As of last Friday afternoon, battle lines had formed over whether developer Shirley Helzberg should get a $5 million taxpayer subsidy for a good project: Renovate a long-vacant building she owns to keep the BNIM architectural firm in the Crossroads Arts District.
The City Council had approved the project in late October. Petitioners were gathering signatures for a referendum that could force a vote in 2016 on the proposed public incentives. Officials with Kansas City Public Schools, Kansas City Public Library and other taxing entities were scrambling to protect some of their future revenues from being diverted to Helzberg’s deal.
This was an intriguing tussle over tax incentives in Kansas City.
Then all hell broke loose.
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Over the next 100 hours, the fight morphed into full-out warfare.
By Tuesday evening, a power play by Mayor Sly James to keep the project moving had blown up in his face, leaving him scrambling to save the project.
R. Crosby Kemper III, the library’s executive director, proclaimed that a city agency had taken actions that could be viewed as “a declaration of war” on other taxing jurisdictions.
Kurt Schaefer, a Republican state senator from Columbia, who’s running for attorney general, had filed a misguided bill to kill the city’s $228-million-a-year earnings tax.
And the future of the citizens referendum was up in the air — as was the extremely crucial future of how smoothly development deals can get done in the city.
Here’s the time line of crucial developments over this 100 hours, pieced together through interviews, documents and reports of public meetings.
1:49 p.m.: The Tax Increment Financing Commission staff sends out a public notice, calling for a “Special Board Meeting” on the Helzberg project for the following Tuesday.
The meeting will be used by the city-controlled TIF panel — led by Cindy Circo, a James confidante and strong supporter of taxpayer help for businesses — to overturn a previous vote by the group. In November, it had postponed approving a development agreement with Helzberg.
After that vote, a piqued James had yanked one of his independent-thinking appointees off the commission — saying the member was acting contrary to city-set policy — and replaced him with someone the mayor presumably could count on to follow his marching orders.
The sudden meeting notice stuns TIF members representing Kansas City Public Schools and Jackson County. They have been trying behind the scenes to work out a compromise on the project. Their goal: Reduce the amount of future school tax revenues diverted to Helzberg’s redevelopment.
3:51 p.m.: The Star promotes a lengthy online story (published in Saturday’s paper) that quotes supporters and opponents of the project.
The article includes a threat from Helzberg. She says she’s not likely to try to put another project into her building at 1640 Baltimore Ave. if the BNIM effort fails.
“I’m going to give this a little more time and then I’ll just tear the building down,” Helzberg says. “And then I’ll go back to the taxing jurisdictions to get the taxes reduced. Because it will reduce if it’s just a surface parking lot.”
It’s Helzberg’s way of telling her opponents in the school district to back off, or else.
4:49 p.m.: Kevin Masters, the school district’s representative on the TIF panel, sends an email criticizing Bob Langenkamp, CEO of the Economic Development Corp., and Heather Brown, the TIF executive director for the EDC.
Masters points out that a majority of the commission has postponed the development agreement and he has “trusted your very direct statement” that no effort was under way to overturn that decision.
But now, he writes, “It seems there was an intentional failure to be transparent as to what was being considered and that is unfortunate, because folks frequently talk about building trust between TIF members.”
4:45 p.m.: CalvinWilliford, chief of staff to Jackson County Executive Mike Sanders and often the county’s representative on the TIF Commission, sends an email to Masters, Brown and Circo, copying fellow commissioners and other public officials.
He bluntly questions the timing of the meeting, saying it’s unprecedented to “rescind an action that was approved by a legally recognized commission majority.”
“I must add that I find this action beneath the standards one would expect in a public body vested with the duty to honestly consider and recommend public policy about the best use of our citizens’ limited resources... Your actions raise questions about the legal rationale for the very existence of an independent TIF Commission. Something seems to have gone fundamentally wrong and we have this new paradigm that continually fails to listen, confuses bullying with collaboration (i.e. ‘we will tear it down and let it become a surface parking lot’) and ignores the needs of our citizens being served by the impacted taxing jurisdictions.”
In interviews during the day, critics and supporters of the Helzberg deal tell me the TIF meeting has caused compromise talks to collapse, for now.
Jennifer Wolfsie, a school parent who’s among referendum leaders, says she “rarely gets turned down” in asking people to sign petitions calling for a public vote next year.
Wolfsie reiterates that she thinks the BNIM headquarters is good for the urban core — but she thinks the “bigger issue” is over who will be paying for these kinds of projects. Her bottom line: The school district has diverted too much money in the past and has needs it must pay for in the future, such as building repairs and better education of students.
6:49 p.m.: City Attorney Bill Geary sends me an email that, out-of-the blue, raises the possibility that the referendum might be illegal.
He says “past council actions” on the TIF plan that includes Helzberg’s building, along with state TIF laws, “will have to be considered” as he prepares a legal opinion on the proposed vote by Kansas Citians.
As I find out later, development lawyer Jerry Riffel, acting on Helzberg’s behalf, has reached out to city officials. He contends that a 2008 vote by the council to approve the TIF district cannot be overridden by a referendum.
10:41 p.m.: Ray E. Sousley, chief legal counsel for Kansas City Public Schools, releases a public statement that goes to James, the City Council and the TIF Commission, criticizing the panel’s scheduled meeting the next morning.
“KCPS can only surmise the special hearing has been called to thwart the efforts of a citizen referendum effort which has expressed concern over the egregious use of incentives for this project....
“When used appropriately tax incentives can benefit all affected parties. However, for years, Kansas City Public Schools and the other taxing jurisdictions have expressed concerns and asked the City Council to reevaluate its tax incentive policies and programs, which are used much more widely and for longer terms than by our peer cities, mostly at the expense of the public school system and other agencies that rely heavily on property tax revenues. The proposed special meeting suggests that City Hall and its redevelopment agencies are not open to discussing, let alone reevaluating, its incentive programs.”
8:45 a.m.: Circo begins the TIF Commission meeting and immediately tries to rush a vote on rescinding the panel’s November decision to stall the Helzberg development agreement.
She’s assured of success this time around, thanks to James’ stacking of the panel. Also, state law gives the city six members on the panel — and five members to all the other taxing jurisdictions, no matter how much future revenues they must give up to make a city-approved development deal occur.
After much posturing, wrangling and a meaningless public comment period, the commission eventually approves the development pact.
According to Circo, that means Helzberg’s plan can proceed posthaste — but only if the ballot referendum leaders fail to get the needed 3,400 signatures by next week. Tuesday’s meeting, Circo contends, doesn’t affect the referendum.
Unfortunately, Circo has no binding decision from Geary to back up her statement. As he told me in his email the previous night, “It is unlikely a final opinion will be prepared before the Committee of Petitioners submits their petition by Dec. 8.”
Kemper issues his “declaration of war” comment, part of his longstanding — and sometimes on-target — belief that public incentives for businesses are out of control in Kansas City.
3:54 p.m.: Star reporter Jason Hancock on Twitter promotes a story of new concern from Jefferson City: Schaefer, chairman of the Senate appropriations committee, wants to repeal the earnings tax in Kansas City.
Schaefer mumbles some nonsense about “allowing taxpayers to deposit more money in every paycheck.” That ignores the reality that killing a source of $228 million a year from City Hall will lead to unfathomable service cuts (especially in public safety) or increases in other taxes to keep all or some of those services.
Schaefer is clearly carrying water for St. Louis multimillionaire Rex Sinquefield, a huge critic of the earnings tax, who has contributed $750,000 to Schaefer’s campaign for state attorney general. Sinquefield is responsible for the fact that Kansas City voters every five years have to decide whether to renew the earnings tax. They did so overwhelmingly in 2011, and the next vote is set for April 2016.
It’s notable that Sinquefield is co-founder and president of the Show-Me Institute, a libertarian think tank that opposes the earnings tax.
Here’s how I think these things are tied together.
The heavy-handed effort by James, Circo and others to push the Helzberg project along in recent days will give Sinquefield and the institute more ammunition to try to convince voters to kill the tax in 2016 — no matter what happens to Schaefer’s bill. (Kemper, the library director, is chairman of the Show-Me Institute’s board.)
6:11 p.m.: James releases a toughly worded statement on the earnings tax issue.
“This proposed legislation is faulty in so many respects that it’s hard to know where to start,” James says. “The earnings tax functions well, as it has for 50 years, and we will be vigorously fighting this wrong-minded legislation in January.”
Suddenly, a fight over a relatively small tax break has turned into a full-fledged, interconnected crisis for the James administration.
The biggest question in civic and political circles now: Can the mayor use his negotiating skills to work with Helzberg, Riffel and taxing entities that have reason not to trust him and deliver a solid compromise that allows the BNIM project to proceed?
Even if that happens, James and others would have to convince the petitioners to drop their referendum drive. And yes, one of the mayor’s longtime irritants, Clinton Adams, has signed the petition, ostensibly to help the school district’s revenue situation.
Meanwhile, Riffel may try to use a seven-year-old council decision to try to legally kill the referendum. That would further irritate many school parents and probably lots of Kansas Citians, which in turn would pose problems for the earnings tax election in 2016.
Of course, a lot can happen to change things dramatically for the better — or worse — in coming days.
Just look at what occurred over one 100-hour span.