five years ago, who would have thought that this district would be limited as to what it could spend even by category? That it would be put in a formal, statutory straightjacket as to what it could spend, and that it couldn’t reallocate among accounts?”
But city administrators, who expressed frustration that they had not been given advance warning that the district would be considering the new TIF policy at the Monday meeting, told the board that they worried the adoption of a TIF policy might discourage developers from looking at redevelopment projects in the aging northeastern part of the county.
“Quite frankly, we believe this policy will create an uneven playing field,” Merriam Assistant City Administrator Chris Engel told the board. “We believe developers will have a tendency to want to go down the highway, somewhere else in southern Johnson County, somewhere in Wyandotte, somewhere in Kansas City, Missouri, to where there is a little bit friendlier environment to economic development.”
Engel noted that redevelopment in built-out communities often presented a host of expensive challenges that developers don’t face in greenfield projects, making the availability of TIF incentives important to the renewal of established-but-decaying areas. He pointed to the Merriam Town Center project as an example of a TIF deal that had turned a “blighted, run-down apartment complex” and “neighborhood full of codes violators.” With the TIF bonds set to be paid off, the district stands to see new revenues that wouldn’t have existed had the project not been approved 20 years ago.
Engel hinted at frustration over a perceived lack of communication between the local cities and the district .
“It seems to me like the onus should be on us to collaboratively work together to assert our common goals in Johnson County and the Shawnee Mission School District in Topeka,” he said. “And we’re not doing that because ultimately I feel like we’re not talking.”
Superintendent Jim Hinson appeared to be rankled by the suggestion that the district had not been a willing collaborator on the issue, and said that one of the challenges the district faced in developing a TIF policy was that there was little agreement between district-area cities over what a fair TIF policy would look like.
“In visiting with some of our cities on what they deem to be appropriate and not appropriate…they can’t agree,” Hinson said.
Hinson told the board that when the policy would come back to them for a second reading, it would be largely dictated by what happened during the legislative session in Topeka, with a number of issues at play that could impact district finances.
The draft of the policy considered during the first reading follows the jump.
This policy describes the manner in which the Shawnee Mission School District will review proposals made by developers to establish redevelopment districts within the boundaries of the School District that rely on tax increment financing (TIF).
In conducting this review, the School District will be guided by K.S.A. 12-1771, which provides, in pertinent part, “No privately owned property subject to ad valorem taxes shall be acquired and redeveloped … if … the board of education levying taxes on such property determines by resolution adopted within 30 days following the conclusion of the hearing for the establishment of the redevelopment district … that the proposed redevelopment district … will have an adverse effect on such … school district.” The School District, by its board of education, will make an independent determination as to whether such a resolution should be adopted under the statute.
As a matter of policy, the School District is committed to (1) supporting economic development initiatives in the fourteen municipalities that make up the School District; (2) acting in partnership with the county, cities, and other taxing entities on economic development initiatives; and (3) ensuring that the tax base of the School District is not adversely impacted in the long term by the establishment of TIF redevelopment districts in a manner not contemplated by statute. To ensure the best possible review, the Shawnee Mission School District encourages a dialogue between the School District, the developer, and the host municipality commencing in the earliest stages of the TIF proposal process.
In conducting the review contemplated by statute, the School District will consider a variety of factors, including those set forth below.
1. An in-depth description of the TIF redevelopment district proposal, including all documents
and supporting materials submitted to the municipality, should be submitted by the developer to the School District, in a timely manner.2. The School District will review TIF redevelopment district proposals in light of applicable statutes and the policy underlying those statutes.
3. The School District will review the financial impact, short term and long term, of the TIF redevelopment district proposal on the School District and on its ad valorem tax base, and will encourage the submission of material that addresses those issues.
4. The School District will consider proposals made to ameliorate the financial impact of the TIF redevelopment district on the School District.
5. The School District will more favorably consider TIF redevelopment district proposals that (a) contain a sunset provision; (b) specify an ad valorem tax impact of fifty percent or less; (c) rely on sales tax rather than ad valorem taxes; or (d) provide that excess revenue is to be captured to pay debt, with the TIF retired as early as possible.
6. The School District will subject TIF proposals that involve residential areas to greater scrutiny in light of the potential for increased service requirements on the district.
7. The School District will establish a committee to conduct the review described in this policy and to make recommendations regarding each TIF proposal to the board of education. The committee will include the superintendent, the deputy superintendent, the chief financial officer and a board member. The committee may employ consultants to gather information that will assist the School District and the board in conducting the review contemplated by statute and by this policy.
