2-cent sales tax can help developers

Qualified developers will be able to help finance their projects with a special 2-cent sales tax under a new policy approved Tuesday by Wichita City Council members.

The policy also allows qualified developers to use the tax to pay some ongoing operations costs at their businesses.

Instead of the sales tax, the policy also gives developers the option of requiring special assessment payments from tenants in an approved development to help sweeten their business plans.

Such community development districts, approved by the state last year, would be limited to commercial developments where all property owners agree on the additional sales tax of special assessments.

But some council members are already talking about loosening some of the restrictions they approved to allow the incentives for residential developments in special circumstances when the city's existing special assessment program doesn't cover costs in new subdivisions.

Council members will debate that and vote on it at another meeting.

The sales tax has no risks for the city's coffers.

But Vice Mayor Jim Skelton questioned whether there should be some way of letting consumers know they're in a community improvement district where they will have to pay more sales tax.

Allen Bell, the city's director of urban development, said consumers probably won't know about the tax unless they pay attention to the council's public hearings or check their receipts.

Developers and their representatives pushed for fewer restrictions and analysis on sales tax districts since there is no risk to the city, and they stressed that economic incentives are especially important in a poor economy.

The city agreed to forgo cost-benefit analysis on the pay-as-you-go sales tax districts.

"This is a tool that has a benefit right now in a time when money is tight and it's hard to get money from banks," said Greg Ferris, a former council member who now works with developers.