Thoughts about the impact of Tax Increment Financing
What do arson and the Power and Light District have to do with each other?
I wondered about this in late October last year when restauranteur Rod Anderson was convicted of four counts of arson, mail fraud, conspiracy, and using fire to commit a federal crime.
Anderson’s five decade old downtown Kansas City Hereford House burned in late October 2008. Kansas City’s amply subsidized downtown Power and Light District opened its first restaurant, McFadden’s, in 2007 and others in the spring 2008.
Here’s a list of the Hereford House competitors that were scheduled to open in the P&L District in 2008. Some of these are now closed and replaced with other restaurants:
The Bristol Seafood Grill - 51 E. 14th, late February 2008 Chef Burger - 1350 Walnut, opens March 6, 2008 Chipotle- 1370 Walnut, late February 2008 Famous Dave’s BBQ- 131 E. 14th, late February Gordon Biersch Brewery Restaurant- 100 E. 14th, March 10th Maker’s Mark Bourbon House and Lounge- KC Live Block Peachtree Restaurant- Soul Food 14th and Main, April 2008 Ragland Road Irish Pub - 170 E. 14th, early March 2008 Ted’s Montana Grill 101- E. 14th, February 2008 Tengo Sed Cantina - 1330 Walnut, March 7, 2008 Vinino - 1320 Grand, November 2008
It’s possible that the Hereford House menu became unpopular because of trends away from beef. But that hasn’t seemed to stop other steak venues, such as Ruth’s Chris Steak House on the Plaza. And, of course, there are still three other Hereford House restaurants going strong in the KC area. Maybe the downtown restaurant needed renovation to be attractive.
I also don’t know when the downtown Hereford House started having financial problems. It could have happened long before the P&L District ever opened.
But I wonder what the impact of glitzy, tax supported restaurants has been on other downtown restaurants and entertainment areas, such as Westport.
The advantage given to some businesses by virtue of being in a tax increment finance district has to be difficult for the competition. As has been documented many times, when Wal-Mart opens a store, small local competitors, such as grocery stores, lose business. It has been estimated that 244 subsidized Wal-Mart facilities in 35 states received taxpayer deals of more than $1 billion.
So did Rod Anderson have his restaurant torched because his business was killed or was going to be killed by competitors who had the advantage of being in a tax increment financed area? Obviously, I don’t know (and would appreciate comments from others who may have knowledge or insight about what happened.)
Even if the P&L District destroyed Anderson’s restaurant, it’s no excuse for arson. But I can imagine the despair and anger from seeing one’s life savings being taken away and believing that government has given competitors unfair advantage.
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