Monday, December 15, 2008
Board to Consider Tax Abatements for Three Properties
Tuesday night the Raytown Board of Aldermen will hear a second reading on an agreement that will create tax abatements for three properties in the Downtown area. The three properties are located at: 6109-6111 Blue Ridge Boulevard, application made by Jeff and Diane Page. The property currently houses Bennetti’s Coffee. 6326 Raytown Place - application made by Gary Knabe. The property houses Knabe’s real estate office for Coldwell Banker, Hometown Realty, Inc. 9715 East 63rd Street - application made by Pam McKinley Clark and Quentin Clark. The property in question is Clark’s Appliance Store. Page is requesting an abatement totaling $190,000.00. Knabe’s request is for $56,117.00, and Clark’s is for $36,503.00. The reasoning behind the abatements is to encourage businesses to locate in Downtown Raytown. The city has declared the Downtown area economically blighted and created the Raytown Municipal Development Corporation to promote investment in the Downtown area. Tuesday’s night meeting is a continuation of a Public Hearing on whether or not to grant the tax abatements. The ordinance is sponsored by Mayor David Bower, Alderman Barb Schlapia and Alderman Marilyn Fleming. Here is how the tax abatement works. The applicants document the cost of improvements to their property. If the city agrees to the abatement - there will be no property taxes on the improved properties for either 15 years or until the cost of the improvements have been recovered by the property owners not paying the tax. But there are flaws to the process. First, all of the applications have been placed together in one ordinance -- as opposed to each application standing on its own merits. The agreements before the Board of Aldermen DO NOT require that the properties involved be occupied by businesses to receive the abatement. Two of the properties in question have been applied for the business owners that will occupy the location (Home Town Realty and Clark’s Appliance). The third application, made by Jeff Page, owns the property, but leases the space to a business. Been There, Done That . . . The City of Raytown has been down this road before. Schnucks Grocery Store received a 15 year tax abatement in the 1990’s. For nearly ten years of the abatement, after about four years of operation, Schnucks pulled the plug on the grocery store. The property was closed to the public but still received a tax abatement that has lasted for will over ten years. They Pay Less, So You Pay More . . . What most people are not aware of is that when a property has its tax abated, the taxing districts still receive the same amount of tax from the area in which the abatement is given. When a tax is abated in a municipality the difference of the abatement is made up by incremental increases spread over other property owners taxes. These "other" taxpayers include businesses and homeowners within the geographic area. In this case the area is Raytown. Proof of this reality can be found by comparing the annual figures of property tax collected by the city in past years. Even though many tax abatement schemes have been created in Raytown (GE at the 63rd Street Gateway, HyVee, Schnucks, etc.) the total dollar amount of property tax collected by the city has actually increased over the years. Clawbacks . . . It is understandable that a city may want to encourage businesses to locate in a blighted commercial area. Many a good argument can be made in favor of granting the abatements. But without any guarantee, or a "clawback" provision, which allows the city "turn off" the abatement if the property goes dark (out of business) the deal is not a good one. Raytown taxpayers deserve a guarantee the businesses given financial aid fulfill their end of the bargain. That end of the bargain is that a business entity will be in place where property taxes have been abated. Anything less is not in the taxpayer’s best interest.