PAOLA — Paola City Council members unanimously supported the planned Paola Crossings development following a public hearing Tuesday, Oct. 8, during which nearly a dozen community members spoke about the proposed project.
The development will be located on a 36-acre tract of land along the city’s primary entryway near the intersection of Baptiste Drive and Hedge Lane.
Paola city leaders have been working with Chris Williams of Highlands Development for the past 20 months, ironing out the details of an incentive package designed to make the multi-million-dollar development feasible for Williams to undertake.
City Manager Jay Wieland told the audience of more than 50 people at the hearing that the land has been part of the city’s enterprise zone more for than 40 years, but it has never been developed due to the high costs associated with excavation, utility extension and movement, water drainage and other issues with the property.
“This should be a highly prized piece of property that was developed years ago,” Wieland said.
The current proposal includes the creation of a Redevelopment District, which would involve the utilization of a Tax Incremental Financing (TIF) policy that the city revised last fall in preparation for this project, as well as the creation of a Community Improvement District (CID) that would generate additional sales tax revenue for the developer.
TIFs divert future property tax revenue increases from a defined area or district toward an economic development project in the community. Wieland said the proposed plan isn’t a typical TIF, though, as the city won’t be issuing any bonds to fund initial excavation or infrastructure work. Instead, the developer will be utilizing a pay-as-you-go approach in which he will put up the initial development costs and then be repaid with the incremental property tax increases from the land as it develops.
He added that the existing property tax base on the property will remain unchanged. The developer will only capture the incremental property tax increases on the property during the TIF’s 20-year time frame.
Other categories of property tax revenue, including the state mill levy designated for schools, also cannot be captured by the developer, per state statute, Wieland said.
In addition to the TIF incentive, the proposal also includes the creation of a CID within the boundaries of the project. The district gives the developer the ability to establish a special sales tax for the development, as well as capture a portion of the city’s general sales tax.
Wieland said the developer’s special sales tax can be up to 2 percent, but the current proposal is 1.25 percent. He also added that specialty sales taxes such as the city’s quarter-cent for the fire station or the county’s quarter-cent for road and bridge projects will still be collected as normal, and those proceeds will not go to the developer.
Williams said the current design plan calls for the creation of a south entrance into the development off Baptiste Drive, along with two entrances from Hedge Lane, which will help create a new traffic flow.
The Paola Crossings development will be split into five phases. Williams said the first phase, which would focus on six lots covering 9.6 acres near the corner of Baptiste Drive and Hedge Lane, will likely involve retail and commercial. It is also the most expensive phase, with an estimated development cost of $14.6 million.
“It’s a significant investment,” he said.
Williams did not mention any specific businesses as potential tenants, but he did say it could involve a mix of restaurants, retail and office spaces, possibly including a medical practice or daycare.
Later phases could involve the possibility of residential development in the northern part of the tract, Williams said.
Eleven people spoke during the public hearing, with five in favor of the development, four opposed and two who asked questions but did not take a stance one way or another.
Paola resident J.R. McMahon, who also is the county’s road and bridge director, said he supports the development. He specifically mentioned the benefits of adding millions of dollars worth of development to an area that’s currently generating very little property tax revenue.
“It’s a great return on investment,” he said.
Former Paola City Councilman Pete Bell also said he supports the project. He said more traffic would actually be a nice problem to deal with because it means people are coming into the community, and he also isn’t worried about creating competition for new businesses because he supports free enterprise.
“This looks like a very positive thing, finally, for our community,” Bell said.
Paul Katzer of Paola said the proposed development is one of the rare opportunities a city has to do something that will boost revenue and make the city’s entryway more appealing.
“I think it’s a wonderful opportunity to bring something into the front door of Paola,” Katzer said. “This is an opportunity that doesn’t come along every day.”
Wes Gerken echoed that sentiment and said he hopes the developer will utilize local contractors for the project.
“Luckily, somebody has deep enough pockets to put some money into Paola, and that’s a good thing,” he said.
Gabe Pfefferkorn of Pfefferkorn Engineering & Environmental, LLC, said he can personally attest to the developer looking to utilize local contractors, because Williams already sought his firm out and asked for contact information of other local contractors.
Some of those who spoke did raise concerns about the proposed project.
Matthew Serrano and David Fiscus, co-owners of Park Plaza 66 in Paola, expressed concerns about the development potentially featuring another convenience store that could siphon away customers.
Serrano said he is a supporter of the community and is personally at the store every day.
“I try to give 100 percent to my business,” he said.
Fiscus said they are already looking at an expense of about $125,000 to upgrade chip readers, and he’s concerned about what might happen to them if another station opens thanks to the city’s incentive package.
“I don’t want to see the market get too saturated,” he said.
Matt Fineout of the Discover Historic Paola group expressed concerns that the proposed development will take away from Paola’s small-town image, and he instead encouraged city officials to invest in the city’s downtown district.
“Paola has a priceless and precious small-town charm we have to nurture,” Fineout said. “The true cost of this TIF is the loss of our community’s identity and culture.”
Alan Hire of Triangle Builders expressed concerns about stormwater on the property, but he said he feels better about the proposal after receiving information from city leaders.
Paola resident Adam Ward said he doesn’t understand why the cost of land acquisition should be reimbursed to the developer. Under the current plan, land acquisition is a reimbursable cost.
“Why do we have to pay him back to buy the ground?” Ward asked.
Paola resident Clifford Blackmore raised concerns that while the property tax base is frozen for the next 20 years, the assessed valuation of the property will continue to increase, and he is concerned the property tax burden will be passed on to city residents.
He suggested the city issue its own bonds and handle the infrastructure improvements inhouse to make sure it is handled correctly.
City Clerk Stephanie Marler wrote down all of the questions and concerns during the public hearing, and once it was closed, those concerns were addressed by Wieland and Williams.
Wieland said he thinks competition can be a good thing, and he believes the new development would actually help Park Plaza and other businesses because it would bring more people and potential customers to town.
Wieland also said the project would not result in higher property taxes for Paola residents. He also reiterated that property taxes will still be collected on the property, but the incremental increase from the current frozen base will go back to the developer until the reimbursable cost limit is met or the 20-year timeframe is up.
If the city were to issue bonds and tackle the infrastructure work inhouse, Wieland said the mill levy would almost certainly have to go up, and residents would be paying higher property taxes.
As for the small-town charm, Wieland said he doesn’t believe Paola will ever lose that attribute. He said it’s what first attracted him and his wife, Peg, to town, and it’s what has prompted them to choose to keep Paola their home after he retires at the end of the year.
Wieland also said the city has been planning to invest money into a downtown streetscape project that would focus on streets, lighting, sidewalks and more around Park Square, but officials have been waiting for bond debt to be paid off to free up revenue.
“By 2021, we should have enough bond debt paid down to issue bonds without increasing taxes,” he said.
Wieland said one of the biggest positives about the proposed project is that it will send a message to those who drive by on U.S. Highway 169 that Paola is open for business.
“This is a great opportunity for our community to do something that will draw more people to our community,” Wieland said.
Although the City Council approved the Redevelopment District, the project also requires approval or non-action by two other taxing entities — Miami County and Paola USD 368.
Miami County commissioners have already agreed to take no action, which would allow the project to move forward, and Paola school board members unanimously approved a resolution of support for the project during their monthly meeting Monday, Oct. 14.
School board president Amanda Martell previously had expressed concern about the increase in traffic from the project causing safety issues for students walking to the nearby schools.
The resolution, which was drafted by Superintendent Matt Meek, emphasized that the board members ask the developer and city officials to do their due diligence in studying the effect the project will have on traffic and take necessary actions to ensure safety.
The resolution also asks the developer to consider multi-family housing and other affordable housing options for a portion of the development, as more families could help the school district’s declining enrollment numbers.
Martell said she supports the resolution because it outlines the board’s concerns about traffic and student safety, but it also keeps the school board out of city-related growth issues.
Now that the project has approval from the City Council, County Commission and school board, the city and developer can move forward to the next stages, which involve getting engineering plans approved and going through the Paola Planning Commission.
“Tonight is only the first step in a long process,” Wieland said after the public hearing Oct. 8.