Archive for Thursday, May 22, 2003

Council looks to change excise tax

May 22, 2003

In its annual tweaking of the city's excise tax, the De Soto City Council agreed developers should have less voice in where the revenue should be spent and pay the tax sooner in the development process.

In discussion last Thursday, Council members came to a consensus on four changes to the excise tax meant to make growth pay for upgrades to collector and arterial streets. The Council will have a public hearing on the proposals June 5 before formally adopting the changes that:

  • Requires the excise tax be paid when property is platted. When the tax was adopted in 1998, payment was due when building permits were issued, with the entire amount due when 75 percent of a development was finished.
  • Eliminates credits against the tax for improvements developers make to adjacent collector or arterial streets unless that work is on the city's 10-year capital improvement plan.
  • Excuses residential sites in old-town De Soto from the tax.
  • Requires property owners with development agreements in place before the creation of the excise tax, build before July 15, 2005, or be subject to the tax with the new provisions.

In explaining the reason for restricting credits, City Engineer Mike Brungardt said the excise tax was one of the primary revenue sources with the city's quarter-cent sales tax for street improvements listed in the capital improvement plan.

"The philosophy was we didn't think a developer should be credited for an improvement that only benefits the development," he said. "Although they can fudge the schedule to some degree, now developers can no longer tell you where CIP funds are going to be spent."

Councilwoman Linda Zindler said Commercial Group's senior housing complex just started east of Lexington Avenue on 83rd Street offered an example of how a developer-dedicated excise tax application good be a bad deal for the city. Almost all the excise tax realized by the project would be used to construct a turn lane on 83rd Street that only benefited the development, she said.

Developers should be expected to pay for such needed improvements through an impact fee, Zindler said. The Council agreed it needed to create minimum development standards that should be expected of developers.

Brungardt said it was hoped eliminating the excise tax on redevelopment downtown and in other sections of old-town De Soto would encourage redevelopment in the area.

Councilman Emil Urbanek said recent events suggested another reason not to charge the tax for rebuilding.

"Listening to some of those cities charging excise tax on houses destroyed by tornadoes, I didn't want that to happen here," he said.

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