KSHB 41 News is asking questions about an Overland Park taxing district that could put more than $100 million in taxpayer subsidies in the pockets of a developer over the next 20 years. It’s rare to see insightful coverage of local issues on the TV news, but KSHB’s story presents both sides of the controversial issue.
Corbin Park, home of Von Maur, is one of several special taxing districts in Overland Park. The special designation allows developers to collect additional sales tax on every item sold within the district. At Corbin Park, shoppers pay 1.5 percent more in sales tax than they would for items purchased outside the district. That extra penny-and-a-half on every dollar spent there goes to Michael Schlup, developer of the property. The developer is required to use that funding to pay down debt on the project, but it allows Schlup to maintain a higher profit margin. The story notes that Schlup bought Corbin Park in 2011 for $8 million in bankruptcy court. He is in the process of building an 11,000-square-foot home on 33 acres a few miles south of the Corbin Park property.
Patrick Tuohey, the director of municipal policy at Missouri think tank, the Show Me Institute, explains in the story:
“What these programs do, it shoulders the burden of development onto the taxpayers, and the developers get to keep all the profit.”
The special taxing districts also allow local politicians to pick the winners and losers in the marketplace. Advantageous tax schemes aren’t available to everyone.
Tax incentives have been a signature campaign issue in the Overland Park City Council election. Overland Park City Council member Terry Goodman, who is quoted in the KSHB story, is seeking re-election in Ward 4. He tells the TV station that the project has equaled or exceeded expectations.
“It has become perhaps the hottest commercial development in the city at the present time,” he said.
According to his campaign website, Goodman hopes the city of Overland Park will create an entertainment district and add more soccer fields. Though she isn’t mentioned in the story, Goodman faces newcomer Gina Burke in the Nov. 7 election.
According to her website, she would like to see additional scrutiny in spending tax dollars and a level playing field for all businesses and citizens.
“Special rates for some and higher rates for others is not a way to run a city, nor is it consistent,” he website reads. She says tax incentives have evolved into a limitless pot of corporate welfare.
“This essentially incentivizes developers to wait on their handout from the government, rather than applying prudent planning and risk-taking, as is the norm with the free market,” he website reads.
Special deals and abatements have also been a hot topic in the Overland Park mayoral race. Incumbent Mayor Carl Gerlach faces Charlotte O’Hara, a former state representative in the race. She is a vocal opponent of TIFs, STAR bonds, and other development financing incentives used by local governments.
She told the Kansas City Star that prior to 1996, Overland Park didn’t give out incentives, but recently, the city gave out almost $600 million in incentives for a Brookridge project.
“That just seemed absolutely ridiculous,” she told the paper.
Gerlach told the paper that all of the incentives in Overland Park are working.
“Other cities in the Johnson County area have tried to get out of the incentives world. They’ve experimented with not doing incentives, and when they’ve done that, they’ve watched cities on both sides of them redevelop past them,” Gerlach said.
