Kay Barnes came out swinging.
Six days before voters picked a new mayor, Barnes called a press conference to rage against Mark Funkhouser, The Kansas City Star and other critics of the way that Kansas City has used tax-increment financing.
This probably wasn’t how she thought things would end. The mayor undoubtedly imagined spending the last days of her reign basking in the glory of the “renaissance” she has led. But TIF, which allows developers to keep a portion of the taxes generated by their new projects, became the surprise issue of the mayor’s race.
As questions about TIF intensified, Barnes began to lose her grip. Her most loyal knights — Chuck Eddy, John Fairfield and Jim Glover — failed to make it past the primary. The race came down to two men, one of whom had all but based his candidacy on how different he is from Barnes.
For weeks, the mayor had listened to Funkhouser, the former city auditor, bash TIF as a feeding trough for the well-connected. (His stinging 1998 performance audit of the TIF program is his Citizen Kane.) Funkhouser caught a break when a particularly egregious request for tax incentives went before the City Council in January. The council’s decision to grant more subsidies for the glamorous Briarcliff office-and-retail project north of the river struck a lot of citizens as proof of a program run amok.
Immediately after the primary, Barnes rallied her moneymen in support of Councilman Alvin Brooks. Her hatred of Funkhouser was transparent in her endorsement. Barnes considered Brooks a friend, but he was not someone she had relied on to get things done.
Then, on March 20, Freedom of Information requests pried loose a long-awaited new audit of the city’s TIF program.
The results were grim. TIF plans as of 2005, the audit said, had produced $233 million less than original projections.
Barnes correctly saw the audit as a reflection of her administration. And she wasn’t happy with the picture that it presented.
At the next day’s press conference, the mayor accused Funkhouser and his former staff of timing the report to maximize its campaign value. She also disputed its findings. The Economic Development Corporation, the city’s main development agency, said TIF projects were “only” $82 million short of projections.
“It is time to push back hard and to make it very clear that I am not going to stand for this community to go down the drain because of some outrageous, biased, distorted supposed facts being presented,” the mayor said.
I hadn’t seen Barnes this angry since I asked about her extensive collection of Hitler biographies. (I once attended an open-to-the-press social event for state lawmakers at her house, and I took notes on her book collection. Sorry. It’s my nature.)
Barnes pushed, and the City Hall press corps pushed right back. Perhaps they had finally grown weary of Barnes calling her critics simple-minded doomsayers. Maybe they were feeling a little emasculated by the bloggers who had filed Freedom of Information requests for the release of the TIF audit and splattered it all over the Web.
Reporters and city officials argued. They talked on top of one another. Voices cracked.
For about an hour, the 29th floor of City Hall felt like a living room where people were deciding to get a divorce.
Standing in the mayor’s office helped me see where she was coming from. Out her window, far below, I could see workers putting a roof on the new arena. Someone handed out a booklet with pictures of the decrepit buildings that had been demolished to make way for our new entertainment district.
Still, just like the mayor, I was infuriated.
Barnes and her generals — she was joined at the press conference by City Manager Wayne Cauthen and TIF Commission Chairman Peter Yelorda, among others — think we don’t get it.
Oh, but we do. We’ve gotten it for years. But their comments and handouts last week just kept insulting our intelligence.
TIF critics will send Kansas City “down the drain.” Like a reptile that sprouts horns at the first sign of danger, Barnes is quick to reject any disparagement of TIF as a bunch of hippie talk. Bullshit. We’re not guitar-strumming losers. We simply get frosted when a powerful redevelopment tool — something that’s supposed to take a sad part of town and make it better — gets applied in the city’s richest zip codes. My favorite example is Kirkwood, the luxury community just south of the Plaza (the Plaza!) that received $8.7 million in TIF. What next, people in top hats collecting alms for granite countertops?
“We use third-party analysis.” By law, TIF projects have to meet what’s called the “but for” test. A green-eyeshade-type analyst is supposed to look carefully at the numbers and determine that the city-saving new project wouldn’t happen “but for” the tax break we give it.
Problem is, those analysts are looking at information that has been provided by the developer. Garbage in, garbage out.
“It’s not real money.” Barnes and her minions insist that no one gets hurt when TIF money gets diverted to developers because it’s all new money anyway. Here’s how Yelorda, a Blue Cross and Blue Shield vice president who sits on seemingly every board in town, put it at the press conference: “It’s been said that the TIF program takes away the funding from the school districts. That is totally inaccurate.”
Actually, Pete, it’s pretty accurate. The forgone taxes represent what economists call an “opportunity cost,” or the price of doing one thing instead of something else. TIF is like putting money into a low-yield savings account for 23 years (the length of most TIF projects). You get a return, but you miss a chance to play the stock market.
Sure, some areas of the city would keep stagnating without incentives. But when the city abates taxes on property around the Plaza, potentially productive ground goes hiding from the tax rolls. So who ends up paying to provide the city’s basic services? Non-TIF areas. Like your house.
“Jobs in excess of 19,000 have been created.” The numbers sound great, but they ignore the “substitution effect,” an eggheaded way of saying that when you build a new mall, it’s going to hurt the mall down the road. Textbook example: A Wal-Mart near Bannister Mall closed the day before a new, TIF-supported Wal-Mart opened on Highway 40 (“Smiley Face, Sad Face,” February 8). Blinders firmly in place, the TIF Commission claims that the new Wal-Mart created 1,535 new jobs. In fact, a lot of the “new” workers just changed bus routes.
By the end of last week’s press conference, most of the disgusted reporters had left to file their stories or post video of Barnes’ tantrum on their Web sites. Here’s a little beauty they missed: Yelorda claiming that the substitution effect was an “erroneous concept.”
Which is like claiming the earth is flat.
I about threw up on my shoes. Then I was ready to sign for the divorce.