Five Topeka mayor candidates weigh in on TIF districts

Topeka’s city government takes no financial risk under the proposed “pay-as-you-go” or “reimbursement district” arrangement being pursued regarding Wheatfield Village, city officials say. (Submitted)

Candidates for Topeka’s mayor’s office spoke positively this past week of the city potentially entering into a tax-increment financing arrangement to aid the proposed Wheatfield Village development at the northwest corner of S.W. 29th and Fairlawn Road.

 

Still, a couple raised questions.

Candidate Clark Trammell suggested city officials haven’t effectively demonstrated to taxpayers why they consider TIF to be necessary.

The city’s governing body on Tuesday heard a presentation from investors involved with the nearly $100 million project, which would include construction of a Marriott hotel, a nine-screen movie theater, a Johnny’s Tavern, a PT’s Coffee and a SPIN! Pizza.

The governing body voted last month to establish a TIF district for the area north of S.W. 29th and Fairlawn. The move was part of a process through which that body is expected to later consider entering into a TIF agreement with 29 Fairlawn LLC, an entity led by Jim Klausman and Floyd Eaton, who hope to establish the Wheatfield Village development.

Kansas law allows for the establishment of TIF districts to encourage economic growth. Government entities create TIF districts at the request of developers to help offset development costs.

Developers agree to pay off TIF bonds issued by the city over a period of up to 20 years using the increase in property tax and sales revenues collected after the project was constructed versus the taxes those same properties generated before the development.

TIF district arrangements were created to benefit blighted areas, but Kansas law also allows for TIF districts to be set up in aging or underperforming “conservation areas” that aren’t blighted.

The property in the TIF district encompassing Wheatfield Village qualifies as a “conservation area” under TIF statutes.

Topeka’s city government takes no financial risk under the proposed “pay-as-you-go” or “reimbursement district” arrangement being pursued regarding Wheatfield Village, city officials say.

Still, some residents would rather not see the developers receive government assistance.

Twitter user John Douglas responded this past week to a Capital-Journal tweet about the topic by tweeting, “If only, as an experiment in capitalism, developers would develop without expecting favors from The Government they rail against.”

Topeka mayoral candidates Spencer Duncan, Chris Schultz, Michelle De La Isla, Mark Weiser and Clark Trammell replied this past week to an emailed question from The Capital-Journal about whether they support the city’s entering into a TIF arrangement regarding Wheatfield Village.

Duncan replied in an email, “TIF is an important tool to improve blighted areas by establishing business, housing and entertainment developments as long as it is structured so if there are bond payment shortfalls the landowner is responsible, not the taxpayer.”

Chris Schultz said in a phone call that he supports using the proposed TIF arrangement to aid the project, and stressed that the city would take no financial risk.

“I think it’s a pretty safe investment,” he said.

Schultz said his one concern involves whether the streets in the area of S.W. 29th and Fairlawn — which already handle a lot of traffic — will be able to accommodate the increased traffic that would result from the presence of the development.

De La Isla, a Topeka City councilwoman who voted last month in favor of forming the TIF district, described TIF arrangements as being a “good tool.”

She stressed that to acquire the TIF designation, those behind the Wheatfield Village project were required by Kansas law to demonstrate that it won’t happen “but for” the TIF incentives.

De La Isla added: “This one is exciting as it supports the build of a local brand PT’s Coffee and already has all the tenants committed. It’s a good project for our city and will revitalize a very visible area in need of work in our community.”

Weiser said he supports the project and its benefit to all citizens.

“There is something that needs to be understood in this agreement with a private business entity,” he said. “The taxpayer or the city must be protected from any potential of loss of revenue if project fails to live up to its business plan. I would seek some fiscal guarantee in the written contract.”

Trammell spoke positively of the development but said he still had questions.

“Having been on both sides of this type of deal/project both as a banker and in the shoes of the developer, I like the project,” he said. “I was impressed with the principals involved in all aspects of the project from what little I have observed from afar. A good project like this takes proven professionals in all the aspects of what is being developed, no shortcuts here.”

But Trammell said he’d like to see the business plan outlining how the project would be developed and, more importantly, phased in.

“I want to know that this whole project will be completed as presented and not stopped somewhere during the buildup for whatever reasons,” he said.

Trammell said he also had questions about things that included:

n Whether the city considered the “shortfall risks” for repayment of the financing if the increases in taxes do not happen.

n Who or what entity will own the project.

n What happens if one of the original underwritten principals leaves the investment or sells all or a part of the development to another person/group of investors, and what TIF performance protection the city has.

n Who will service the TIF financing for the city and what their qualifications are to do so.

“In summary, I like the deal and the local developer is extremely credible. However, the details I have shared above are a part of doing proper due diligence when making commercial finance deals like this,” Trammell said. “When the City Council does a deal like this they in part become a lender of sorts and must act like one. To do that you need participants who have the skills to underwrite the financing and the project being financed.”

Contact reporter Tim Hrenchir at (785) 295-1184 or @timhrenchir on Twitter.

 

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