Leavenworth city commissioners have approved the creation of a community improvement district for a car dealership.

The creation of the CID for Luxury & Imports, 5239 S. Fourth St., will allow an additional sales tax to be charged at the dealership. Money generated from the additional sales tax can be used to reimburse costs associated with a planned expansion of the business.

Commissioners approved an ordinance to create the community improvement district as well as a development agreement when they met Tuesday.

The ordinance will create a 0.4% sales tax that will be charged at the dealership in addition to existing sales taxes. The money collected for the additional sales tax will be used to reimburse eligible expenses associated with improvements to the site of the business.

The improvements will include additional lot space, a new building and renovation of an existing building. It is estimated the improvements will cost $1.6 million.

Assistant City Manager Taylour Tedder said, under the development agreement, the business will be able to recoup only 75% of the expenses through the additional sales tax.

The project will be completed in phases. And reimbursement for each phase will be capped at 75% of the cost.

"So each of these items is reimbursed at a 75% cap," Tedder said.

The ordinance allows the CID sales tax to be in place for up to 22 years. But the tax may expire earlier than that if the 75% reimbursement cap, which totals to $1.2 million for the entire project, is reached.

Tedder said the boundaries of the community improvement district are restricted to only the site of the dealership.

"It’s just the property they own," he said.

Ted Rea, owner of Luxury & Imports, said the expansion probably will result in at least 10 additional jobs at the business.

Commissioners unanimously approved the ordinance for the community improvement district and the development agreement.

Tuesday’s votes came after commissioners conducted a public hearing on the community improvement district Aug. 25. No one from the public commented on the proposed CID at that time.

Tedder said Tuesday that the additional sales tax at the dealership probably will not go into effect until Jan. 1.

Also Tuesday, commissioners voted to purchase vacant parcels at 711 S. Third St. and 226 Olive St. for a total cost $6,500. The city is purchasing the adjacent properties as part of a stormwater repair project that is planned for the area of Second and Chestnut streets.

Twitter: @LVTNewsJohnR