An Overland Park city council committee has voted to pull the plug on giving tax incentives to developers of Market Lofts, the city’s first and most beleaguered public financing deal.
The city council’s Finance, Administration and Economic Development Committee on Wednesday voted unanimously to end the tax increment financing agreement after learning that the developer had sold the project without the council’s approval.
Under the agreement, the developer was required to get that approval before transferring ownership of Market Lofts. But the city only learned of the sale to 19 Grand LLC on Sept. 3, the day before closing, and that was not enough time to bring it to the city council, said attorney Todd LaSala, who is advising the council.
That move by Market Lofts LLC put the project in default of the agreement, allowing the city to not reimburse a potential $694,000 in tax increment funds over the coming years.
What money has already been collected and deposited into the TIF account will flow back to the taxing jurisdictions affected. LaSala did not have a number on how much that is.
“As you know this project has a long and somewhat painful history,” LaSala said. But because of the sale, “you are well within your rights to terminate the TIF.”
The Market Lofts project was created in 2007 for the area along 80th Street between Marty Street and Overland Park Drive.
It was the city’s first tax increment financing deal, and the beginning of a trend in downtown Overland Park toward mixed-use apartment and retail buildings.
But the project suffered major setbacks over the years, beginning with the Great Recession in 2009. As the real estate market began to climb out of that, other problems ensued for developer Paul Goehausen.
At its inception, the tax increment financing agreement would have been worth $1.1 million in development costs for Goehausen. But a series of problems — including with the weather, the general contractor and shortages due to a renewed building boom — caused the project to be delayed numerous times.
As a result, deadlines on the project were moved back every year between 2016 and 2019.
As Goehausen missed deadlines, the TIF amount was whittled down.
In 2019, the city council considered declaring the project in default because of the missed deadlines. But councilmembers relented because they worried that the incompletely built project would interfere with foot traffic at the nearby farmers’ market or would not get finished at all if TIF money was withdrawn.
The project has now been completely built since then and is currently occupied on the ground level by an exercise studio and liquor store.