RHID captures the incremental increase in real property taxes created by a housing development project for up to 25 years. The incremental increase can be used to pay debt service on bonds issued to fund the project or transferred to the developer as reimbursement for costs incurred.
In order to take advantage of the incentive, property must be within a designated district. Districts are defined by the City or County and must be based on a Housing Needs Analysis.
As of July 1, 2023, the following changes have been implemented:
Cities with populuations over 60,000 are limited to less than:
New Allowable Costs:
In a major program expansion, K.S.A. 12-5249 was amended to allow for the renovation or construction of residential dwellings, multi-family units or buildings exclusively for residential use on existing lots, if:
For a developer to take advantage of the incentive, the property must be within an established RHID. The City or County governing body establishes an RHID and the incentives by:
The first type of RHID aids cities, counties, and developers in building housing subdivisions within rural communities by assisting in public infrastructure expenses.
The property tax increment can be used to reimburse costs such as for the following items:
Since 2021, RHID is expanded to include the renovation of buildings or other structures that are more than 25 years old for residential use and located in a central business district. This allows for vertical construction including improvements made to the second or higher floors of a building or other structure. This does not include improvements for commercial purposes, such as retail or restaurant uses.
The increment can be used to reimburse costs on the following types of items: property acquisition, plumbing, HVAC, walls, flooring, removal of hazardous substances or materials, roof, framing, etc. Costs incurred that benefit the entire building, such as a roof, should be allocated between the non-residential and residential uses.
The City/County HNA must demonstrate the following:
Once the HNA is completed the City/County takes action to adopt a Resolution making certain findings regarding establishment of the RHID and providing the legal description of the property to be contained within the District. After publishing the Resolution, a copy of the Resolution and the HNA are sent to the Secretary of Commerce requesting agreement with the findings in the HNA. If the Secretary agrees with the findings, the City/County may proceed with the establishment of the District and adopt a plan for the redevelopment or development of the housing project in the District.
The City/County must adopt redevelopment plan, including:
Reinvestment Housing Incentive District Act is intended to encourage the development and renovation of housing in Cities and Counties by authorizing Cities and Counties to finance certain public improvements to support housing in areas of the state experiencing a shortage of housing. The Act focuses on the economic and business benefits of providing additional housing options.
The Act is publicized at K.S.A. 12-5241 et seq and provides a financing tool for Cities and Counties to address housing shortages within their communities.
The ACT allows Cities and Counties to address specific types of housing needs e.g. multi-family or single family, in variety of price ranges. The process involves using the property tax increase created by the new housing project to pay for or reimburse certain infrastructure costs. This results for a more economic incentive to defray developer costs.
The incremental increase can be used to pay debt service on bonds issued to fund the project or transferred to the developer as reimbursement for costs incurred. The property tax “baseline” is determined at the time the District is created. As the developer adds infrastructure and the housing itself, the incremental gain in property tax over the baseline may be returned to the developer as reimbursement for the infrastructure costs. If the City/County issued bonds to pay for the infrastructure, then the increment may be used for debt service. The term of such reimbursement can be up to 25 years. City/County has discretion over what percentage of the increment is paid to the developer. The increment can be used to reimburse costs for the following items: land acquisitions; site preparation; sanitary/storm sewers; drainage conduits, channels and levees; street grading and paving; street lighting fixtures, connections and facilities; gas, water, heating, and electrical services in public right of way; sidewalks; water mains and extensions and certain costs for upper-level improvements in older downtown buildings.