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From new apartment buildings to commercial shopping centers, 20 major building projects are underway Overland Park, Kansas. The one element they have in common: Tax incentives from the city or state.
The most common incentive programs include tax increment financing (TIF), which diverts future property tax revenue into front-end construction costs, and community improvement districts, which levy sales taxes to fund projects.
As Johnson County’s largest city experiences a boom, the use of tax incentives for development projects has become a central issue in the Overland Park mayoral race.
One candidate, former business executive Mike Czinege, has criticized tax incentives, describing them as “wasteful” and “unnecessary.” In social media campaign ads, public statements and debate forums, Czinege has criticized Overland Park’s use of tax breaks for development projects and pledged to reform the city’s tax incentive policy to — as his website states — “prioritize taxpayers.”
His opponent, Overland Park City Council president Curt Skoog, has voiced support for subsidies for projects that attract employers and jobs to the city. Skoog, who sits on the council’s economic development committee, can vote to approve or reject tax incentives for development projects.
In an interview with The Kansas City Beacon, Czinege said tax incentives in Overland Park have become “overly aggressive.”
“Developers should be using their own capital to build these things,” Czinege said.
Skoog told The Beacon Czinege’s comments on tax incentives are inaccurate. Skoog said one of his highest priorities is to make sure tax incentives do not place any burden or risk on Overland Park residents.
“I’m in favor of implementing the plans that the residents of Overland Park want to happen,” Skoog said. “So all of the incentives that have been approved, that I have voted for, are used to implement the community vision that the community came together and said that they wanted to occur.”
A recent analysis by The Kansas City Beacon on campaign finance in the Overland Park mayor’s race found that Skoog received $6,750 from 14 LLCs and corporate donors — these donations make up a higher share of Skoog’s campaign donations compared to Czinege.
At policy forum, Curt Skoog brings up Mike Czinege’s connection with AMC, which received tax breaks
Czinege said tax incentives shouldn’t be used to pay for development projects unless they’re in a blighted area.
“But for the most part, they should be businesses that want to invest in that area. And it should be their capital that gets invested, not the taxpayer capital,” Czinege said at the forum.
Skoog said Overland Park is a “city of offices” during the debate, adding that the city can attract new businesses with its amount of office space. Skoog used AMC — a former employer of Czinege — as an example of a company benefiting from a state tax incentive program when it relocated its offices from downtown Kansas City to Leawood, Kansas, in 2011. The move happened while Czinege worked for AMC Theatres as its senior vice president and chief information officer. He left the company in January.
The company relocated with the help of tax incentives from Kansas through its Promoting Employment Across Kansas program, which allows companies that relocate from out of state to keep 95% of employee withholding taxes.
“Mike, you’re probably familiar with that because your employer got $47 million on that program, when you relocated AMC… ,” Skoog said during the forum. “The state is very active. Incentives from the state make a big difference and incentives and public investments from the state help us make sure that we land those jobs in Overland Park.”
Initial reporting from the Kansas City Business Journal in 2013 estimated that AMC received $47 million in PEAK incentives. Further reporting from The Pitch in 2015 found that AMC “could receive up to $21 million in PEAK benefits” and $500,000 from Kansas’ Job Creation Fund.
“I don’t blame AMC for asking for it,” Czinege told The Beacon. “I would blame the city for giving it to them. One of the things we have to stop is the border wars, from municipality to municipality, and from Missouri into Kansas.”
Beyond tax incentives, the future development and business climate of Overland Park has loomed large in the race for the first open mayoral seat since 2005, when Carl Gerlach was first elected to a tenure that lasted until now.
Restaurant chain Applebee’s, another former employer for Czinege, also benefited from tax breaks, but not while Czinege was working there. In 1993, Applebee’s moved from Kansas City, Missouri, to Overland Park. In 2008 — about a year after Czinege left — the company moved again, from Overland Park to Lenexa, Kansas, with the help of a property tax abatement. Three years later, the company moved back across the state line to Kansas City, aided by $12.5 million in tax incentives from Missouri.
Mike Czinege has made tax incentives a centerpiece of Overland Park mayoral campaign
Throughout his campaign, Czinege has characterized tax incentives as “wasteful giveaways” to developers that shift the tax burden onto Overland Park residents.
Tracey Osborne, president and CEO of the Overland Park Chamber of Commerce, disagrees with Czinege’s contention that incentives prioritize developers over residents. Subsidized development can boost a city’s quality of life and economic opportunities, she said.
“If we could keep spreading the tax base out, which is the way Overland Park was designed, so that this tax base would be shared among the commercial residents of the community as well as the residential residents of the community, then the burden isn’t placed on either one of those to an unfair extent,” Osborne said in an interview with the Kansas City Beacon.
In a response to survey questions on his campaign website, Czinege says he supports tax incentives for development “when used judiciously” in areas that would not otherwise attract development.
Czinege has voiced support for some use of tax incentives. In response to survey questions sent by the Shawnee Mission Post, a local news outlet in Johnson County, Czinege pointed to developments along Metcalf Avenue and Shawnee Mission Parkway as an appropriate use of incentives. Czinege said the Prairiefire and Bluhawk developments should not have used tax incentives.
“In areas where there’s blight or high crime, or is not a desirable development area, then taxes should be considered — not guaranteed, but considered,” Czinege said.
Skoog said when he evaluates requests for tax incentives for development, he evaluates if it will pose any risk to the city and if it implements city and resident objectives.
“Also there is a test to make sure that the project cannot be built without public investment,” Skoog told The Beacon. “And then the key thing is that if the project does not follow the agreement, then we cancel and have clawbacks.”
Czinege has also used social media to criticize Overland Park’s use of tax incentives. According to Facebook data, the Mike for Overland Park Mayor page has run about 20 ad campaigns since June focused on development or tax incentives.
“Stop developer giveaways in Overland Park,” a recent Facebook ad reads. “Mike will prioritize residents and will fight to end out of control tax incentives.”
Previous Czinege campaign ads on Facebook include language such as, “help Mike fight against taxpayer funded kickbacks” and “developers are taking over our city.”
In another ad, the Czinege campaign says “millions of dollars have been given away.”
But Osborne said fewer than 10% of the city’s development projects are incentivized.
“The vast majority of job growth or capital investment that is done in the City of Overland Park does not have a public investment attached to it,” Osborne said. “It’s all private dollars. The city of Overland Park has been very judicious in the projects that it chooses to place a public investment in and has a number of standards.”
Osborne said the city has seen an additional $9.1 million in taxes it wouldn’t otherwise receive through these current development projects.
“Now they’re bringing in almost $12 million in taxes, even with the incentives in place,” Osborne said. “And so all of those taxing entities, the schools, the county, the city, wastewater, all of those are still getting an additional $9 million on top of the taxes that they were previously getting. Because it’s a misconception that they don’t get any taxes.”