| REGISTER TO WIN | |
 |
Kansas City had a problem: The dying Blue Ridge Mall was turning into an eyesore along Interstate 70, one of the gateways into the city.
A real estate developer had a solution: Demolish the mall and build a new, Wal-Mart-anchored shopping center with a little help from a city development incentive known as tax increment financing, or TIF.
It was such a “win-win” situation that the project passed the City Council unanimously. But some city leaders didn’t notice that the developer, MBS Mall Investor, could achieve an 18 percent profit margin, almost double the average shopping center deal in metropolitan Kansas City.
The developer says the company needed that rate of return because it was such a risky project. But City Councilwoman Deb Hermann, who voted for the project, said the rate was a surprise to her.
“That’s not good,” Hermann said. “If they can make an 18 percent return, they don’t need all that incentive.”
The Blue Ridge Mall is one in a long string of TIF projects that show Kansas City’s approval process is often driven by developers who get good deals while taxpayers’ interests aren’t always adequately protected.
Some say these deals are worth it. At Kansas City’s Economic Development Corp., the city agency overseeing the TIF Commission, officials justify high profit margins for some TIFs like the Blue Ridge Mall because those projects boost the city in ways that can’t be quantified.
“To have a crumbling, deteriorating mall, what does that say about Kansas City? It says things aren’t going very well in the city,” said Jeff Kaczmarek, the agency’s president. “You have to look at the overall benefit of doing a particular project at a particular time.”
Nevertheless, a growing band of independent consultants, city auditors and corporate watchdogs believe developers shouldn’t be getting such good deals. TIF, they say, is only supposed to provide tax money necessary to make a project feasible for private developers, not to inflate their profits at public expense.
But that’s happening. Indeed, The Kansas City Star, in a four-month examination of TIF, found the city’s lack of scrutiny and analysis of TIF deals could be costing taxpayers millions of dollars.
Consider: The Star found more than half of non-governmental TIF projects approved this decade included profit margins that significantly exceeded national and Kansas City averages. That means taxpayer subsidies were potentially more than they needed to be.
In addition, while TIF tax dollars typically pay for such things as streets and parking, Kansas City also has authorized public dollars for extra features within TIF projects — from a downtown Christmas lighting display to marble statues in the Briarcliff shopping center in the Northland.
Essentially, while TIF has done a lot of good around Kansas City — revitalizing downtown and creating shopping districts, among other things — even average citizens are becoming alarmed.
“We have been too generous with tax breaks,” said Joe Medley, a native Kansas Citian who is so concerned about TIFs that he helped form a grass-roots group called Citizens for Responsible Economic Development. “What they’ve turned into is a silver spoon for fat-cat developers.”
Even some well-known development attorneys question some of the TIF deals.
“I think there are deals done by the TIF Commission that were too rich for developers,” said Mike White, who wrote substantial parts of Missouri’s TIF law and was the TIF Commission’s first attorney in the 1980s.
Join the discussion
Share your observations and experiences about news. Lively, open debate is the goal, but please refrain from personal attacks or comments that are racist, vulgar or otherwise inappropriate. If you see an inappropriate comment, please click the "Report as violation" link to notify a KansasCity.com editor. Thanks for your feedback.