Businesses that take advantage of a new economic development district will be required to post a sign saying they are part of the district — though the sign won't say customers will pay extra sales tax because of that.
The Wichita City Council voted unanimously Tuesday to require the signs, which will direct customers to a city website to learn how much the extra sales tax is at a particular business and to learn what a community improvement district is.
Most council members agreed the signage isn't perfect, but they also said it is time to move forward with the district provision that helps cities attract developers.
"We need the tool," council member Sue Schlapp said. "We need to be in the game."
The districts, created in 2009 by the Kansas Legislature, allow businesses to charge customers up to 2 percent in tax to pay for construction, landscaping, bus stops, art and other projects. The tax can last up to 22 years, but it goes away when the work is paid for.
The city determines what tax percentage a business can tack on to customer's bill.
Because of that, council member Jeff Longwell said, "Adding the percentage (to the sign) might cause some confusion."
But Susan Estes, field director for the Wichita and western Kansas district of Americans for Prosperity, told the council, "We need to be as transparent as possible."
After the meeting, she said of the concern about confusion, "Now, instead of being confused, we're going to have people being blissfully ignorant."
She said people are used to figuring their taxes within a geographical boundary.
"They're not used to having multiple tax rates within one political jurisdiction," Estes said. "A sign that doesn't have the percentage on it doesn't clue you in on exactly what's about to happen."
Korb Maxwell, an Overland Park attorney for Wichita developer Christian Ablah, told the council that no one in development is "interested in hiding" information from the public.
But he said posting the percentage would have a negative effect in luring retailers to one of the improvement districts.
Ablah is developing a retail project at Central and Oliver, one of the four projects approved by the council as an improvement district. The other three are Bowllagio at Kellogg and Maize Road; a hotel at Water Walk; and the Drury Plaza Hotel, formerly the Broadview Hotel, at Douglas and Waco.
The projects are in various stages of development.
The city staff recommended not to have any sign and to use only the website to provide information. The staff had a lot of "back and forth" discussion before settling on that recommendation, said Urban Development Director Allen Bell.
"A lot of that had to do with the fact that to have really thorough disclosure, you would want that tax amount on (the sign)," he said after the meeting. "But the developers were very steadfast and convincing to us ... that it would have the effect of being a poison-pill provision that would render that program useless."
It became a question of whether the city does the improvement district or not.
"Now we've reached a compromise that allows it to go forward with a lesser degree of disclosure," Bell said. But he said at least the website will give customers the opportunity to learn more about the district and the additional tax.
A customer won't be able to look on a receipt to learn about how much the extra tax is.
State law requires merchants to list only the total amount of sales tax on a receipt, Bell said.
Bell said the state advised the city it couldn't require the improvement district tax to be listed.
Not all of the extra tax goes to the developer or business. About 7 percent of the total is taken out; the state collects a 2 percent handling fee and the city gets about 5 percent. The rest goes to the business.
The city will have specific requirements of the sign, including that it be at least 24 square inches.