A developer is proposing the first housing-centric incentive district in southern Overland Park, which could feature approximately 30 dwelling units, including single-family homes and twin villas, on 151st Street.
According to city documents, an unnamed developer wants to form the Reinvestment Housing Incentive District roughly at 6630 and 6680 W. 151st St., in the Stanley annexation area of the city. However, approving the incentive district would require the city to veer from some of its policies.
This type of incentive functions similarly to Tax Increment Financing districts to offset some of the cost of building a development with eligible reimbursements over a set period of time. Overland Park has recently been mulling adding this type of incentive to its docket as part of a wider discussion about economic development policy.
Other Johnson County cities have authorized this type of incentive before to build primarily single-family home neighborhoods, but, if eventually advanced, this would be Overland Park’s first time granting its use in city limits.
On Wednesday, the Overland Park City Council Finance, Administration and Economic Development Committee will host the first of what could be many discussions on the prospective application for the new housing incentive district on 151st Street.
Developer proposes 30+ dwelling units
Plans for development on these properties date back to 2023, per staff documents, and at one point nearly included donating the parcels to the city. That being said, early on, the unnamed developer seemed interested in using plans from the city’s Portfolio Home pilot program.
The proposal at the center of a potential incentive district would include 18 single-family homes and 16 twin villa units, for a total of 34 dwelling units, still built with the base designs contained in the Portfolio Home program. City documents say the proposed sale price would start at $300,000.
Currently, the properties at 6630 and 6680 W. 151st St. span a total of 2 acres and are currently zoned for agricultural uses, according to county land records. One property has a four-bedroom single-family home on it, which was built in 1911. The other property has a garage-like building on it, but no other existing construction.
Both properties are owned by a limited liability company in Grandview, Missouri, called AIC151.
How do Reinvestment Housing Incentive Districts work?
The state of Kansas has allowed Reinvestment Housing Incentive Districts, previously called Rural Housing Incentive Districts, for decades, but they were limited to counties with lower population density.
Over the years, the state legislature approved expansions to the laws governing it, and in 2023, approved an amendment to reframe it as reinvestment housing. That change could allow districts to be formed to support redevelopment housing, new development or even renovation of existing housing stock.
It functions similarly to a TIF in that it sets a base year tax valuation, and then, from there, all assessed tax on any increased valuation above that base year — called an increment — is returned to a third party to reimburse them for some infrastructure development or other eligible costs for a set amount of time. The idea is to offset some of the development costs and pass some of those savings onto the occupant of a dwelling unit with a lower sale price or rent.
In the past, some councilmembers have touted it as a potential tool to encourage the development of “missing middle housing,” that is, housing toward the middle of the spectrum — between apartments and large single-family homes — that are built less frequently.
Spring Hill passed the first of this type of housing incentive district in Johnson County three years ago, back when it was still limited to rural housing.
This proposal could veer from Overland Park policy
The proposal for the housing incentive district on 151st Street, if approved, does not entirely adhere to the city’s standard policies on incentives.
For one thing, Overland Park usually favors a pay-as-you-go approach, which basically means the city prefers to give the money in an incentive district to a third party as it is raised instead of up front to avoid taking on any of the risk in the development. Under that framework, a developer is expected to pay for the entire project up front and then recoup those costs over the life of the incentive, usually 20 years.
However, under this proposal, city documents say the developer has a gap in financing that would make it hard to cover those costs initially and wait to be reimbursed.
Instead, the developer would need to form a Reinvestment Housing Incentive District, but also would require the city to authorize special assessments — a municipal mechanism typically used to help cover the cost of public upgrades and is paid off through annual property tax additions. Then, in this case, the assessments would be paid off with the increments raised in the district.
Under that framework, should the committee and the full Overland Park City Council choose to proceed, then the city would assume more of the financial risk in the development process than is typical.
Next steps for the 151st Street district:
- The discussion on Wednesday at the finance committee will play a big role in whether the proposal advances. If the committee chooses not to support taking the proposal forward, it would practically be dead.
- That being said, if the committee did support advancing the proposal, then the discussion on Wednesday would be the start of a multipart process to form the district.
- Actual approval would require a formal application, public hearings, authorization of a development agreement and other actions from the committee and city council.
- If the city did ultimately decide to authorize the district, then other taxing jurisdictions, including the county government and school district, could block its formation.
Keep reading: What’s a RHID? Overland Park mulls developer incentives for housing projects
