Though the recently approved 0.25 sales tax increase around Independence’s busiest shopping corridor won’t take effect for nearly a year, the board of directors likely decided on it early to give businesses and residents ample notice, the assistant city manager and board’s chairman said Thursday.


“That really wasn’t discussed by the board in any detail,” said Assistant City Manager Larry Kaufman regarding why the Independence Events Center community improvement district board voted 4-1 on Aug. 12 to increase the sales tax.

Though the recently approved 0.25 sales tax increase around Independence’s busiest shopping corridor won’t take effect for nearly a year, the board of directors likely decided on it early to give businesses and residents ample notice, the assistant city manager and board’s chairman said Thursday.


“That really wasn’t discussed by the board in any detail,” said Assistant City Manager Larry Kaufman regarding why the Independence Events Center community improvement district board voted 4-1 on Aug. 12 to increase the sales tax. That increase is necessary to provide additional revenue in making the debt service payments due on bonds that were issued to construct the Events Center. The opinions I heard was that it was better to do it now even though it wasn’t going to take effect for several months so that people could be prepared for it.”


Within the past six months, Kaufman said, Jim Harlow, the board’s treasurer and the city’s director of finance and administration, has been examining the market and sales tax collection trends more closely within the Events Center Community Improvement  District, which includes major shopping areas like Eastland Center, Hartman Heritage Center, The Crossroads, Independence Center mall, Bolger Square and Independence Commons.


Based on Harlow’s projections, by fiscal year 2013-14, the existing CID sales tax rate of 0.5 percent would not generate enough revenue to make the bond payments. Harlow also recommended that the CID board re-evaluate the sales tax rate and its anticipated revenue each year, adding that the state of the economy and whether shoppers are spending money at retail establishments within the district play a significant role.


City staff members also are taking a closer look at whether the issued debt could be refinanced, given that interest rates were relatively high when the debt was issued, Kaufman said.


“I know everyone is hoping to refinance the debt at some time in the future to take advantage of what they hope will be lower interest rates,” he said. 


The city-appointed CID board of directors, which now consists of three city staff members and two local business leaders, typically meets twice a year. Kaufman’s and Harlow’s terms are set to expire this December while the other three board members’ terms expire in December 2013. 


Board members must be at least 21 years old and must be either an owner, or representative of an owner, of real property within the district. The city owns the Independence Events Center. Some community members have questioned the composition of the board with mostly city staff members instead of business officials who are located within the district.


“Legally, yes there could be representation from other property owners within the district. In terms of a practical manner, I doubt that that would occur primarily because the district is a funding mechanism to pay for the debt service that allowed us to pay for construction of the Events Center,” Kaufman said. “Therefore, it’s in the city’s best interest – and in the community’s and the citizens’, for that matter – to have representatives on the board to make sure the city can pay for its debt.”


The future of the CID-funded holiday IndeBus service also is in limbo since its first two years of operation saw lower-than-anticipated ridership. City Manager Robert Heacock said an alternative approach to IndeBus will likely be considered because of the low participation in 2009 and 2010, but no final decisions have been made. The City Council must approve any contract that is awarded for IndeBus services.


“I think the board would be supportive of either position,” Kaufman said. “It’s not something we’ve taken a position on, on how it’s supported or how it is administered. The effectiveness of the service and the attractiveness of the service is something that the city specifically monitors.”