Sphere: Related Content
It appears that there is a lot of misconception out there on the Lee's Summit City Council use of TIFs to promote development in Lee's Summit. True, the original intent of the TIF law was to promote development of "Blighted" areas and Lee's Summit doesn't have a lot of those to develop. But that is not how other area governments have used the TIF law, to Lee's Summit's detriment. One has just to look to the cities northern border to see the best example of how TIFs have been used against us. I dare say that at least 25% of sales taxes generated from the hugely successful Independence Center corridor comes from Lee's Summit citizens leaving Lee's Summit to shop in Independence, and except for Independence Center itself, which predates the TIF law, all of the additional shopping, office and hospital areas have been developed via TIF promoted development. I for one don't think that land around I-70, 291, and 39th street could be defined as "Blighted". But Independence, by using a loose interpretation of "Blighted" is reaping huge rewards in the form of sales taxes from purchases made by Lee's Summit residences on TIF inspired development.
There are citizens in Lee's Summit that believe that a $143 million dollar TIF for LEGOLAND means the City is writing a $143 million dollar check to the LEGOLAND developer before the developers build in Lee's Summit. That is not how it works.
This is a Dr. Seuss (simple hypothetical) example but say a vacant lot in the city has a property tax bill of $5K on an value of $100K. Then a developer buys the land, invests $900K more and builds a shopping center, their total investment in now $1,000K and based on that value the tax on the property goes up to $50K or 10 times the initial tax value. In addition to the $45K in new property taxes the shopping center generates $55K a year in sales taxes which also go to the city that would have never been collected from the vacant lot. So total taxes collected per year from the once vacant lot has gone from $5K per year (property) to $105K (property + sales), a $100K gain. But to be fair the city does provide some additional services and they cost the city $20K dollars more, it is still a good deal for the city, as they still make $80K per year.
Now for the TIF, in order to build the shopping center the developer asks for a $20K per year TIF for 23 years, in other words instead of paying $50K per year in property taxes they pay $30K, but over 23 years it adds up to the astounding figure of $460K. The city council says "OK" because they know that they are still in the black a cool $60K per year. But the area Grinches find out and raise a stink in the newspapers, they say an evil developer is getting $460K they don't deserve from the city and that's nearly the entire cost of the development. Then the city council gets scared of the Grinches and rescinds the original deal. So the developer backs out, the shopping center doesn't get built, the city is out the $60K per year, and the city residents have to drive 10 miles north to the next city where the developer ends up building the shopping center with a $460K TIF from that city. But the Grinches say they have won because they saved the taxpayers $460K from the evil developer. While really the evil Grinches have cost the taxpayers at least $1,380K in taxes ($60K x 23yrs) plus the time and gas it costs them to drive north to the next city.
Moral, the Grinches are evil not the Developer..
Wake up Lee's Summit the Grinches are at it again.
Tuesday, June 19, 2007
Sphere: Related Content