Like Kansas City, the City of Merriam has offered generous tax incentives to developers hoping to create new streams of revenue for the city. In theory, TIF (tax-increment financing) incentives encourage developers to build projects in areas they would otherwise avoid.

The developer receives a tax break for a number of years on the developed property and the city hopes to recoup their generosity down the road, betting that developers will build in the area (without TIF incentives) to get in on the action, and that the TIF-financed property will begin creating revenue after the TIF expires.

Merriam Village is a TIF financed mixed-use development that includes retail and some residential development on 30-acres just south of Johnson Drive on I-35. This high-visibility tract of land was formerly home to several local businesses, a car dealer, an auto body repair shop, and a heating and cooling repair shop.

With much fanfare and excitement Circuit City, an electronics retailer, was announced as the main anchor tenant of the new Merriam Village development.

Last week the City of Merriam received an email stating that Circuit City may not be fulfilling their planned lease as the anchor tenant in The Merriam Village Shopping Center according to Dan Leap, Merriam City Council Member.

Phil Lammers, Merriam City Administrator, forwarded an email to KCTribune.com from Dow-Jones newswire titled “Circuit City Halting Some FY09 Store Openings; Hires Advisor”.

“I have not had direct contact with the company, although Bryan Dyer, our Director of Development, has spoken with the developer, and we are still optimistic that Circuit City will still have a soft opening sometime around Thanksgiving.” said Lammers.

On Monday, October 22nd, the Wall Street Journal reported that “people familiar with the company” have said that Circuit City has hired bankruptcy lawyers, but will wait until after the holidays to file for Chapter 11. At this time, the company is not disclosing any information about scheduled store openings or closings.

The Merriam City Council awarded TIF incentives to Developer Diversified Realty of Utah. DDR is also the developer of several retail centers in the metropolitan area, including Town Center Plaza in Leawood and the Merriam Town Center on Johnson Drive and I-35.

Now that Circuit City may not become the anchor tenant, the City of Merriam may be left with a TIF developed shopping center with no tenants and no revenue. In 2007, the City of Merriam budgeted for over $600,000 in revenue from this project and another TIF incentive development, Merriam Pointe, across I-35, which is owned by David Block and David Christie. Neither property has produced any revenue to date, according to Leap.

“The current City Council put a lot of eggs in that basket – giving a TIF incentive for 30 acres, and they now want another tax incentive, a TDD, and they don’t even have an anchor tenant. The City of Merriam just had to raise the property tax for residents 6 mils, which is unheard of.” said Leap.

A TDD is similar to a CID (Community Improvement District) sales tax in Kansas City, which adds an additional percentage to the sales tax collected in a designated area, and is usually reserved for underdeveloped or blighted areas. In Kansas City, a CID must be approved by 51% of the stakeholders in the requested area, whereas a TDD can be requested by a single developer.

“The TDD request is currently in committee now and will come to the full council for approval shortly and I will vote against it.” added Leap.

The City Council will be holding a meeting Monday evening at 7 p.m. when they will discuss Merriam Village among other things.