KC company threatened to leave Missouri without more incentives. Now it’s staying put
A Kansas City firm that threatened to leave Missouri in an unsuccessful attempt at raking in more taxpayer incentives will now stay put for well over a decade.
Over the summer, BlueScope Construction sought $14 million in state and local incentives to stay at its West Bottoms facility. It said it had received an offer worth some $20 million to hop the state line and move to Kansas.
That request was met with skepticism and outrage — particularly because the request came up a year after Kansas and Missouri agreed to stop poaching jobs from each other.
On Friday, local real estate lawyer Roxsen Koch, who represents the company, said BlueScope notified Missouri officials of the company’s plans to stay put. The company’s current lease was set to expire in 2022.
“Following positive discussions with the landlord, the lease will be extended, keeping BlueScope in its West Bottoms home through December 31, 2034,” the company said in a statement. “BlueScope has appreciated the collaboration from all parties involved and is pleased to finalize an agreement that provides continuity for its valued employees, customers, and the community.”
For council members who voted down the proposal earlier this year, Friday’s news was validation that the city can take a tougher stance on economic development incentives without necessarily hurting the local economy.
“There are times where these kinds of deals feel like a bit of a shakedown,” said Councilman Eric Bunch, “and I hope in the future that this starts to indicate that we’re a city that’s still very much open for business, but we’re not going to give into bad deals or bad policy.”
Bunch said his vote against the proposal wasn’t an attempt at calling BlueScope’s bluff. But he said the decision shows the city can retain a valuable employer ”without throwing lots of incentives at them.”
“So often when we do push developers and push businesses to sharpen their pencil, financially, it turns out that there’s a little bit more in the tank for them to stick around or complete a project or build new apartments or whatever,” Bunch said.
City Councilwoman Katheryn Shields was among the council’s four members who voted in favor of the incentive package earlier in the year. If BlueScope had made good on its threat to move, she said it would have cost the city hundreds of thousands of dollars in lost earnings tax revenue.
“We gambled and we won,” said Shields, whose district includes the West Bottoms. “And I’m very happy to see it.”
Though the company was seeking yet more incentive dollars, Shields said the city stood to lose more if BlueScope were to leave town, taking its 300-plus high-paying jobs with them.
“My colleagues, I think, would say we called their bluff and we won,” she said. “And again, when you’re gambling, sometimes you win and sometimes you lose.”
BlueScope Construction is a subsidiary of Australia-based BlueScope Steel, which employs 14,000 people across 18 countries. BlueScope acquired Kansas city-based Butler Manufacturing in 2014 in a deal worth more than $200 million.
BlueScope already had received a discount on its employee parking from the city and a 100% property tax abatement for nearly 20 years.
The latest incentive proposal was criticized for the sheer magnitude of taxpayer support the company would have received over a 33-year period. But it also raised deeper questions about whether racial bias affects city tax incentives.
Because property tax breaks deprive schools, libraries and mental health services of funding, the plan ignited a wider discussion about how the city diverts revenue from urban school districts to spur development south of the Missouri River but often spares majority-white districts north of the river.
Northland Councilwoman Heather Hall acknowledged the disparity during a June committee meeting.
Kansas City Public Schools Superintendent Mark Bedell characterized the development practice as “systemic racism.”
“I am exhausted with the development community pitting the City against the public entities that are doing the work of trying to give our students and their families access to the world they deserve,” the superintendent wrote said in the letter to the council.
School officials could not immediately be reached for comment Friday.
BlueScope’s decision to stay will no doubt fuel longstanding criticism of city and state economic development programs. Local economic development officials view things like tax breaks and tax credits as powerful inducements to bring jobs to their cities and states. But skeptics, like those at the national group Good Jobs First, say incentives often reward companies who would have built, expanded or stayed without any government aid at all.
Mayor Quinton Lucas said companies’ practice of asking for incentives to move to Kansas City — or under threat of leaving — wasn’t new.
“The story is we’re elected officials, and we’re supposed to be smart, and we’re supposed to understand sometimes that just because somebody threatens it doesn’t mean it will happen,” Lucas said, “and we need to just stick with what’s right.”
He said he was happy Kansas City would get to keep BlueScope — “while at the same time not giving away the farm to do it.”
Councilwoman Melissa Robinson, who represents the city’s East Side, said she was happy BlueScope saw value in its Kansas City home. But the company’s decision, she said, demonstrates that incentives should not be viewed as entitlements.
“I hope we will continue to see ourselves as an attractive city of destination based on what has been built and not solely on our ability to grant never ending streams of incentives,” Robinson said. “Kansas City is not the same town it was 20 years ago.”
Economic development incentives are most frequently used to lure new companies or help existing ones grow. But over the summer, company and city officials argued that retaining jobs was just as important to the city as attracting new ones.
Koch, the attorney representing BlueScope, said the West Bottoms facility could sit empty for years if the firm were to leave.
“As my mom would always tell me, a bird in the hand is worth two in the bush,” she said in June.
The debate this summer centered on two possible scenarios: forego some property taxes to keep the company, or lose the company and its employees’ earnings taxes.
But the city didn’t discuss a third option: that Kansas City could keep the company, keep all the jobs and the tax revenues. By simply doing nothing.
