Groups working to reduce tax breaks for economic development in Kansas City have a decent chance to achieve that goal. It would be a small victory for taxing jurisdictions that have lost millions of dollars for their operating budgets for decades.
But as the City Council acts Thursday, it will have to examine the key question of how the change would affect developers’ interests in building new housing and office space in the city.
Council member Quinton Lucas, the prime sponsor of the ordinance that puts a new cap on incentives, has met with representatives of all sides of the dispute over the last few months. His take?
“I think we have reached real consensus,” he said this week.
Taxing jurisdictions such as school districts, library systems and local counties basically praise the move by Lucas and some of his colleagues to trim the level of property tax abatement from 100 percent down to 75 percent for many projects. That would free up more money to flow immediately to the jurisdictions, which they could use to improve basic services they offer residents.
Of course, that’s only if developers would move ahead with projects even if they don’t get public subsidies at the current levels. Some economic development promoters in town, including a few wary council members, have warned that Lucas’ changes could harm the city’s ability to add jobs.
That seems a bit overly dramatic.
Lucas’ ordinance only reduces the potential tax abatement figure by one-fourth. Mayor Sly James a couple of years ago proposed a more aggressive cut to only 50 percent abatements, which developers and City Council critics killed.
Second, Lucas’ ordinance includes exemptions that would allow the city to go up to the 100 percent tax abatement level to snag some desired projects. That could occur, for instance, in “distressed” sections where jobs have long been scant, such as east of Troost Avenue. But City Hall would have to be careful not to exempt too many projects; that could irritate taxing jurisdictions and blow up this compromise.
Passing the new ordinance could have an added benefit. It would lower the chance that activists for taxing jurisdictions would threaten a proposed development with a referendum or petition initiative. Overall, projects might flow more smoothly through City Hall in the future.
A few taxing jurisdiction representatives who have worked on tamping down public incentives have praised Lucas’ work.
“Your compromise will, I believe, be a stabilizing influence that when enacted will be seen as a significant improvement for all parties,” Calvin Williford, a top Jackson County official, recently wrote.
Kansas City Public Library Director Crosby Kemper III said his organization “is grateful for the very important first step that your ordinance provides for relief to the taxing jurisdictions.... It is the beginning of real enforceable standards. We support the passage of your ordinance.”
It’s unfortunate, though, that City Hall still has not produced a long-promised study that would evaluate how current public subsidies have actually worked to stoke redevelopment. It would be even better to have that information in hand before dealing with Lucas’ ordinance.
Still, many Kansas Citians have long thought city officials too aggressively pass out tax breaks. Ratcheting them back a bit could restore public confidence in the subsidy game — while also more quickly providing extra funding for schools and libraries.