As part of Olathe’s efforts to reimagine its downtown, the city has taken the first step toward setting up a special sales tax district that will aid in the redevelopment of a prominent collection of downtown storefronts.
The special 2% Community Improvement District sales tax would cover the storefronts between 114 N. Cherry St. and 126 N. Cherry St., directly adjacent to Johnson County Square, at the heart of downtown Olathe where the former courthouse stood.
Developer Lane4 has dubbed the project County Square Commons and has promised to bring a new Austin’s Bar and Grill and other restaurants to the stretch of reimagined dining and retail spots, complete with a rooftop patio space.
On Tuesday, the Olathe City Council voted 6-0 to set a public hearing for the formation of the sales tax district on April 1.
The item was part of the consent agenda, which means the city council didn’t discuss it individually before voting on it.
Councilmember Matthew Schoonover was absent from the meeting.
What is a Community Improvement District?
- Community Improvement Districts, or CIDs, are a type of incentive that use revenues raised through a temporary special sales tax assessed within the boundaries of a specified area to reimburse developers for some project costs.
- The extra sales tax is applied on top of existing local and state sales taxes.
- In this case, the developer is requesting a 2% sales tax for no more than 22 years to reimburse up to $2.7 million in estimated eligible expenses from the County Square Commons project.
- The full project is expected to cost about $7 million, according to the development agreement.
Olathe selling Cherry Street buildings for $1
- According to real estate documents the Post obtained, the city intends to sell the roughly 11,000-square-foot Cherry Street storefronts to Cherry Santa Fe LLC — a subsidiary of Lane4 — for $1.
- Plus, the developer must pay a $5,000 earnest deposit that could be applied toward fees incurred in the County Square Commons development process, such as building permit costs and inspections.
- In the past, Olathe has conducted similar sales of former city property for $1, including the former downtown Olathe Public Library site — in areas where the city is seeking reinvestment or encouraging specific types of investment.
More incentives likely for County Square Commons
- Per the development agreement, Lane 4 is also requesting industrial revenue bonds, a 10-year, 100% property tax abatement and a sales tax exemption on construction materials.
- Olathe has also offered the city’s interest-free and forgivable Home Rule Economic Development Grant loan of $2.2 million.
- Additionally, Olathe has waived the application fees typically required for CID petitions and other incentives for the County Commons project.
Olathe has prioritized more downtown dining
Olathe has previously made efforts to acquire some storefronts in the city’s downtown to see them sold for redevelopment in order to welcome more dining options to the area.
Last year, that approach ultimately forced Vader’s Bar and Deli to close its doors at its longtime home at 122 N. Cherry St.
At the same time, Olathe has sold some of its old office buildings downtown to other popular Kansas City eateries so they can open new locations in the area, including Third Street Social and Char Bar.
Pizza 51 is also planning a location in downtown Olathe at the site of a former auto shop on Kansas Avenue.
All of this ties into a longer-running effort to reimagine Olathe’s downtown area that has also included a new library branch, a new county courthouse and the Johnson County Square green space.
County Square Commons next steps:
- The CID sales tax is not a done deal yet; the city council still has to hold a public hearing in April and vote on the matter.
- Eventually, the Olathe Planning Commission and city council will both need to sign off on revised site plans for the Cherry Street building before any redevelopment work for the County Square Commons can go forward.
- Additionally, the city council has yet to formally indicate its intent to issue the bonds, property tax rebate or sales tax exemption beyond what’s in the development agreement.
- The County Square Commons project will wrap up in 2026, according to city documents.
More downtown Olathe redevelopment news: Olathe boosting two new downtown eateries with special sales taxes
