Neighborhood Revitalization Program (NRP)
Sumner County has in place the NRP, which the City of Wellington is a participating entity. The NRP is a tax rebate program that is designed to return 95% of property taxes paid for a term of five (5) years. The NRP covers the entire City with two exceptions. (See Below) The program applies to qualifying new residential, commercial, and industrial developments and existing residential, commercial, and industrial developments with improvements of $5,000 or greater. Application for the NRP is made to the Sumner County Appraiser’s Office and is required prior to ANY work on the property. Contact the Sumner County Appraiser for full details.
Downtown District – Wellington
For this designation, projects must be located in the City of Wellington and within the following area:
Beginning at the center of the intersection at Jefferson Street and West 11th Street, thence east along the centerline of 11th Street 780 feet to the center of the intersection at C Street and East 11th Street; thence south along the centerline of C Street 2,600 feet to the intersection at C Street and South 4th Street; thence west along the centerline of South 4th Street 780 feet to the center of the intersection at Jefferson Street and South Fourth Street; thence north along the centerline of Jefferson Street 2,600 feet to the point of beginning.
Tax rebates for qualifying property within the confines of the downtown district shall be for a period of 10 years at 95%. Qualifying properties must be property zoned and classified as Commercial.
East US-160 Corridor – Wellington
This designation applies only to projects located within the corporate limits of the City of Wellington and within the following area:
Beginning at the center of the intersection at East 16th Street and North Boundary Road; thence north 2,700 feet; thence east 9,700 feet; thence south 2,750 feet along the Kansas Turnpike Authority right-of-way; thence east 135 feet to the Kansas Turnpike Authority right-of-way; thence south 1,000 feet along the Kansas Turnpike Authority right-of-way; thence east 445 feet to the Kansas Turnpike Authority right-of-way; thence south along the Kansas Turnpike Authority right-of-way 1,650 feet; thence southeasterly 2,560 feet to the center line of 20th Street South; thence southwesterly along the center line of 20th Street south 7,850 feet to the center of the intersection at 20th Street South and Meridian Road; thence west along the center line of 20th Street South 2,700 feet to the city limits; thence north 5,225 feet to the point of beginning.
Tax rebates for qualifying projects within the confines of the East US-160 Corridor district shall be for a period of 5 years at 95%. Rebate refund will only apply to the first $500,000 of the increased property’s market value. Qualifying projects must be property zoned and classified as Commercial. If at any time during the duration of this plan, property within this district is annexed into the city limits, property will qualify under these guidelines.
Property Tax Abatement
A tax abatement is a common economic development tool used to encourage new investment as well as increase or maintain basic employment in the community. In Kansas, there are two methods for obtaining tax abatements on real property: a constitutional tax abatement and the issuance of Industrial Revenue Bonds. The selection of which method to pursue largely depends on the type of business taking place on the property as well as additional financial considerations (e.g. fees to issue bonds).
Constitutional Tax Abatement
A constitutional tax abatement (Article 11, Section 13 of the Constitution of the State of Kansas) allows a tax exemption on all or a portion of the appraised value of land, buildings, and personal property used exclusively for a new business or an expanding business (if it will create new jobs) primarily involved in one of the following:
- Research and Development
- Storage of goods traded in interstate commerce
Industrial Revenue Bonds (IRBs)
IRBs are among the most popular and cost-effective methods of financing up to 100 percent of a new or growing business’ land, buildings and equipment. In Kansas, IRBs are issued by cities, counties and the Kansas Development Finance Authority. Proceeds from the sale of the bonds to private investors are made available to enable creditworthy companies to purchase land and pay the costs of constructing and equipping new facilities or the costs of acquiring, remodeling and expanding existing facilities. If IRBs are used to finance certain types of facilities, interest payable to the owners of the bonds is exempt from federal income tax. This type of IRB is generally called a “tax-exempt” bond. Interest payable on bonds issued to finance other types of commercial facilities, or to finance non-qualifying portions of an eligible facility, is subject to federal income taxation. This type of IRB is generally called a “taxable” bond. Interest payable on all IRBs is exempt from Kansas income taxation. Because interest received by owners of tax-exempt IRBs is not subject to federal income taxation, the rate of interest on such bonds may be as much as 2.0 to 2.5 percent (average annual interest cost) below interest rates charged for a comparable taxable bond or taxable conventional loan. In many cases, IRBs afford long-term, fixed-rate financing not otherwise available for a business’ capital investments. Adjustable rate financing is also available to businesses that are willing to risk exposure to fluctuating (and potentially higher) interest rates.
In IRB financing, the bond issuer either directly loans the bond proceeds to a private business or acquires ownership of the property financed and leases it to the business. The loan payments or lease rentals are used to repay the bonds with interest. Typically, in a lease structure, the business is given an option to purchase the property at the end of the lease term for a nominal sum. Proceeds from the sale of the bonds are placed in escrow with a bank and used as directed by the business to pay eligible costs of constructing, acquiring and installing the facilities. The business may have up to three years to spend the proceeds of tax-exempt bonds on eligible property.
One benefit of IRBs issued by cities and counties is eligibility for full or partial property tax abatement for the financed facilities for up to 10 years and a sales tax exemption for labor and materials purchased for new facilities. These benefits apply to both tax-exempt and taxable bonds.
Issuance of IRBs by cities and counties is governed by Section 12-1740 et seq. of the Kansas Statutes Annotated. Kansas Development Finance Authority bond issuances are governed by Section 74-8901 et seq. Many bond issuers also have their own policies and regulations regarding issuance of IRBs and the granting of property and sales tax exemptions for the financed facilities.
Community Improvement District (CID)
A CID is a real estate economic development tool which can be used to finance public or private facilities, improvements and services within a local city. The CID funding mechanism can be used to finance a variety of local approved development-related activities, including: property acquisition, infrastructure development, parking and building construction within the district, and can also extend to certain infrastructure improvements outside the designated district, if those improvements are contiguous to the district and are deemed necessary to implement the development plan. A CID can derive revenues through special assessments, a district-only sales tax, or other funds as appropriated by the city.
Financing is provided through bond issuance or can be project generated on a pay-as-you-go reimbursement basis. Businesses within the district must approve the imposition of a district sales tax or property tax special assessment prior to its establishment. Those sales tax and special assessment proceeds are used to pay off bonds issued and/or contribute to the direct reimbursement of project-related costs. These special district taxes and special assessments have a maximum term of 22 years.
Transportation Development District (TDD)
Transportation Development Districts may be created for the purpose of financing certain projects, including bridges, streets, interchanges, intersections, signage, signalization, parking lots, parking garages, bus stops and stations, airports, docks, lake or river ports, railroad, light rail, mass transit facilities and any other transportation related project or infrastructure.
Tax Increment Financing (TIF)
TIF is a real estate redevelopment tool applicable to industrial, commercial, intermodal transportation area and residential projects. TIF uses the increases in sales and/or property tax revenues to retire the bonds sold to finance eligible redevelopment costs (KSA 12-1770 et seq.) or to reimburse the developer on a pay-as-you-go basis. Monies raised through TIF may be used for eligible redevelopment project costs approved by the city, such as land acquisition, site preparation, infrastructure, parking structures and other related costs.
The TIF funding mechanism can be used to finance improvements within the district and can also extend to certain infrastructure improvements outside the designated district, if those improvements are contiguous to the district and are deemed necessary to implement the development plan. TIF cannot be used for the construction of privately-owned buildings.
Financing is available from the proceeds of bonds issued by the city or on a pay-as-you-go reimbursement. The bonds are primarily secured by the incremental increase in property taxes within the redevelopment district as a result of the new construction or rehabilitation buy may, under certain circumstances, also be general obligations of the city. The city may also use franchise fees and local sales taxes generated within the redevelopment district to pay the bonds or finance the project costs.
TIF works for both privately- and publicly-owned land to be sold for redevelopment. Advance developer commitment to construct the project is essential to demonstrate that the TIF revenues will be sufficient.
STAR (Sales Tax) Bonds
Sales Tax Revenue (STAR) Bonds are special bond projects for major commercial or tourist areas. The threshold is usually $50 million in capital investment and $50 million in gross annual sales. Both an incremental state and local sales tax can be used to fund the project. The creation of a STAR Bond district requires the approval of the Secretary of Commerce.
All economic development financing tools are subject to final approval by the Wellington City Council.