Meadowbrook Project Development: Frequently Asked Questions as of July 20, 2015
- What is a TIF (Tax Increment Finance) District?
A TIF, or tax increment finance, is an economic development tool for financing current public improvements based on future revenues from increased property taxes and/or sales taxes. A TIF establishes a base level at the current property tax revenue and any increase or increment in the property tax revenue is then captured over a defined period and used to pay for eligible improvements within the TIF district/development area. The process for establishing and administering a TIF is detailed in Kansas State Statutes (KSA 12-1770 et seq.). The Cities have the authority to create TIF districts after their governing bodies hold public hearings and find the area to be eligible.
Currently, the Meadowbrook project plan will include TIF financing for 20 years or less. All property tax levies which the owner is currently required to pay will continue. Once improvements are made to the property (includes a senior living home, luxury apartments, townhomes, single-family homes, and a hotel) the increment or increase in the property tax revenue is captured to pay for public improvements. The improvements that are TIF-eligible expenses include parkland acquisition, public streets, sewer, public infrastructure, street lighting, lakes, community center, trails, etc. The project elements using TIF funds will be detailed in the development agreement. The current amount of TIF financing is estimated between $15 million to $18 million.
- If the proposed park property is going to be turned over to Johnson County, why doesn’t Johnson County complete the TIF process and issue bonds?
In Kansas, TIF authority occurs at the city level. Counties are not allowed to use TIF financing in an incorporated area.
- What is the difference between GO (General Obligation) bonds and SO (Special Obligation) bonds?
Both types of bonds are issued with the Governing Body’s approval. General obligation bonds are issued and backed with the full faith and credit (property tax-raising authority) of the city. Should the estimated TIF revenues not meet projections, the city would be required to pay any shortfall from other sources or to raise revenue.
In contrast, special obligation bonds have no city credit backing. Any shortfall in the projected TIF revenue is a loss for the bond holders.
Current projections show the issuance of between $8.5 million to $9.5 million in general obligation bonds and $5.8 million to $7 million in special obligation bonds. In the current project plan the developer will buy the special obligation bonds, illustrating its commitment to the proposed project. This approach places a portion of the bond risk on the developer.
- Is the City responsible for the bond repayments?
If the City issues general obligation bonds, the City will be required to pay the bonds in full. It is anticipated the TIF funds generated from the private development will fund the general obligation bond payments. Although the City expects that the special obligation bonds will be repaid in full from the TIF revenues, there is no guaranteed repayment provided.
Should the City issue general obligation bonds and no revenue is generated, it would require the use of other sources such as the economic development fund or capital project fund or an approximately a 3-4 mill increase in the property tax rate to cover the bond payments. The current draft of the development agreement will require the developer to construct the senior living, multifamily luxury apartments, and the hotel immediately. Regardless of the occupancy rates, the project will generate an increase in property taxes collected once these developments are completed. What is unique about the proposed development, should the development not perform, the County will still own—and city residents will still benefit from—an 80 acre park with improvements.
- Are public streets included in the project costs?
The public street cost is estimated at $1.4 million to $1.8 million. The public streets are within or border the park. Public funds are not used for the streets within the private development.
- Why is an Industrial Revenue Bonds (IRB) also included?
By issuing IRBs, a sales tax exemption is granted to the developer on construction materials. In many cases, IRBs with a sales tax exemption are used as a development incentive with the owner or developer benefitting from the savings. With the Meadowbrook project, the developer will be making a contribution between $1.0 million to $1.7 million to the project for public improvements equal to the savings of the sales tax exemption.
- What impact will this have on my property taxes?
Properties within the TIF district will continue to pay property taxes as they do now. Properties outside the TIF district are unlikely to be impacted directly by the project in the short-run. In general, however, if this development occurs, the overall goal of the project is to enhance Prairie Village and keep the surrounding area an attractive place to live and do business. If the development succeeds, properties surrounding the park may see their values increase. And, city taxpayers in general will benefit from a broader city tax base. View the project map (PDF).
- Will residents have a say in what happens at the park?
Johnson County will continue to involve the public as the park plans develop. The Park District participated in the two-day open house in March of 2015. The public was also involved the public through the Johnson County Parks Master Plan. Additional public meetings and input will be gathered during the Meadowbrook Park Master Plan process. The Park District is currently working on a request for proposals (RFP) to hire a park designer/planner (due July 2015). The Prairie Village City Council will be involved in the plan approval process and input will be gathered from the Prairie Village Parks & Recreation Committee and citizens.
Current discussions, comments, and open houses have revealed many ideas and opinions on what should and should not be in the park, along with ideas for the current clubhouse to include various indoor programming and activities.
- What is the current zoning and is this use allowed?
The current zoning of the Meadowbrook project is single-family housing. If the developer desired to build single-family homes throughout the entire property, it would not require rezoning. With the current plan, a rezoning request will be submitted to rezone the property to mixed-use which includes single-family, multifamily, senior living, hotel, and a small amount of retail. The rezoning will require approval of the Prairie Village Planning Commission and the City Council.
- Has there been an appraisal of the property?
The City of Prairie Village contracted with Bliss Associates to conduct an appraisal of the property. A full appraisal was completed along with a supplement appraising only the park property portion (since this is the portion the city expects to purchase). A copy of the appraisals are on the City of Prairie Village website. (Appraisal PDF) (Appraisal Supplement PDF)
- Is there enough parking for the park?
The exact uses of the park have not been determined. Once the public input process is completed along with approvals from the required parties, additional parking will be added. There will be parking at the current Meadowbrook clubhouse and discussions include on-street parking through the parkway within the park property. Should the final use show the need for more, additional parking lots will be added.
- What uses are currently shown in the development?
The current development design includes a senior living project, luxury apartments, townhomes, single-family residential homes along with a boutique hotel of approximately 35 rooms. There may be limited retail uses included in the senior living facility and within the first floor of the inn.
- Will there be access to the development from 95th Street?
The developer is currently working to include access from 95th Street using Rosewood Drive. This new access has not been finalized.
- What entities are involved in the approval process and will residents have an opportunity to voice their opinion?
There are four entities involved in the approval process which include the City of Prairie Village, Johnson County Park and Recreation District, Johnson County Wastewater, and the developer, Van Trust. There have been and will be many opportunities to share comments, support or concerns with the city and the other parties.
Questions and comments regarding the Meadowbrook Parks and development plans, can be directed to email@example.com.