Hays City adopts RHID and development agreement for Tallgrass Phase 4

The Hays City Commission voted 5-0 to adopt ordinance No. 4,070, establishing a Reinvestment Housing Incentive District (RHID) and approving a development plan and development agreement for Tallgrass Phase 4.

The RHID will cover eligible infrastructure costs for a proposed expansion by developer Heart of America that would create approximately 101 residential lots north of the existing Tallgrass phases, Assistant City Manager Jared Kuckelman said at the public hearing.

“Heart of America is proposing to continue on with phase 4 of the project, which would involve the creation of approximately a 101 new residential lots,” said Jared Kuckelman, Assistant City Manager. He described the RHID mechanism as capturing incremental property-tax gains within the district for up to 25 years to reimburse certain eligible costs, primarily infrastructure such as site preparation, streets, and water and sewer lines.

Under the development agreement, the developer must deposit 30% of projected infrastructure costs into an escrow account; that deposit is set at $1,800,000, Kuckelman said. Eligible project costs are estimated at about $6,000,000, and the RHID is estimated to generate roughly $6,867,000 of revenue over 25 years. Midwest Energy reimbursements and the developer’s deposit will go into the escrow account used to cover debt service.

“The developer will be empowered to sell the lots and then entitled to the proceeds from this while also requiring that building permits be pulled within 12 months of the sale,” Kuckelman said. He added that if, after six years, the project has not generated sufficient increment, the city would have the option to take ownership of undeveloped parcels; conversely, if the project produces sufficient increment, a portion of escrowed funds could be refunded to the developer.

Commissioners closed the public hearing by unanimous vote and then approved the ordinance. The approval triggers a 30-day veto period; Kuckelman said that, if not vetoed, the RHID could take effect on June 9.

The ordinance and development agreement assign the city the RHID revenues and authorize city construction and financing of infrastructure, to be offset by RHID revenues, the developer deposit, and reimbursements. No public comments were recorded during the hearing.

Next steps will be administrative: the city will complete the statutory notice and the 30-day veto window, then implement the development agreement and escrow arrangements if the RHID becomes effective.