Archive for Wednesday, October 21, 2015

Given development potential, Basehor studies incentives

October 21, 2015

The city of Basehor expects more economic development in the near future, and Mayor David Breuer wants to take some steps in preparation.

“Obviously we’ll have some people coming to us and wanting to build some things, and they’ll want some incentives to do so,” Breuer said.

The Basehor City Council on Monday reviewed financial incentives offered by cities to encourage economic development with Springsted, the city’s financial advisor. Breuer emphasized that the city has yet to be approached by a developer asking for incentives, but he wanted the council to be informed moving forward.

Tom Kaleko, Springsted representative, first praised the city for its recent upgrade to an AA bond rating, emphasizing that not many cities of Basehor’s size are able to achieve such a high rating.

“You’re getting toward the top of the heap,” he said.

The high rating is another reason why more economic development is likely on its way to Basehor.

Kaleko first reviewed five questions a city should consider when a developer asks for an incentive, the first being if the proposed development is appropriate for the community.

“You’d be amazed at how often I see cities going down the road of somebody proposing something, and they never even stop to ask themselves ‘Is this something we really want?’” Kaleko said.

This is where it is important for a city to have a consistently updated comprehensive plan, Kaleko said, and identify areas where development might be a challenge as well as certain industries the city would like to attract.

Secondly, the city should investigate a developer’s experience, financial resources and disclosures such as conflicts of interests or legal suits.

The city should also question if a project is feasible, usually through a financial advisor’s study of market feasibility and a cost benefit analysis.

The fourth question a city should ask is if an incentive is truly necessary for the project to move forward, and how much of a subsidy the developer really needs.

“From my experience, the amount of subsidy requested is easy to predict: It will be the maximum that whatever tool it is that they’re wanting to us will provide,” Kaleko said.

Finally, the city should ask for a guarantee that the developer will complete everything promised through a formal development agreement.

The council also discussed the most commonly used types of subsidies:

• Industrial revenue bonds, which allow developers to borrow money through the city, with no liability to the city, to get tax exempt bonds and an exemption for sales tax on construction materials.

• Community Improvement Districts, in which the city creates a set area in which sales tax is increased or through special assessment.

• Tax Increment Financing, in which the city continues to get base level of property tax, but the taxes above that due to the development improvements are used to pay for development for up to 20 years. This can be vetoed by other taxing entities like the county or school district, and the property must be considered to be “blighted.”

In other business, Martley said the city is moving forward with the county to begin the tax foreclosure process on property east of 155th Street. The property owner, identified as NBK, Inc., is delinquent on taxes from 2012, 2013 and 2014, including the special assessment taxes for the area, which now total $420,000. Martley noted that the city had to adjust its budget by more than $200,000 due to the delinquency.

Councilman Dick Drennon did not attend the meeting.

At its Monday meeting, the council also:

• Approved a design agreement with Schlagel & Associated for $45,840 for improvements to Donahoo Road.

• Approved contracts with Land Company Real Estate Services for land acquisition services related to the Leavenworth Road sidewalk improvement, the Chestnust Sanitary Sewer improvement, and Donahoo Road improvement projects.

• Approved a preliminary and final development plan, a final plat and a subdivision improvement agreement for Legacy Senior Residences, a 48-unit senior housing facility near 155th and Elm streets. Representatives for the developer, Cornerstone, said they hope to break ground in early November.

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