CBIZ and Mayer Hoffman McCann of Leawood may move to the Country Club Plaza

03/13/2014 8:09 PM

03/13/2014 8:09 PM

CBIZ and Mayer Hoffman McCann, a big financial and accounting firm now in Leawood, said Thursday it was searching for a new home, and according to several sources in the real estate industry, it is leaning toward jumping the border to the Country Club Plaza.

The firm employs 400 to 450 people and is now in a 10-year-old building at 11440 Tomahawk Creek Parkway.

Rick Mills, chief operating officer of CBIZ Financial Services, said the firm is seeking 100,000 to 130,000 square feet and anticipates a decision within two months.

“We’re still looking, and we have lots of opportunities at a lot of places,” Mills said. “It’s a little premature to draw any conclusions.”

But sources in the real estate and development agency worlds, who spoke only on condition of anonymity, say Missouri already has offered a substantial incentive package to lure CBIZ across the state line.

Sources say the firm is strongly considering moving into vacant space at the Plaza Steppes building at 700 W. 47th St. The 13-story structure lost its major tenant last year when the Polsinelli law firm moved into the Plaza Vista development, formerly known as the West Edge.

Another possible Plaza area location being pitched to CBIZ is a new office tower being proposed by Block Real Estate Services at 46th Terrace and Pennsylvania Avenue.

Block Real Estate officials declined to comment, and Larry Bridges, whose firm, Executive Hills, manages the Plaza Steppes, declined to return phone calls.

When asked about the Plaza Steppes location, Mills replied: “No final decision has been made. I can tell you 10 other buildings we’re looking at.”

The firm, which at one time was based in Kansas City when it was Mayer Hoffman McCann, would be one of the bigger trophies in the economic Border War that has heated up in recent years.

As a “new” company to Missouri, as defined by state development officials, CBIZ would be allowed to retain 100 percent of its employee state income taxes for a set number of years under the Missouri Works program. Kansas has a similar income tax-based incentive program called PEAK.

Both programs have been the primary incentive tools to encourage companies to cross the state line within the metropolitan area.

Although state and local development officials say they’re landing new jobs to their jurisdiction, critics say the moves yield little, if any, benefit to the area economy.

One Kansas source familiar with the CBIZ situation who asked not to be identified said Missouri was “throwing some big numbers at them (CBIZ).” Kansas City and Missouri economic development officials declined to comment.

The Plaza Steppes building was completed in 1987 and was considered a premier location until recently. It experienced a huge blow when Polsinelli left.

The 12-story, 188,000-square-foot building being proposed by Block Real Estate is seeking professional tenants similar to CBIZ. The developer said construction could begin on the $78 million project once 50 percent of its space is leased, a requirement that would easily surpassed if CBIZ was to locate there.

The Block Real Estate project, however, is seeking city approval for incentives and is weeks, if not months, away from City Council consideration.

At one time, Mayer Hoffman McCann was a separate, Kansas City-based firm, but in 1998 the company merged its tax and consulting practice with Cleveland-based CBIZ. Mayer Hoffman McCann retained its separate identity and handles audits and reviews, while CBIZ focuses on accounting and taxes.

Mills said the firm recently sold a division and does not need as much space as it now occupies on Tomahawk Creek Parkway.

In an interesting twist, the company’s current landlord also is Block Real Estate Services, the firm pitching the proposed Plaza office tower.

Although Mills said the firm is approaching the end of its lease, it still has more than four years left. That is not an insurmountable problem, however. In an effort to recruit tenants, a new landlord often will assume the cost of continuing lease payments at the previous location until a replacement tenant is found.

Since 2009, the so-called Border War has shifted more than 6,000 jobs across the state border within the metropolitan area, draining more than $210 million in income tax revenues from the states and resulting in few, if any, net new jobs in the area.

Kansas City civic leaders have been calling for a moratorium on the use of incentives within the area for more than two years.

In April 2011, 17 top executives from both sides of the border sent a letter to the governors describing the practice as eroding the area's tax base with no net improvement to the local economy. The letter was coordinated by the Hall Family Foundation.

Since the PEAK program began in 2009, Bill Hall, president of the Hall Family Foundation, has

estimated Kansas had attracted 3,289 jobs across the metropolitan border and Missouri had attracted 2,824, leaving Kansas with a net benefit of 465 jobs.

Earlier this month, the Missouri House and Senate approved separate bills that would call a truce in the metropolitan economic border war. The legislation would prohibit incentives for border-jumping businesses in Douglas, Johnson, Miami or Wyandotte counties in Kansas and Cass, Clay, Jackson or Platte counties in Missouri.

It would only go into effect, however, if the Kansas Legislature or governor enacted a similar measure in the next two years.

This week, however, a task force established by Kansas to examine issue, the Kansas Border Challenge Advisory Committee, published an op-ed piece in The Star that cast doubt a resolution was in the works anytime soon.

“Achieving a solution that contributes to the overall economic growth of the Kansas City region and that uses taxpayer dollars effectively will require considerable work and attention to detail, along with a true commitment to the notion of a level playing field,” the committee stated.

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