Wichita OKs request for extra sales tax from owners of Margarita’s Cantina building
The Wichita City Council on Tuesday approved a request from the owners of the former Margarita’s Cantina building at 3109 E. Douglas to place an added 1% sales tax on future businesses that operate on the property.
Now, developers will be able to be reimbursed $233,250 of their costs for renovating the almost 100-year-old building into an eye-catching space that could hold one or more businesses. The developers, brothers Brian and Paul Suellentrop, plan to spend another $1 million on the renovations.
As part of the community improvement district, or CID, that the council approved, the $233,250 will be collected from an extra 1% sales tax that the future tenants of the building would agree to collect from its customers. That comes out to, for example, an extra 20 cents on a bill of $20.
The incentives will be “pay as you go,” which means that the developers will pay the upfront costs of the renovation then be reimbursed by the city through the 1% sales tax as the money is collected. The tax district will expire after 22 years or after the $233,250 is generated — whichever happens first. The owners won’t get any of the money without sales at the property.
Brian Suellentrop said after the meeting on Tuesday that tenants would have to agree to collect the sales tax before signing a lease.
There’s no risk to the city or taxpayers on the deal, he stressed.
“The risk is all on us,” he said. “We’re going to go out, and we’re going to borrow, and we’re going to spend, and if we don’t perform, and we don’t get the right tenant that brings the sales taxes, then that’s on us.”
The council voted 6-1 to approve the request. The only holdout was J.V. Johnston, who said that he didn’t think the project fell under the spirit of a CID.
“I think the CID was meant for districts, meant for areas of town that needed help to redevelop, such as South Broadway, North Broadway, other areas of town. East 21 Street is another good example,” he said. “I think that was the intent for it, and it’s been expanded to other areas and individual buildings to try to get some money.
“Fundamentally, I think that’s not right. That’s probably part of the libertarian in me that says government should not be in the business of reimbursing developers.”
Other city council members, including Mayor Lily Wu, said during the meeting that they didn’t disagree with Johnston but pointed out that, in the case of the Margarita’s building, the applicant met all the city’s CID stipulations. The problem, they said, is with the CID program itself— something the council plans to address in September workshops.
Wu said that she was comfortable voting in favor of the CID because only people who chose to visit the future tenants of the Margarita’s building would pay the sales tax.
“. . . It is out of reasonableness that I will be voting in favor of this,” she said, “because I want to see people invest in our community. I want people who grew up in our community wanting to take greater pride and put greater investment into your own neighborhood.”
Suellentrop said after the meeting that he and his brother want to start renovations as soon as possible on the building, which they said would need new plumbing and electrical work because of its age and condition.
They envision a restaurant taking over the former Margarita’s space, but because its 4,500 square feet is bigger than most modern restaurants want, they would be willing to split it up into two spaces. The little barbershop space attached on the building’s east side would be a good spot for a retail vendor, he said.
As part of the CID agreement, the owners will not be able to put a drive-through on the building.
If they move quickly on the work, Suellentrop said, the building could be ready for tenants in three to four months. The brothers plan to get with architects soon to begin designing the space.
The Suellentrops bought the Margarita’s building at an auction in October. It had been home to the Mexican restaurant since July 1992, but its owner at the time, Jesse Lee, decided after the auction to vacate the building and find a new home. Margarita’s closed at the end of business on Dec. 31.
Lee said in January that he’d reopen Margarita’s in the space at Union Station formerly occupied by The Kitchen. But last week, he said that the deal was off. He’d had second thoughts about the financial risk of reopening the restaurant and was “taking a pause” on the Margarita’s project.
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