Council tables Montage Apartments sales-tax-exemption request for two weeks amid calls for an incentives policy

The Olathe City Council on May 6 tabled for two weeks an inducement resolution seeking a sales-tax-exemption-only industrial revenue bond for the Montage Apartments project at 1051 North Merlin Road. Council members said they wanted more consistent policy guidance and a clearer fiscal analysis before approving a sales-tax exemption for the multifamily portion of a larger mixed-use development.

Councilmember Kevin Schoonover moved to table Resolution No. 25-1034 for two weeks; Councilmember Gilmore seconded. The motion passed on a 6-0 roll call.

Staff and the applicant described the request as a sales-tax exemption specific to the multifamily lot (townhomes and apartments), not the commercial pad sites. Economy Director Jamie Robichaud explained the exemption was tailored to the multifamily portion because the dollar amount there is what would generate a sales-tax-exemption benefit on construction materials. Attorney Chris Maddox, representing the out-of-state developer, said the project has significant off-site infrastructure costs; his firm’s latest estimate for public infrastructure and off-site improvements was described in the meeting as roughly $5.5 million, with two traffic signals estimated at about $1.1 million. Maddox said the previously discussed sales-tax-exemption amount for the project was about $2 million (total sales tax), and noted the exemption was intended to help offset those infrastructure costs so commercial frontage could be developed as the council desired.

Councilmembers who opposed immediate approval said the city needs a clear, even-handed policy to guide incentives for multifamily development. Councilmember Matt Felter pointed to past instances where council had denied similar requests and said the city should provide “a level playing field.” Other council members said they were sympathetic to the applicant’s long development timeline and recognized the project’s potential to add rooftops supporting commercial uses, but nevertheless wanted staff to return with more details on infrastructure costs, the distribution of sales-tax impacts among jurisdictions, and comparable precedent.

The applicant said it could return in two weeks and was prepared to work with staff to provide additional fiscal detail. Staff was directed to prepare a more detailed analysis of assumed sales-tax exemption impacts, the portion of sales tax that would have been collected locally versus county/state shares, and the infrastructure costs that the developer says are required. The tabling does not legally obligate the council to grant the inducement; councilmembers were advised that the application could be modified and resubmitted if needed.