Lee’s Summit plans enterprise zone but residents oppose “blight” designation

rpulley@lsjournal.comApril 17, 2013 

Lee’s Summit officials might create an enterprise zone to promote growth, but some residents within that area contend the “blight” designation that’s required could affect their property values.

The Lee’s Summit City Council on April 11 held a public hearing on a proposed Enhanced Enterprise Zone that would cover an odd-shaped area of the city roughly south of Colbern Road between Douglas and Blue Parkway to Chipman Road. It also woould include John Knox Village and some older residential neighborhoods between Douglas and Rice Road. The proposed zone is based on census blocks with guidelines for low-income and unemployment.

Chris Sally, of Development Initiatives, a consultant working on the project for the city, said the designation is required by Missouri to create the zone. It would be based on aging infrastructure underground for commercial areas. It wouldn’t include pictures of homes or claim neighborhoods are deteriorating, he said.

Bill Vincent, a resident at 812 NE Swann Road, said the city’s plan to declare blight in the zone would affect property values. The connotation would be that the area a “slum” even though those neighborhoods are well maintained, he said, and if a potential home buyer learns of the designation they won’t buy.

He noted many Lee’s Summit residents who live in the proposed zone are retired and living in nice neighborhoods and were only included to meet the unemployment and income guidelines set by Missouri.

“We’re the ones who are going to lose money on this deal, we don’t think it’s right when we’re not in a blighted area,” Vincent said.

Sally said the blight label would be based on commercial land in the zone based on aging underground infrastructure. No homes would be used as examples of blight, he said.

Keith Asel, chairman of the advisory board set up for the proposed zone, and a banker, said he had never seen an appraisal that mentioned blight or an enterprise zone, even in areas such as the Country Club Plaza which was declared blighted for a conservation district.

Asel said that because many communities competing with Lee’s Summit, such as Grandview, Independence and Kansas City have such zones, it would “level the playing field” for the city. He said that statistics from the Missouri Department of Economic Development show that since 2006 the enterprise zones had attracted 4,750 jobs and $1.3 billion in investment.

The zone couldn’t use power of eminent domain to take property from homeowners to give to potential businesses and can be limited to specific kinds of business the city wants to target. The city can give subsidies to knowledge-based industries but set criteria for the zone to keep out businesses such as pay day loans, adult businesses or animal feeding enterprises.

The advantage of having the zone is that can attract companies that relocate or add jobs can be eligible for a 50-percent-minimum property tax abatement for 10 years on the property improvements. The businesses would pay 100 percent of the prior level of property tax, and sales tax and taxes on personal property such as equipment. The businesses would also get state tax credits, if they meet the conditions under which they were approved by bringing , the promised number of jobs and a specified amount of investment for a building.

“This is the meat and potatoes of how economic development is done in Missouri,” Sally said. “This truly is a program that does bring new revenue to the community.”

The zone is based on census data which takes account of poverty and unemployment rates and takes in Lee’s Summit neighborhoods beyond proposed areas of development to be eligible for the tax advantages. But it won’t affect zoning of residential neighborhoods. A developer couldn’t buy a lot of homes and bulldoze them to put in a commercial project unless the developer got approval from the city for a new zoning.

The city has until June to create the zone, because after that a new set of data will be used for deciding eligibility and Lee’s Summit probably wouldn’t qualify any longer.

Daniel Van Petten said he and neighbors who were being included in the zone oppose it because of the “blight” designation required by Missouri law to create the zone.

“We oppose the designation of blight for whatever reason,” Van Petten said. He said he didn’t want to see it become an excuse where industry could expand into residential areas around downtown Lee’s Summit.

Jim Devine, president of the Lee’s Summit Economic Development Council, said that based on his 40 years experience in the field “you’re going in the right direction.”

Councilmember Bob Johnson said that if the city creates the enterprise zone, he would like to see it bring better paying jobs than in past city-subsidized projects.

He proposed that a requirement for a company to get the tax abatement would be that the average wage of the new jobs should be equal or exceed the Jackson County average wage that’s published by the Missouri Department of Economic Development. That’s currently $47,318.

Councilmember Allan Gray said he thought that was a little high and suggested the city call for an average wage of $40,000. Councilmember Ed Cockrell said he needed more information on what wages are for jobs in industries the city might want to target. The council tabled the issue until the May 16 meeting where staff is to provide additional information.

Cockrell said he doesn’t know how the blight designation might affect neighborhoods, whether the perception will actually impact property values.

“I think this fear is real,” Cockrell said. “I’m not sure where I’m going to land on that.”

Councilmember David Mosby said he wanted to begin the zone with tight limits on businesses that can apply particularly because the city is on a tight schedule to create the zone. He noted the rules for the zone would allow the city to expand the categories for businesses later as it has more experience with the tool.

“We should do it smart and do it calculated,” Mosby said.

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