Sales taxes will go up slightly at The Legends Outlets to finance a new three-story parking garage, which will be connected to 240 luxury apartments.
One store, Penney’s, sent a vice president to oppose being included in the new taxing district.
The Unified Government Commission voted unanimously tonight in favor of the community improvement district sales tax for the project, which will require a $50 million bond issue. The project includes the garage and the luxury market-rate apartments. A bridge or walkway will connect the new parking garage to the existing parking garage at The Legends, UG officials said.
According to UG officials, the UG financing part of the project would only cover the 350 public parking spaces in the garage, which would have about a total of 600 spaces. Some parking spaces would be set aside for apartment residents. There would be other public elements of the project that also could be covered by the CID financing, but not the private parking spaces.
The sales tax increase will be six-tenths of one cent, which UG officials said is about 60 cents on a $100 purchase. The community improvement district cap is $14 million.
The sales tax increase will apply to most of The Legends Outlets stores, plus Penney’s and Target that are just west of the main Legends area, according to George Brajkovic, UG economic development director. The new sales tax in the district will be 10.325 percent.
The CID does not include Cabelas, Nebraska Furniture Mart, Sporting Park and CommunityAmerica Ballpark, which will retain their current sales tax rates, according to Brajkovic. Cabelas and NFM will stay at 9.225 percent.
Brajkovic compared the new sales tax total to other communities, including Lenexa’s City Center CID, at 10.1 percent; Shawnee Plaza, 10.225 percent; Mission Crossing CID, 10.35 percent; and Overland Park Prairie Fire CID, 10.35 percent.
He said the Country Club Plaza district sales tax is 8.85 percent for clothing stores and 10.85 percent for restaurants. Zona Rosa’s district sales tax is 9.475 percent for clothing stores and 11.475 percent for restaurants, he said.
The development team for the Legends project includes EPC Real Estate, Legacy Development and KKR, owner of The Legends Outlets.
Brajkovic said there would be a 10-year payment in lieu of taxes based on the estimated market value of the property. In 2014, the property brought in about $9,000 in taxes, and for the first year it is completed, it is expected to bring in about $300,000 to the UG in lieu of taxes, he said.
Plus the project is expected to bring more than 240 permanent residents into the Legends area, which is expected to bolster retail sales and restaurant opportunities, Brajkovic said.
During a public hearing tonight on the community improvement district, a representative of J.C. Penney opposed the store being included in the CID district.
Randy Fickel, of Plano, Texas, vice president and associate general counsel of J.C. Penney Corp., said he understood the benefit to Penney’s would be the additional parking spaces, however, they felt they currently have sufficient parking in front of the store, where people don’t have to cross a four-lane divided road to get to it.
He also said it penalizes their core customers by imposing an additional sales tax on their purchases, and they don’t derive any benefit from that additional tax.
Fickel said this puts Penney’s at a competitive disadvantage to some of its main competitors on the north side of Parallel Parkway who are subject to a lesser sales tax.
Plaza at the Speedway – across Parallel Parkway from The Legends – has two different sales taxes, 9.725 percent and 10.125 percent, according to UG information. Fickel said Penney’s main competitors are at 9.725 percent.
“People look at what they pay in taxes, and people focus on what the taxes are,” Fickel said. In Texas there is a sales tax holiday, where for one weekend, customers don’t have to pay sales taxes, he said. Taxes there are 8.25 percent.
“If we sent somebody a coupon for 8.25 percent, they wouldn’t get off the couch to spend it, but if we told somebody they didn’t have to pay the government 8.25 percent, they’d turn out in droves,” Fickel said. “It’s human nature. So at a certain point, people will decide with their feet not to pay a little extra in taxes.”
The CID had to have 55 percent of the property owners within it agreeing to be in the district.
Commissioner Jane Philbrook asked which stores signed the petition to participate in the CID and which ones didn’t.
A UG staff member said he didn’t know, and offered to get the information later.
Brajkovic said more than 55 percent of the property owners agreed to be in the CID. Those who agreed included The Legends Outlets owners and the UG. The UG at the time owned the theater in the shopping center, which recently was sold to a private owner. Brajkovic estimated that The Legends is at least 60 percent of the property included in the district.
Commissioner Brian McKiernan said he appreciated Penney’s concerns, but the new apartments will bring in close proximity to the store a number of new customers who they could attract to the store. He said there is the possibility the store could benefit from the apartments as much as any other store there.
Doug Bach, answering a question from Commissioner Hal Walker, said while Penney’s was not a direct recipient of an incentive to build, however, it was originally in a sales tax revenue (STAR) bond district, so all land was accumulated, purchased and reimbursed from STAR bond dollars, and they were recipients of a land deal which was reflective of the UG putting together all of the STAR bond area. Penney’s and Target were later excluded from the STAR bond district.
In other action tonight, the UG Commission also passed the $15.9 million Wyandotte Plaza bond refinancing unanimously, without discussion.