Guest commentary: TIF saves our cities on the backs of the poorest
Later this month St. Louis will host the National Urban League’s National Conference, the theme of which is “Save our Cities: Education, Jobs and Justice.” These are important topics to address, and Missouri is a good place in which to do so. For all the talk of St. Louis and Kansas City as diverse engines of the state economy, too often the very policies implemented to “save” our cities are the ones that further divide rich from poor.
In the past, the lines between the haves and have-nots were literally drawn on maps and enforced through private covenants and government policies. Modern economic policies aimed at urban revitalization are picking up where block-busting and red-lining left off — transferring tax dollars from the have-nots to the haves.
For example, tax increment financing (TIF) is a widely used development program in Missouri. It was originally proposed as a way to spur development in economically distressed areas. Under a TIF program, the city redirects the increased taxes paid on improved property back to the developer. In areas where the return on investment is questionable, public funds can help reduce risk. It sounds like a great idea.
Unfortunately, as practiced in Kansas City, TIF exacerbates racial inequality and socio-economic division. As we found in our 2014 paper, “Urban Neglect: Kansas City’s Misuse of Tax Increment Financing,” TIF is overwhelmingly used in already wealthy and economically vibrant (and predominantly white) parts of town. Kansas City has used TIF to subsidize the world headquarters buildings of successful corporations such as H&R Block, JE Dunn, Burns & McDonnell and Cerner. Taxpayers have subsidized luxury high-rise apartments and will soon be asked to pitch in on a convention hotel for visitors from out of town. We’ve even helped fund an entertainment district downtown only to have it accused of enforcing a dress code that discriminated against African Americans.
To add insult to injury, most of the tax dollars diverted back to developers would otherwise support the Kansas City Public School District (where 57 percent of students are African-American and 90 percent qualify for free or reduced-price lunch). The district estimates that the annual cost to it is about $25 million and rising. When a wealthy developer requested TIF to renovate a building in the trendy Crossroads district, opposition was led by public school parents tired of seeing the urban district bled of much-needed resources.
This reverse Robin Hood subsidization — redirecting tax revenue away from the poor to benefit the rich — hits poor and minority populations twice. Not only are they denied funds for schools, libraries and other services, but they see few options other than to increase their own taxes to make up for money diverted to developers. A community improvement district was created around a grocery store on Independence Avenue to charge a 1 percent sales tax to provide security and “general maintenance of public areas,” services ordinarily provided by local government. As a result, the sales tax rate at this Aldi grocery store is higher than the Aldi in Waldo or elsewhere in the city.
Kansas City Mayor Sly James denies there is a problem with TIF policy, and has gone so far as to remove a TIF Commissioner, Philip Glynn, merely for seeking to slow down the process. A recent City Hall reform of TIF was so loaded with loopholes as to be nearly meaningless, yet the mayor opposed even this largely symbolic effort.
Saving our cities is a worthy goal. But in Missouri and especially here in Kansas City, many of the policies that are intended to do so are often the same ones that further impoverish those at the very bottom of the economic ladder. We shouldn’t celebrate them as economic progress. We should call them what they are, more of the same divisive policies that deserve their place in the dustbin of history.
Patrick Tuohey is Western Missouri field manager at the Show-Me Institute.
This story was originally published July 12, 2017 at 8:30 PM with the headline "Guest commentary: TIF saves our cities on the backs of the poorest."