Overland Park will soon end a special sales tax incentive at Oak Park Mall ahead of schedule, making it just a little bit cheaper to shop there.
Back in 2007, Overland Park approved a 0.5% Transportation Development District (TDD) special sales tax at the mall to help pay for transportation-oriented improvements and some redevelopment at the mall site.
Later, the city issued $16.2 million in revenue bonds tied to the TDD that would need to be paid back by April 1, 2032. In 2022, the city added $3.8 million more in refund bonds, with an expected payback date of 2032.
In the end, CBL Properties, the owner of Oak Park Mall, was on track to repay the bonds this week, so the Overland Park City Council voted 11-0 last month to terminate the TDD sales tax district effective July 1.
Councilmember Jeff Cox was absent from the meeting.
How does a TDD work?
Transportation Development Districts, like Community Improvement Districts, use revenue to reimburse some development costs raised through an extra sales tax applied on all purchases in a defined area for a set amount of time.
Sometimes cities can approve the issuance of bonds to go along with those districts that are paid back with the sales tax reimbursement, as is the case with Oak Park Mall, by a specific date.
In this case, Overland Park is set to terminate the sales tax about seven years ahead of schedule.
Deputy City Manager Kristy Stallings said the reason the bonds are set to be paid back early is, in part, due to how they were structured at issuance, with flexibility that allowed “accelerated” repayment.
Additionally, paying off the bonds early saved money on interest costs and paved the way for the sales tax to go away early.
“In a time of a challenging environment for shopping malls, it’s still a pretty viable, important sales tax producer and gathering space in the city,” Stallings said.
In addition to Oak Park Mall, Overland Park has established other TDDs at Bluhawk, Corbin Park and Mission Farms West shopping areas. Find the full list of active incentive districts in Overland Park here.
What happens to extra Oak Park sales tax funds?
Because the bonds are expected to be paid back a few months before the sales tax goes away, the city expects to collect some extra revenue from it.
On March 24, Stallings told the city council that the city isn’t exactly sure what it will do with those funds. However, the city council has the authority to dedicate it for any other “governmental purpose,” she said.
Stallings said the city is unsure exactly how much money will be raised through the sales tax for those extra couple of months, and city staff has no recommendations on how to use the money at this time.
So, all of that will need to be settled later.
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