12th & Oread Special Taxing Districts

Related Documents

The information on this web page provides background and links to documents related to a special report requested by the City of Lawrence on the 12th & Oread Special Taxing Districts.

In 2008, the City of Lawrence approved a redevelopment district for tax increment financing and a transportation development district to assist the development of the Oread Inn, now the Oread Hotel. The Oread project was a pay-as-you-go project, with all project costs being fronted by the developer. Under the redevelopment agreement between the City of Lawrence and Oread Inn, L.C., the developer would be eligible to receive incremental new sales and property taxes paid back over time to reimburse certain project costs, including the parking garage, street improvements and other associated infrastructure improvements. A one-percent transportation development district sales tax would be added to sales within the district to also be a source of reimbursed revenue to the developer to cover parking garage and street improvement costs. The redevelopment agreement has remained in place since that time and the City has remitted incremental property taxes and sales taxes to Oread Inn per the development agreement.

In mid-February 2015, City staff received a media inquiry regarding Oread Wholesale, a tenant of Oread Inn. In March, staff began contacting the Kansas Department of Revenue and identifying potential subject matter experts. The City of Lawrence secured the assistance of AGH, a firm with expertise in sales tax issues, in May 2015. This was done because the issues were complex and sales tax data associated with an individual taxpayer is extremely confidential per Kansas laws. From June through mid-November, AGH and the City had discussions with Oread Wholesale representatives about the review and confidentiality issues. On November 23, 2015, AGH was provided access to two boxes of records from Oread Wholesale to review. As a result of review of the records, on December 15, 2015 AGH released a report to the City of Lawrence opining that Oread Wholesale did not make any sales within the special taxing districts, and thus the City of Lawrence had over-reimbursed Oread Inn, L.C. (Oread Inn, L.C. and Oread Wholesale, L.C. are two legally separate companies).

The City has worked diligently on this matter and has been as transparent as possible at appropriate points in the process of review. We want to assure the public that once we learned of the issue, we hired an expert in Kansas sales tax law and notified the developer of our concerns. After extensive discussions, we obtained documents in late November 2015 related to Oread Wholesale’s amended returns. Based upon our expert’s analysis of those records we were able to determine what is owed to the City. The City of Lawrence is seeking from Oread Inn, L.C. full repayment of over-reimbursements, plus interest and costs to produce the report from AGH.

For more information, please contact the City Manager’s Office at (785) 832-3400.