Kansas City education and political leaders want to discuss incentive reform; petitioners want to force a vote

A coalition of activist organizations that believe the Kansas City Council has not moved far or fast enough on reforming economic development incentives wants to take the cause into its own hands.

The Coalition for Kansas City Economic Development Reform started collecting signatures this week in an attempt to let voters decide whether the limits of incentives should curtailed.

The coalition wants to generally restrict by half the amount of property taxes that can be redirected to economic development projects.

For example, tax increment financing is a tool that allows development projects to capture 100 percent of future property tax increases generated by the development to pay for eligible project costs, along with 50 percent of economic activity taxes (sales, earnings and utility taxes) it produces.

The Planned Industrial Expansion Authority abates 100 percent of property tax increases in an approved development for 10 years, followed by a 15-year period of 50 percent abatement.

In both cases, the Coalition for Kansas City Economic Development Reform’s proposed measure would reduce those 100 percent redirections or abatements to 50 percent for the life of the project (often between 23 and 25 years). The coalition has considered aiming to get the question on the November ballot, but the group has only until late August to gather about 1,700 signatures.

That leaves open the April ballot, the same election where Kansas City political leaders have considered placing a bond issuance of between $500 million to $800 million before voters to improve infrastructure in the city.

Jan Parks, a spokeswoman for the coalition, said the measure is patterned after one Kansas City Mayor Sly James contemplated in 2014, except stricter.

James’ incentive reform ordinance called for projects to be evaluated at a 50 percent tax abatement level. It allowed for the possibility of higher incentives than the 50 percent limitation at the City Council’s discretion; the coalition includes no exceptions. James’ ordinance was not approved.

“We would like to get something that is consistent, that’s maybe more fair for everyone,” Parks said. “It’s certainly not that we’re anti-economic development. We’re hearing that, but that’s not true. But we don’t think things like luxury apartment buildings need 100 percent tax abatement.”

Quinton Lucas, a first-term 3rd District at-large councilman, has introduced a similar ordinance that caps incentive abatements and redirections by one-fourth for most economic development programs. Like James’ ordinance, Lucas’ includes exceptions to those caps, including historic revitalization projects, developments in economically distressed areas and buildings that incorporate environmentally friendly elements.

That ordinance, which has six other co-sponsors, has yet to receive a public hearing.

Lucas said Thursday that the Kansas City Council is carrying out a “mature and responsible discussion” over the policy implications of reforming incentive programs.

Lucas was not thrilled to learn of the coalition’s attempt at a petition initiative, saying he and his colleagues were elected to make public policy decisions like development incentives.

“I find this to be an unhelpful approach,” Lucas said. “We are trying to address this issue in a responsible way. I hear their concerns. I think everyone on the council hears their concerns.”

Parks said the Coalition for Kansas City Economic Development Reform includes representatives from the American Federation of Teachers Local No. 691, Urban Summit of Greater Kansas City, the local chapter of the NAACP, the Kansas City Public Schools’ district advisory committee, the Metro Organization for Racial and Economic Equality and the Black Agenda Group of Kansas City.

The petition is the latest volley in an ongoing dispute over when, where and how often it’s appropriate to use tax incentives to assist in the financing of private development projects in Kansas City.

Groups like Parks’ coalition argue that school districts and libraries, among other taxing jurisdictions that get a majority of their funds through property taxes, shouldn’t effectively subsidize private developments as often as they do.

Proponents of development incentives counter that incentives have played, and continue to play, an important role in reshaping Kansas City over the last two decades. They contend that curtailing incentive programs could cause developers to look elsewhere, particularly neighboring suburbs in Missouri and Kansas, for their projects.

The Coalition for Kansas City Economic Development Reform has made frequent use of petition initiatives, or the threat of using them, to stall or encourage compromises in individual projects. Petitioners have a low threshold for initiatives — 1,700 signatures — to have a valid petition, owing to the low turnout in the 2015 mayoral race between James and Vincent Lee.

A prominent example was architecture firm BNIM’s decision to abandon a new headquarters project in the Crossroads Arts District. The firm will instead move to Crown Center on a five-year lease.

This latest petition seeks broader reform on incentives that don’t target individual projects. There are questions about whether the coalition’s ordinance could bind the terms of incentives offered by agencies that are created by Missouri law, such as the Port Authority of Kansas City.

Parks, who is also the education task force chair for the Metro Organization for Racial and Economic Equality, said her coalition has contemplated that issue, but added nothing further. She said the petition has been reviewed by Kansas City’s legal department, which mentioned no major concerns with it.

Meanwhile, a group of education and government leaders wants to meet with civic groups to discuss the effect incentives have on their budgets. A letter signed by 11 of these leaders was hand-delivered Wednesday to the Greater Kansas City Chamber of Commerce, the Downtown Council of Kansas City and the Civic Council of Greater Kansas City.

The letter requested meetings with each organization and questioned the effectiveness of incentives in growing Kansas City’s economy. The letter stated that economic development incentives redirect $30 million in revenue from Kansas City Public Schools each year.

Signatories to the letter included R. Crosby Kemper III, executive director of the Kansas City Public Library; Mark Bedell, superintendent of the Kansas City school district; Allan Markley, superintendent of Raytown Public Schools; Andrea Flinders, president of the union representing Kansas City teachers; Anita Russell, board president of the local NAACP; and Calvin Williford, director of economic development for Jackson County.

Joe Reardon, president and CEO of the Greater Kansas City Chamber of Commerce, acknowledged receiving the letter.

“We just received the letter from the coalition and Chamber leadership is considering its response,” Reardon said in a statement to The Star. “While the KC Chamber Board has not taken a position as yet, this is an issue of great interest to our many Chamber members, and one that we’ve been following closely.”

The Civic Council similarly has not staked out a position on the issue.

“The Civic Council has not been involved in the discussions about KCMO’s tax incentives and has not taken a position on them or any proposals regarding changes to current policy,” said Scott Smith, chairman of the Civic Council and retired HNTB Corp. president and CEO. “The request for a meeting was received late yesterday. Any decision about next steps would be a matter for the board to consider.”

Officials from the Downtown Council did not respond to a request for comment.

This story was originally published July 28, 2016 at 6:28 PM with the headline "Kansas City education and political leaders want to discuss incentive reform; petitioners want to force a vote."