Yael T. Abouhalkah

In 2014, get tougher on taxpayer handouts in KC

Updated: 2013-12-19T00:21:17Z

By YAEL T. ABOUHALKAH

The Kansas City Star

Kansas City’s constant rush to hand out tax breaks to developers ought to get much more scrutiny in the year ahead. City officials should do a better job of evaluating whether these incentives make sense. It is in the taxpayers’ interest; if tax breaks are given away to undeserving projects, revenue is lost, and city services could go without funding.

That’s some good advice, if I do say so myself: I wrote those words in January 1994, during the dawn of Kansas City’s infatuation with doling out taxpayer subsidies to businesses.

So here we are two decades later, after Kansas City’s politicians and economic development agencies have approved billions (with a “b”) of dollars in public incentives for dozens upon dozens of development projects. Some have been worthwhile. Too often others have been financially foolish investments on behalf of taxpayers.

But with 2014 dawning, an unusual story is unfolding.

A Tennessee company called Chartwell Hospitality is planning a $46 million, 10-story, 257-room hotel project in the Crossroads Arts District at 16th Street and Baltimore Avenue.

And get this: Chartwell is asking for zero in public subsidies. As in zip and nada.

This is an encouraging step forward for economic development in the region, given the frustrating tendencies by public officials in not just Kansas City but also in Overland Park, Olathe, Lee’s Summit, Independence and, heck, almost every city of much size when it comes to handing out taxpayer subsidies.

So is this a brave, new world in Kansas City area economic development?

Let’s hope so. Consider what’s happening along and close to the two-mile starter streetcar line scheduled to begin operating in 2015. The streetcar is already helping to attract new businesses and more housing to the core. So Mayor Sly James and other elected officials have good reasons to ratchet back the amount of tax breaks for development in large parts of downtown.

The crowd that wants to keep the status quo may have a different viewpoint of the Chartwell hotel project and what it means.

Take the cadre of development lawyers who for decades have made a good living working through the byzantine tax-break policies established by city officials. If some of those incentives suddenly go poof, the lawyers will have a lot more mundane paperwork to handle with fewer billable hours.

The Chartwell story, of course, could turn out to be a one-time experience. And if the project becomes the exception to the rule, it likely will be partly because suburban cities continue to recklessly award public dollars to attract businesses to already-booming communities. That wrong-headed approach ratchets up pressure on Kansas City to keep playing the subsidy game.

In addition, tax-break mania is more likely to keep going as long as a border war between Missouri and Kansas gives companies a big advantage in pitting the two states and area cities against each other when it comes to incentives.

In the last week, Kansas City officials have rolled out a new way to provide oversight and guidance for the Economic Development Corp. and the agencies that are supposed to be in charge of prodding projects forward.

In the best of worlds, the “new” EDC will have more focused and streamlined ways to deal with requests for taxpayer dollars. Questionable projects won’t get much if any taxpayer support.

At least that’s the promising prospect as 2014 dawns.

But as the last 20 years have shown all too well, local leaders have not been as tough as they should be in controlling their enthusiasm to lavish public incentives on private development.

To reach Yael T. Abouhalkah, call 816-234-4887 or send email to abouhalkah@kcstar.com. Follow him at Twitter.com/YaelTAbouhalkah.

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