Archive for Tuesday, November 29, 2011

Council to revisit development fee rebate

November 29, 2011

The Tonganoxie City Council agreed to revisit a new development incentive package offered in 2010.

In January of that year, the council approved an ordinance that would provide buyers of new homes a rebate of up to $3,000 in development fees incurred during the construction of new homes. The incentive, which ended Jan. 1, 2011, was limited to 10 homes, which would have to have at least a $250,000 price tag.

The incentive expired with no applications for the rebates because none of the homes built in 2010 met the $250,000 program threshold. Assistant City Administrator Kathy Bard said that figure was chosen because the city wanted to encourage construction of higher priced homes, a section of the housing market with little on no activity in Tonganoxie.

But that could be said for all sections of the housing market in 2011 as the continuing industry slump has slowed new construction to a crawl in Tonganoxie. Bard said the city has issued permits for only six new homes this year.

That was a point developer Greg Ward made Monday in a report to the council. The discussion that report started ended with agreement the council should consider bringing the rebate program back, but lowering the participation threshold to $175,000.

But Ward presented a far more ambitious proposal to the council, which would have the city abate for four years all additional taxes from new construction of more than $135,000. The plan was presented as a counter to an existing Basehor incentive package that gives 95 percent tax rebates for the first three years and 50 percent rebates on years four through six on new development of more than $140,000, he said.

It would also benefit homebuyers by providing abatements and thus eliminating the need to pay taxes later rebated, Ward said.

Tonganoxie needed a more aggressive plan to compete with Basehor because that community had the advantage of being closer to the metropolitan area, Ward said.

The developer was told there might be ways to make something like his plan work, but that state law forbids outright abatements on residential and commercial property. It also was pointed out that when the city created its redevelopment district, which allow rebates for improvements to existing buildings as well as new construction, new subdivisions were intentionally excluded from the district.

Although Basehor did include undeveloped land in new subdivisions in its redevelopment district, the state enabling statute on such districts speaks of it as a tool for combating blight. City Attorney Mike Kelly said a former state attorney general told him districts such as that created in Basehor would be on shaky ground if challenged in court.

But it was agreed the council would consider at its Dec. 12 meeting restarting its development fee rebate program on new construction with a lower participation threshold and other tweaks to make it more useful.

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