The process of encouraging economic development by approving tax increment financing projects in Kansas City is broken. Jackson County Executive Mike Sanders has offered a way to improve it.
Sanders wants to expand representation and improve transparency on the commission that has handed out tens of millions of dollars in tax breaks. Both are good public policy moves.
Sanders already has some key allies. Other members of the development community should get aboard.
Kansas City Public Library Executive Director R. Crosby Kemper III points out that his system loses an estimated $2 million or more a year to TIF projects. Kemper understandably wants the library to have more say than it does now in approving, amending and ending TIF districts. School districts also are on Sanders’ side; TIF developments each year divert millions of public dollars that could be used to provide better education to children.
Unfortunately, current rules have major flaws.
One big problem is that the taxing jurisdictions — primarily counties, libraries and school districts — don’t have full voting rights on the commission when it makes recommendations on TIF projects to the Kansas City Council.
In some instances, the staff or legal counsel of the quasi-public Economic Development Corporation have told the taxing jurisdictions they can’t vote on proposals before the commission, leaving only commissioners appointed by the city with seats at the table. Sanders says that interpretation of city and state laws is mistaken. Apart from that, it’s absurd.
Under Sanders’ sensible proposal, taxing jurisdictions would have full voting rights. That would give counties, libraries and schools more control over the use of millions of their public funds. As Sanders says, “These projects do impact (taxpayers’) services.”
A second problem is Kansas City’s oversized representation on the TIF Commission. Its six members outnumber the five members who represent all the other taxing jurisdictions.
Sanders’ good plan would expand the commission from 11 to 15 members. Clay, Platte and Jackson counties each would have two representatives. Currently, a county only votes on a TIF project inside its borders. But in a major change proposed by Sanders, the counties also would have a say on whether TIF projects in other counties would go forward.
A broader-based TIF commission would be an excellent way to promote a more regional approach to taxpayer subsidies. And it could slow the excessive use of assistance for questionable retail projects.
Mayor Mark Funkhouser, City Council finance committee chairwoman Deb Hermann and City Manager Wayne Cauthen ought to join the effort to promote justifiable economic development in the future. Help will be needed from the Economic Development Corp.’s board, led by Mike Chesser, chairman of Great Plains Energy.
Continued sniping from EDC staff officials, claiming Sanders and others are trying to undermine economic development, must end. That’s not true, and it’s especially inappropriate from an agency that’s partly financed by development deals, whether they make sense for the city or not.
A broader-based TIF commission with a regional outlook could make needed changes in the way Kansas City evaluates future public subsidies for private developers.
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Open Question, Nukman
It is an open question whether the kind of TIF that you mention can ever be implemented in a city as dysfunctional as KCMO. In the meantime, citizens can and should insist upon high quality, effective, reasonably priced public services of all kinds. I suspect that we agree on this point. I also hope that things can change for the better; perhaps, a Mike Sanders administration would do the trick. At that point, I would be more positive about your suggestions.
TIF funds are necessary if
TIF funds are necessary if you are going to rebuild in less than the most desirable economic areas of the City. But, nobody is suggesting that we end TIF. Mike Sanders wants TIF to stick to it's original intent of providing incentives to developers who will build in blighted areas and stop having TIF be a slush fund for developers in affluent areas to avoid their obligation to provide the infrastructure that their projects require. Like Barnes' TIF's
for Briarcliff.
kcfan, You Need a GOOD REAL Commercial Real Estate Class
What TIF will produce sustained development in KCMO? TIF drain funds and resources away from public services and required capital improvements. Apparently, you fail to understand that no matter what the TIF incentive no development will take place in a town where one can be killed by stray bullets, property is not safe, the City Council is a City Clowncil, the City Manager is totally inept and unqualified (a real loser who would be fired anywhere else), both the CM and Mayor will have to pay large large court damage awards from the City coffers, TIF tax burdens are shifted on to non-TIF advantaged property, huge deficits from TIFs are being covered from the General Fund of the City, etc., etc. TIFs and skewed "development" in KCMO worsen all this through shifts of the tax burdens on to the middle class, and leads to declining funds for public services by the City and those by the other entities mentioned in Yael's essay. Local politics has contributed mightly to this decline of KCMO through scripted neglect while two former Mayors were PRIMARILY interested in only advancing their politcal careers by cozying up to "developers" who are potential big campaign contributors. KCMO has been sold down the river, and you appear to want more of the same. Don't give me any bull about real estate courses.
Look
I like Crosby Kemper III, but you're talking about a guy's whose bank has perhaps never done a commercial real estate development loan, and if they did, the first one must have gone so badly they never did one again.
The only way TIFs hurt KC is if it doesn't lead to net growth and you're just constantly shifting businesses from one location to another, but even then at least you're cleaning up blighted property.
If the city effectively kills TIFs, you might as well move to Johnson County because that's where everyone is going to be working. You can't neglect a part of town for 40 years, start to bring it back and then just abandon it again and expect all of a sudden that people are going to make little or no return investments instead of locating in a JoCo or Northland green field. All these people should be required to take a commercial real estate development class before they talk.
Crazy town
Yael's view is almost no incentive is worth the effort. It certainly was not the view of the Kansas City Star who decided they would build their new print facility downtown instead of the burbs. Because it costed more to build the same building at 17th and McGee than a corn field in Johnson County they asked and got a tax incentive. But the real treat is Crosby Kemper,now head of the KC Library, and his Ann Rand view of the world that has been discredited time and again. For laughs the Plaza Library was built with tax incentives. Crosby Kemper thinks there should be no incentives and let the market control everything. We tried that Crosby---our city went into a steep decline in the 80's and 90's while the only game in town were the two Kemper families. They sat on their hands and refused to lend money to others who wanted to rebuild our city. And oh yes the Kemper family got in line to get those "hand outs" once someone started to redevelop our declining downtown.