Tax increment financing promises lots of new jobs, but many miss the mark

In a post-recession economy that remains fragile, politicians can make hay by promising new jobs.

This doesn’t just happen on the federal level, where the current parade of presidential candidates, most of whom are deranged, throw out vague ideas of how to “create jobs.” It’s quite common among local politicians.

Kansas City officials are looking to defend the use of incentives for private development, which is as common as salt in this city. The pro-incentives campaign is under way just as a planned Crossroads Arts District headquarters building for architecture firm BNIM got thwarted by activists who didn’t see why a well-heeled developer needed public resources to complete a real estate project in a well-established part of town.

Tax-increment financing is one of the most popular development tools. City leaders often complain that the public and news reporters don’t understand TIF, even though it’s a straightforward concept (new taxes generated by a project can pay for certain reimbursable project costs on a development instead of going to local government entities).

Developers often win over politicians and the public by promising that TIF will help “create” a certain number of new jobs. But those projects often miss the mark, and and at times by a wide margin.

Last month, the Missouri Department of Revenue released its annual report for all TIF projects in Missouri. The numbers were stark.

Among the 504 TIF districts across the state, developers estimated that 266,261 new jobs would be created. In fact, 89,485 were realized. That’s 33 percent of the projection.

Certain Kansas City TIFs underscore this how this imbalance adds up.

The Barry Towne TIF, which passed in 1996 and resulted in a Northland shopping center at U.S. 169 Highway and Barry Road, was estimated to create 3,900 new jobs. To date, it has created 969 new jobs.

The Blue Ridge Mall TIF, passed in 2005 to demolish and replace the aging southeast Kansas City mall, was supposed to create 1,535 new jobs, but has come up with 961 so far.

The Briarcliff West project, first approved in 1990, called for 4,000 jobs. To date, 1,345 exist there today.

Those are but a few of the TIF plans that have missed on projections. And to be fair, there are some that have met or exceeded projections.

Developers may argue that those new jobs, whatever number they are, wouldn’t exist but for the use of TIF.

A discerning public might expect more realistic projections and more accurate outcomes when tax dollars are at play.

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