City of Lawrence

Neighborhood Resources Department

 

MEMORANDUM

 

TO:              Dave L. Corliss, Interim City Manager

 

FROM:         Victor Q. Torres, Director, Neighborhood Resources

                   Ed Mullins, Finance Director

 

DATE:           March 15, 2006

 

RE:              Neighborhood Revitalization Act – Delaware Commons—an analysis

 

 

 

The purpose of this report is to consider the implications of an application of the Neighborhood Revitalization Act to the Delaware Street Commons project.  The analysis utilizes an appraisal prepared by Keller & Associates dated September 28, 2004.  Based on an inspection of the property the market value of the property at this time was four hundred seventy thousand dollars $470,000).  Once all infrastructure and structures have been built out, the appraiser concludes the property will be valued at three million three hundred fifty thousand dollars ($3,350,000).  This report is intended to provide and estimate of the amount of property taxes potentially rebated to the property owner if the City of Lawrence implemented a Neighborhood Revitalization Plan as compared to a Special Assessment on the property for the same period.    

 

Proposal for Property   This property is located at 12th Street and Delaware situated on approximately 2.44 acres.  Once the project has been completed it will include 23 single-family units, some will have unfinished basements.  In addition, there will be a single story common house.  

 

Neighborhood Revitalization Act   During the 1994 legislative session, lawmakers passed SB 732, known as the Neighborhood Revitalization Act (NRA).  The Act allows tax rebates for property owners who renovate or make improvements to their property.  Local governments are authorized under the Act to cooperate in offering property tax rebates to owners that invest money in their property resulting in an increase in value.  The rebate is offered for any additional property taxes assessed as a result of property improvements. 

 

Additional Information   Participation by the taxing entities may result in additional costs for tracking and implementing the NRA over the rebate period.  Staff is currently contacting a number of communities that have adopted a Neighborhood Revitalization Plan to identify specific details on the implementation and tracking processes required.      

 

 

 

 

Analysis   A rebate to include the City, School District, and County are included in this analysis.  For this analysis staff utilized the rebate schedule from the City of Hutchinson (attached).  Note:  The City of Hutchinson Neighborhood Revitalization Plan includes two rebate schedules.  

 

Year 1      95% Rebate                           Year 6                    50% Rebate

Year 2      85%                                     Year 7          50%

Year 3      75%                                     Year 8                    50%

Year 4      65%                                     Year 9                    50%

Year 5      55%                                     Year 10         50%

 

 

 

 

 

 

Public Improvements estimated-Special Assessment

 

 

 

 

 

 

Conclusions   Based on this analysis and the calculations above, if the City implements a Neighborhood Revitalization Plan for the community the Delaware Street Commons project is a participant a tax rebate in the amount of $224, 713 would be realized over the ten year period.  The City only tax rebate portion would amount to $54, 596.25 over the ten year period.  The rebate schedule utilized in this analysis is not a function of the law; jurisdictions participating in the NRA are able to establish their own rebate schedule.  For example, if the City elects to have a constant 95% tax rebate over the 10-year period a greater dollar amount would be received by the property owner, thus increasing the incentive for development.

 

Comparing the NRA option to the Special Assessment option in which the $22,811 would not change over the period results in a total amount of $228,110 over the ten year assessment period.  This is close to the $224,713 for the tax rebate of all property taxes.  However, the City would be paying the full amount of the special assessment, while the rebate is split among the city, county and school district.   

 

 

 

 

 

 

 

 

 

 

 

 

 

Site Plan

South west corner of property looking due north.

South west corner looking due east toward the back of the lot.

Southern most remaining house.

Northern most house.

North east corner looking due south.

North east corner looking south west across adjoining Tenants to Homeowner property