BY NATE KING
Salina Post
During its Monday meeting, Salina City Commissioners agreed to issue a multi-million dollar incentive package to Overland Park-based housing developer Salina Destination Development LLC.
The package consists of industrial revenue bonds, or IRBs, which exempt Salina Destination Development (SDD) from paying Saline County property taxes on the land used for Phase One of the multi-family apartment project.
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The property tax exemption would be in effect for a decade. According to an IRB fiscal impact model provided by Wichita State's Center for Economic Development and Business Research, SDD will be free from paying the following city, county, and state taxes:
$3,479,439 Saline County property taxes
$2,967,175 City of Salina sales tax
$1,924,485 School District 305
$1,827,500 State of Kansas tax abatement
Assistant City Manager Shawn Henessee said during the meeting that the incentive package would also exempt SDD from paying sales tax for construction materials during Phase One.
"The goal of the IRBs is to further incentivize and make sure we get this housing that is needed," Henessee said.
Phase One, which will soon add 250 one and two-bedroom apartments near Dry Creek, just west of Menards, is expected to cost approximately $35 million to build.
As an additional incentive to the project, the State of Kansas awarded the City of Salina a $25 million grant that was issued to provide housing to support other jobs in the community.
"We're not saying this is a panacea all of a sudden, and we have snapped our fingers, and all of Salina's housing problems are gone," Henesse said. "This really is an enormous step that is nearly impossible to quantify — to be in a position to deliver this many units to support expanding businesses."
According to SDD, Phase One of the project will create seven permanent jobs at the apartment complex. These jobs will be general grounds laborers, property managers, and leasing agents.
During time for public comment, Salina resident Rosemary Mai told commissioners she and others in the community did not support the sizeable incentive package.
"Everybody's property taxes are going up this year, but yet we're giving them free property tax?" Mai said. "I listened to the radio this morning and a lot of people are complaining about their property tax going up."
Mayor Hoppock responded to Mai's comment and said he understands the community's concerns.
"We do have a housing shortage, and we don't really have the local expertise to build a 250-unit apartment complex," Hoppock said. "We looked at the IRBs, we also looked at the property tax abatement for 10 years, because we said, 'We need rents that people can afford, and so by using these tools, that's how we were able to get the rents to market rate. It's a catch-22."
Need to annex and rezone
Project developers are eager to begin work on the project, but the land is not inside Salina City limits. The land is categorized as "unincorporated county land." The land is also zoned for agricultural use.
Henessee said the City of Salina does plan to annex and rezone part of the land for the project, but he does not expect that process to be concluded before mid to late December.
State statute (K.S.A. 12-1741a) requires consent of the Board of County Commissioners before IRB's can be issued because the property is currently outside city limits.
The City of Salina's Development Agreement with Salina Destination Development LLC requires approval of the IRBs within 45 days of closing on the property.
Due to uncertainties in the timeline of the annexation process and to ensure compliance with the agreement, the County Commission needs to consent to the IRBs.
City Commissioners passed the IRBs by a 5-0 vote.
Other city affairs discussed at the meeting:
Mayor Hoopock signed a letter to the Department of Transportation recommending SkyWest to continue to serve as Salina's preferred airline.
Approve Resolution No. 23-8169 declaring the necessity to acquire firefighting equipment, providing for the issuance of general obligation bonds of the City of Salina to pay for such equipment, and authorizing the publication of the Notice of Intent.
Approve Resolution No. 23-8168 authorizing the City Manager to execute an agreement with Jennifer Dahlstrom to provide indigent counsel services for the Salina Municipal Court.
Authorize City staff preparation of a special assessment engineering feasibility report for phase II of Lakeview Estates Additions No. 2 and 3.
Authorize City staff preparation of a special assessment engineering feasibility report for Phase I of Magnolia Hills Estates Addition No. 3.