Union members take a stand against TIF in Lee’s Summit

More than 200 union carpenters showed up at Lee’s Summit City Hall
on a recent Tuesday. Some rode Harleys. Some brought children. Almost
all of them wore T-shirts protesting a deal that the City Council was
about to make.

The carpenters mustered in the parking lot, giving the council
members who arrived for that night’s meeting a glimpse of what lay
ahead. No car hoods took a beating, though. As they entered the
building, Dave Wilson, an organizer at the Carpenters’ District Council
of Kansas City & Vicinity, assured Councilman Allan Gray that peace
would prevail. “We told our guys: best behavior,” Wilson said.

The carpenters had come to express their displeasure with a loan
proposal, of all things.

In 2006, the Lee’s Summit City Council approved tax-increment financing for a shopping center called Summit Fair, near U.S. Highway 50. Organized labor usually supports such deals because development
means work for union members.

This time, though, the union didn’t think the developers were hiring
enough of its members. The loan protest was really a hiring
protest.

The carpenters are motivated by self-interest, to be sure. But the
union’s fight with Summit Fair owner RED Development goes beyond labor
versus capital. In a way, the union is putting TIF on trial — and
some of the evidence is pretty ugly.

The carpenters union, along with the Ironworkers Local 10, became
angry when Summit Fair “went vertical.”

RED Development chose contractors from outside the region to build
significant portions of the mall. A contractor in California put up the
steel. A Georgia company is performing the framing and drywall.

The unions complain that out-of-town contractors look attractive
because they bring in workers who are willing to toil for less than
prevailing wages. “The local workers are being left out in the cold,”
Wilson says.

RED officials, in turn, say the union shops’ bids were simply too
high.

The dispute played out in typical fashion. Ironworkers camped
outside RED’s office near the Plaza with a banner criticizing the
contracting decisions. This we’ve seen.

The Summit Fair fight escalated when RED asked the city of Lee’s
Summit to provide an $8.8 million loan so that the company could pay
off an existing bank loan.

The carpenters, hoping to take advantage of populist outrage, took
to calling the loan a “bailout.” Union officials even made a 10-minute film to illustrate the effects of RED’s contracting practices. In one
scene, an unemployed union carpenter, Mike Helms, moves forlornly about
his garage. Helms tells the interviewer that it’s where he goes to get
out of his wife’s way.

RED officials reject the notion that the loan is a bailout. Managing
partner Dan Lowe told the council that the loan was “not a gift” but an
advance of funds that the council promised when it approved the TIF
plan. Without the injection of cash, Lowe said, construction would have
to stop.

The carpenters argue that RED is using the city’s creditworthiness
to obtain a loan with a below-market interest rate. And in addition to
making the point that area residents had been deprived of jobs, Joe
Hudson, political director of the carpenters union, suggested to the
council that RED had sought to opt out of the “risk” half of the
risk-reward equation.

The council chambers looked like a basketball arena on a night when
the fans wear shirts of a particular color (in this instance, white).
When it was time for public testimony, a carpenter who lives in Lee’s
Summit approached the microphone. He was holding the hands of his young
daughters. “These are the ones who are affected when I don’t go to
work,” he said.

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Besides the emotional appeals, there were discussions about the
technical aspects of TIF, a scheme that allows developers to recover
costs from the tax revenue generated by their projects. Councilman Gray
asked for some clarification on the mechanics of the loan. David
Frantze, a development lawyer with a city contract, responded with an
answer so lengthy and opaque that you would’ve thought he was getting
paid by the three-syllable word.

TIF is tricky, which is part of its genius. It’s hard to be outraged
by something that’s semi-incomprehensible.

Take a comment that Lowe made. He told the council that as “stewards
of public money,” RED Development had to hire contractors who submitted
the lowest bids.

It’s true that TIF pays for the infrastructure — such as roads
and sewers — that new developments need in order to function. TIF
proponents, in fact, make a point of using the term “public
infrastructure” in an effort to push back against the notion that it’s
a handout to developers. The argument: TIF pays for stuff that cities
build anyway.

But if that is the case, how is RED being a public steward when it
hires a cheapo company to drywall the future site of a Victoria’s
Secret? Those are not the public’s frilly panties.

The contortions didn’t end there.

The term “public-private partnership” kept coming up. At one point,
Lee’s Summit Mayor Karen Messerli said: “Whether you like or not, the
city is a partner on Summit Fair.”

But moments later, Messerli said the city couldn’t instruct RED
Development to hire local employers. “We have no control over that,”
she said.

Doesn’t sound like much of a partnership, Mayor.

Messerli’s comments irk Wilson. If cities are providing assistance,
he says, they should be able to require preferences for local workers,
suppliers and contractors. “To not require that of a developer is
selling out the taxpayers who need those jobs,” he tells me.

In the end, Messerli cast the deciding vote. With the council
deadlocked — four ayes, four nays — she said it was her
“pleasure, responsibility and commitment to the community” to vote
yes.

Wilson, who had expected the outcome, says the carpenters plan to
hold up Lee’s Summit as an example of what cities should not do.

The union won’t lack for opportunities. RED Development, in fact,
has hit up Blue Springs with a proposition similar to the one presented
to Lee’s Summit.

The Blue Springs council activated the TIF plan for a retail center near Interstate 70 and Adams Dairy Parkway last December. At the time,
City Administrator Todd Pelham noted that taxpayers were not
responsible for the bonds that the city would issue to help with the
construction.

But now RED wants the city to back $13 million in bonds. A decision
is expected within a month.

City leaders are willing to meet developers’ demands because they
want Best Buy and Petco producing sales taxes within their borders
— not someone else’s. The arms race puts developers at an
advantage.

“RED is pitting these cities against each other to get the best
deal,” Wilson says.

TIF can be a powerful tool. A study determined that TIF districts in
Lee’s Summit have created 2,525 jobs since 2000.

But as Summit Fair makes clear, some jobs are better than
others.

After all, a job doesn’t mean much to the local economy if it’s held
by a guy who cooks his meals on a hot plate in a motel, yearning for
the day he can go home.

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