The City will consider the use of certain financial incentives as permitted by statute and City policies. The City would consider the use of the following incentive programs on a case-by-case basis:
Tax Increment Financing (TIF): Tax Increment Financing (TIF) uses the increased property taxes generated by real estate development within a tax increment financing district to pay for certain eligible costs associated with the development. The value that is "captured" (that is, the increase in property value over the value in the year the TIF district was established) generates property tax increment. The incremental taxes are used to subsidize eligible project costs such as land acquisition, demolition, public and site improvements, and related consulting and administrative costs. TIF districts may also capture city sales and city franchise fees generated within a TIF district providing a significant funding resource with which to supplement "regular" property TIF.
Transportation Development District (TDD): Transportation Development Districts may be utilized to finance transportation related infrastructure associated with new or expanding commercial development. Eligible improvements include among other things, construction or maintenance of: Parking Lots and Parking Garages. A Transportation Development District Sales Tax is in addition to any current city, county and state sales tax. Transportation Development District Sales Taxes nay be imposed in increments of .10% or .25% up to a maximum of 1%.
Neighborhood Revitalization Area: Under Kansas law (KS 12-17, 114), neighborhood revitalization areas (NRAs), cities can utilize tax abatement as a revitalization tool. Tax abatement allows the city to rebate to the taxpayer all or part of the additional taxes incurred through redevelopment or reinvestment in real property. This incentive can be at cross purposes with TIF if the increment is intended to be used to finance capital improvements.
Tax Abatement: The City of Olathe may provide a 50% tax abatement to new and existing businesses on real property investments if the project meets certain criteria. Depending upon how the abatement is structured over the term, abatement may slightly exceed an overall average of 50%. A 5% increase in the abatement may be considered for projects that are targeted industries by the State of Kansas, the City of Olathe, or the Olathe Economic Development Council. The current target industries include quality high technology businesses, office development, and locations within the Downtown Core.
Tax Credits: Housing Tax Credits issued by the Kansas Housing Resources Corporation (KHRC) are available to rental housing developments where a portion or all of the units are set aside for residents who earn below the area median gross income per IRS guidelines. Requests for letters of support for pursuit of such credits must comply with the KHRC’s allocation plan and City policy.
Historic Tax Credits: Tax credits provide a key tool for the rehabilitation of historic properties -- both income-producing and non income-producing. The federal program provides an income-tax credit equal to 20% of qualified rehabilitation expenditures on income-producing properties. The state program provides a tax credit equal to 25% of qualified expenditures on income-producing or non income-producing properties. Projects must meet the Secretary of the Interior's Standards for Rehabilitation.
For more information, please contact:
Deputy City Attorney
Historic Tax Credits
Kansas State Historic Society
Cultural Resources Division
785-272-8681 ext. 240
Neighborhood Revitalization Area
Assistant Director - Strategic Financial Management