We asked Kansas City’s mayoral candidates what they think about handing out incentives to developers. Here’s what they said.
Over the last few weeks, we’ve been speaking with Kansas City mayoral candidates about how they’d use the office to approach the biggest challenges facing Kansas City. (Pick up our March issue, out next week, for a preview of the race.) The mayoral primary is April 2, and the top two who emerge from that will square off in a June general election. Also on the ballot in the June election is a measure that would cap the amount of property tax abatements the city can give to new and redeveloped property projects at 50 percent.
Some candidates believe placing caps on the amount of tax incentives the city can offer will halt growth downtown; others say projects that receive large tax breaks end up funneling money away from more important public services like schools and libraries. The current cap, set at 75 percent, was approved by the City Council in 2016. But since then, exceptions have been made for some projects, such as the Mark Twain apartments, which landed a 90 percent tax abatement. (Notably, council members Jolie Justus and Scott Wagner — both now running for mayor — opposed the 75 percent measure in 2016, and, based on our conversations, still oppose caps on incentives.)
Here’s what the candidates had to say about the 50 percent cap we’ll be voting on in June.
“I think it’s a response to how this council has not gained the trust of the voting public to use that tool [awarding incentives] as needed. So a group of people [those who got the initiative on the ballot] are looking to totally pull the reins in altogether. I don’t know if that solves the problem. There are good projects that have to have commitment from the city before you can match in with the state tax credits. So you don’t want to remove the tools, you want more accountability of the people who are granting the tools. As the mayor, I will appoint people to the boards, to the TIF Commission, and to the statutory agency boards that are going to have an equity focus, that would evaluate projects based on the needs and not just because of who’s asking for it.”
“I think a good leader never commits to something with that kind of definition because you leave yourself unable to be as flexible as you would like to be. However, I am tired of eroding the tax base, of which those dollars are being taken away from entities that I very badly want to see dollars go to: schools. If an incentive has to be larger, but in turn we can also turn that into the ability to do something else within Kansas City at the same time, I want the flexibility to be able to do that. I am not anti-incentive.”
“Well, I certainly agree. I do think, as well, that the rebuilding of our downtown is extremely important, and I don’t want to lose sight of that, but I do know that people want to be able to feel the momentum in all parts of the city … And so we have to work with our development community to really figure out ways that their community benefit is something of great value to the entire city. I think we have to send a clear message to our development community that we have to get serious about the redevelopment and growth of our entire city. I think that we also have a number of real unique tools in our toolbox to help us address this. It’s extremely important because it helps people realize the type of benefits that they can actually receive, but also for them to realize that these are valuable places for you to actually come in and invest in and develop within the heart of the city. And how we actually incent companies to do that is something that I want to do within my first 100 days as mayor of the city. I plan to convene a group of developers and organizations to help tackle how we as a city really address pulling this together.”
The Pitch: So … do you support the 50 percent cap?
“I didn’t answer that purposely for you. I mean it is a debate, obviously, that we as a council will have to take on, and it’s something that likely won’t make it to the mayor’s desk. It’s something that I as a council person will have to make a decision on pretty soon. Honestly, it’s capped at 75 percent now. We are aggressively trying to pursue what that cap may be. Fifty percent could be the best cap. We’ll make that determination. Could be soon.”
“It takes opportunities off the table that we don’t want to take off the table. For instance, if we went to a 50 percent cap, and all of a sudden had the opportunity for an amazing catalytic project that was happening along the 71 Highway corridor and the only way we were going to be able to make it work is through a 100 percent tax incentive, and the project didn’t [happen because of that], then that seems like a silly result. Rather than trying to come up with these one-size-fits-all things, we need to start adding in more requirements and responsibilities and diversify the type of incentives that we have. So for instance, what do I mean by that? Well, number one, make more requirements that require job creation with an incentive and then have clawbacks when you don’t hit those benchmarks. Put pieces in there that require affordable housing and sustainability and making sure that our community is resilient in the face of climate change. These are a lot of things that we could be adding into the incentive program right now that we’re not doing. And I think that’s a much better way to handle incentives than to do away with them or to cap them artificially.”
“I was on the TIF [Tax Increment Financing] commission for years, and I supported projects like a new grocery store at 39th and Prospect. [That project] number one, could not have actually accessed capital any other way, and two, really benefited the community. I opposed other projects that were happening for large corporations in parts of town that are already doing well, because they could access capital for that project and it did not create benefits for the community. So when it comes to the use of tax incentives, my standard is that we should only be using them in parts of Kansas City that can’t access that capital already, and that we’re using them to bring things into the community that we do not already have: net quality jobs that we do not already have, and the kind of housing projects we don’t have enough of. I have an open mind about this issue. I think we should make this simple for the development investment community in Kansas City, and I think we should say that you can access the full level of tax incentive, whether it be tax increment financing or some form of tax abatement, if you are working in a truly economically distressed community in Kansas City. I don’t want to take away our ability to heavily invest in the project if it’s going be transformational for the community. I want to have the full power to make that happen if that opportunity comes along. I don’t want my ability as mayor to do a transformational project in an economically distressed community to be limited artificially, but as someone who was on the TIF Commission and as someone who fought a lot of these battles with the people who were pushing for this, I know where they’re coming from. These tools themselves are not bad, and these tools, if used in the right way, they can be one of the ways that we grow our economy.”
“I think we we still need time to see how the 75 percent ordinance is working. I worked my tail off to get it passed, visiting with leadership and every one of the 15 school districts, businesses throughout our city, real estate lawyers and all that … and it is still called the Lucas Ordinance. My view is that there were some problems of how it was rolled out and the city staff rather arbitrarily said that any project that was in the ‘pipeline’ was subject to the policy, which meant that it didn’t really even start being in effect for a year-and-a-half. So, in my view, I still support the 75 percent ordinance. I think it needs to be followed in full. In talk with the 50 percent group, the real problem isn’t so much that we are at 75 or 50 percent, it’s that some aren’t even following the rules. What I would like are rules consistently applied throughout Kansas City to ensure all of our school districts and others are getting money as soon as possible from these projects … The city is generating earnings taxes off of [incentivized developments], but what about the schools, when are they ever going to get to see something? That’s another one of those where it’s like, Wait a generation. I just don’t think that’s fair, I don’t think that’s effective.”
“I’m a former school board member, so I look at everything both from the school board perspective and from the city council perspective, and the one common denominator in both of those is you need growth in the city. For school districts you need to have young families moving in to keep the population of the schools high or increasing, because a lot of school districts depend on funding per pupil. For the city, same. We need our tax base to continue to grow so that we can continue to have economies of scale and do things for neighborhoods. I supported the 75 percent cap. I felt like giving the school district a little more up front versus at the end of all of these projects that are expiring. I’ve seen there’s been a pretty significant increase in what the school district gets before and afterwards. I think the study that came out is, there’s a $4 to $1 return … Now the question of a 50 percent — I think the question is, What will the impact be? Will that actually decrease revenues to school districts because there are fewer projects, or will there be an increase? We are for sure losing out on some of the deals outside of Kansas City. I’ve heard this from the people that pursue those deals, that if you don’t have the same thing available that other communities are offering, you’re just not even on the list in the first place. But I understand the intent of wanting the 50 percent. I respect the petition process.” [Editor’s Note: We’re counting that as a non-answer.]
“I always believe that what you’ve got to do with abatements is actually understand whether or not abatements are necessary. Merely creating caps doesn’t necessarily create anything new where you want that project to go. For example, my observation is the logic behind capping is that you want the incentives greater somewhere else. But that assumes that by capping an abatement in one area, that somehow that project will move somewhere else to get greater abatement. And I think what has been proven out even over the last couple of years — when we have had the cap of 75 percent — is that nothing moves. It’s not like you’ve got even more projects appearing in other parts of the city. What it really meant was you’re either providing less abatement, or you are not getting a project because of the cap. If what is sought is we want more projects in other parts of the city in order to create more affordable housing, or better retail, or more job centers, then the answer isn’t necessarily to say you get less than one part of the city. The answer is you need to find developers whose business model says we want to go into other parts of the city.”
“I think that providing artificial caps is not the solution. I agree with the objective of making certain that we have properly tailored tax incentives for development. But I don’t believe just handpicking numbers is the way to do that. I think instead that we need to make certain that each of the groups that control these statutory communities can provide us a service, that we have representation. I think we can clearly articulate goals. I think it is a sliding scale for the type of projects we want to incentivize. We might have an opportunity with a project that is going to bring good-paying jobs, easy public transportation, a huge benefit to the people most in need of jobs, and we have put in place an ordinance that handcuffs and says you can’t have more than 50 percent [in tax breaks]. And as much as the community would love to have this business provide good-paying jobs, economists say you can’t do this for [only a] 50 percent [tax break]. We are, and we have, tied our hands [and don’t] have the flexibility to do something that would be a tremendous benefit to the city. I don’t think you can answer it with these artificial percentages. I think the answer is a well-articulated plan, like I said — about having a city plan. The decision of where to put those dollars should be guided by the city plan, it should include a plan for incentives, and we should have a sliding scale depending on the nature of the project and its value to our community. It would be awful to lose out on an opportunity to provide good, meaningful, paying jobs because we have handcuffed ourselves.”