Apr. 13, 2019
A group of eight students from the Summit Technology Academy wrapped up a semester-long research project with a presentation to the city council’s finance and budget committee at their Apr. 8 meeting. The project sought to determine the economic benefits or detriments of multi-family housing complexes in Lee’s Summit.
Multi-family housing has been a hot topic for the city as the council has considered several projects designed to provide housing options for empty-nesters, for Millennials and for downtown dwellers. One of the biggest questions raised by multi-family housing is on the impact to the school district. If a housing project suddenly brings 300 or more residents to an area, will the revenue from personal property and sales taxes be enough to cover the cost of added students?
In some cases, the students found, the answer is yes.
The research looked at four area complexes: a premium housing product (Residences at New Longview, with average monthly rents of $1,600), a mid-tier product (Charles Apartments, with average monthly rents of $900), an entry-level product (Maple Estates, with average monthly rents of $670 per month) and a unique demographic (Dogwood Springs, an age-restricted complex with average monthly rents of $950).
When looking at the impact on the school district, Residences and New Longview and Dogwood Springs (which, as a 55+ community, does not have any students enrolled in school) were shown to benefit the district by generating more revenue than was expended on behalf of school-aged children living there. Charles Apartments and Maple Estates both put a strain on the district. Totaled together, the complexes cost more to the district than the revenue generated by residents.
Looking at other costs to the city, including police and fire services, only Dogwood Springs had a net loss to the city. Estimated service expenditures totaled about $5,000 more than estimated revenues.
With help from Police Chief Travis Forbes and Assistant Fire Chief Jim Eden, the students determined the average number of police and EMS calls to these complexes and estimated the average costs to the city.
They also found the number of students enrolled in the Lee’s Summit R-7 School District. Using the district’s own estimate of an annual $6,300 cost-per-student, the student researches determined the annual cost per complex.
The research also accounted for revenue: by choosing five units at random from each complex, they created an estimate of personal property tax revenues.
A custom formula, which assumes 1.5 people per unit and a household income of three times the cost of rent per unit, projected the estimated sales tax generated by the tenants in each complex. The formula based the rate of taxable expenditures on national standards, which show expenditures account for 76% of income, with 43% of those expenditures being taxable. The presentation acknowledges that this formula cannot account for one important unknown: online sales, from which the city earns no sales tax.
The data did not include estimates on infrastructure costs to the city.
The committee members were impressed with the presentation, each thanking the students for their time and their efforts.
“I think it’s an excellent presentation, I commend you all,” said Mayor Pro Tem Beto Lopez. “The future is bright. I hope some of you consider sitting up here someday.”
Councilmember Bob Johnson took the opportunity to look for guidance from the students, asking them what suggestions they might have for the council when creating public policy. He asked whether there was anything the council should look for or stay away from when considering development and redevelopment projects for the city.
“We don’t know what the answer is so we’re looking for help,” Councilmember Phyllis Edson said with a laugh.
Two students agreed that premium complexes definitely seem to be on the rise and present a net gain to the city, without many negatives found. Age-restrictive complexes also have a benefit, with no associated cost to the school district.