Some of Kansas’ largest cities are struggling to gain full returns on tax increment financing districts meant to help bolster development activity and property values, a recent state audit found. TIF districts, as they are called, are intended to fund real estate projects that otherwise wouldn’t exist. The idea is that the development will increase property values in the designated district, resulting in higher property tax collections that are used to pay off the bonds that financed the project. State auditors surveyed six TIF districts from Kansas’ largest cities and found that half did not recover their costs in a timely manner. Most experienced construction delays and recorded increased crime rates after development finished. At least one city calculated its TIF collection incorrectly. Two cities, Wichita and Topeka, aren’t likely to recover the costs of three projects through TIF revenue by the end of the districts’ lifetimes. In Topeka, the general fund is covering an estimated 40% of the city costs associated with the College Hill TIF project, the audit found. In Wichita, two projects have experienced construction delays and the projects haven’t generated as much TIF revenue as anticipated. One of those projects, the Douglas and Hillside TIF district, was $1.8 million behind on debt service payments as of 2022, but the city said the debt will be fully financed by 2027, according to the audit. The other project, the Ken Mar TIF district, was $420,000 behind on payments as of 2022 and developers have been tied up in litigation with the city. “If a city cannot pay off debt obligations on time, then its overall cost from the TIF project may increase as it accrues additional interest,” according to the audit. “The use of other city funds to help cover shortfalls may leave less funding for other purposes.”
Source: Kansas Reflector
