Five things to know: Citywide eighth-cent sales tax on KC's April 4 ballot
From an upper floor of Kansas City’s City Hall, Steve Lebofsky watches for development. The city planning and development department employee tracks citywide building permits, scours news stories and digs deep into the city’s capital budgets, cataloging reams of data.
Going back decades, Lebofsky can produce a chart that shows what was built (or rebuilt) where — and where not much happened. The data show a development dearth in the central city targeted for public help through a proposed citywide sales tax.
Through an initiative petition, Kansas City voters will be asked April 4 to approve a one-eighth-cent sales tax that would provide economic incentives in an area bounded by Ninth Street on the north, Gregory Boulevard on the south, The Paseo on the west and Indiana Avenue on the east.
According to Lebofsky’s list of development projects valued at a minimum of $3 million each, over the last seven years about $300 million in new construction or redevelopment has been spent or approved for spending within the target area.
That’s $300 million in a slightly more than 7-mile-long corridor stretching about 10 blocks east and 10 blocks west of Prospect Avenue. To put that in perspective: A partnership called Kansas Entertainment was said to have invested more than $300 million on one development, the Hollywood Casino, in 2012 in Wyandotte County.
As for the $300 million in significant spending along the Prospect corridor — with the exception of improvements at Research Medical Center — nearly all was for publicly-assisted redevelopment, with subsidies going to apartments, single-family houses and social service enterprises, including police, health care, education and government facilities.
A prime example is the Kansas City Police Department’s $74 million East Patrol and crime lab complex at 27th and Prospect. It’s a valuable resource and possible catalyst for other development at that corner. But it’s not necessarily the kind of private-sector investment sought by the sales tax proponents through the “Central City Economic Development Sales Tax” ballot issue.
Rare lines on Lebofsky’s spread sheets list the kinds of private-sector, commercial development — such as a United Beverage plant expansion; a Posty Cards plant expansion; a Pener Plaza shopping center renovation and a new Aldi grocery store — that tax proponents hope to encourage in the area.
Along the Prospect corridor, “not much has happened because valuations on appraisals just do not hold,” said Ken Bacchus, a former City Councilman and urban planner by profession. “It costs developers more to build things than they’re worth. People just don’t see the market. ... That’s why we need incentives.”
Even in the vibrant downtown real estate market, the KCP&L tower redevelopment from offices to apartments earned a 25-year tax abatement plus tax increment financing to help build an adjacent parking garage. Sales tax backers say that’s the kind of incentive needed to push small — and large — developers into the central city.
Kansas City Mayor Sly James and City Manager Troy Schulte, who disagree with the focus and timing of the sales tax initiative, argue that other solutions to the dearth of central city investments are in the works.
They would prefer to see infrastructure and transportation improvements to that area through the general obligation bond questions that also will be on the April 4 ballot. They also pin hopes on a City Council-approved Shared Services fund that would channel a small percentage of funds tied to other development projects to central-city redevelopment needs.
James and Schulte acknowledge the Prospect corridor needs help, but they also point out that about $2.3 billion in public and private money has been spent on multifamily housing, single-family housing, retail, social service, health and government developments since 2011 in the larger east-of-Troost Avenue part of the city.
“We’ve done a lot in the last six years to target demolition to eliminate blight,” Schulte said of the city’s stepped-up program to tear down abandoned houses and work with the federal government to rebuild sidewalks in the target area.
The Kansas City Council last summer approved $13.25 million in bond proceeds to help redevelop the Linwood Shopping Center at 31st and Prospect with a full-service grocery store, a site where a previous supermarket closed in 2007. Redevelopment has been stymied for years but a demolition/groundbreaking event finally is to be held Monday.
Supporters say that’s where the sales tax will help. For the next 10 years, the tax could provide about $8.6 million a year for development incentives such as land acquisition, pre-development costs, leverage for equity partners or gap financing.
“This is about development and cleanup along that corridor,” said Gayle Holliday, a backer of the sales tax proposal. “It’d be new money to assist small business, not to duplicate PIAC (Public Improvement Advisory Council) or TIF (tax increment financing) or any existing programs for housing.”
As proposed, the as-yet unspecified incentives, to be managed by five appointed commissioners, would help lure developers to an area they now shun, largely because property values and lease rates are so low that they don’t see enough return on investment.
That’s not to say the corridor is totally bereft. There’s major benefit from the Research hospital, doctors’ offices and nursing school complex at Prospect and Meyer Boulevard, for example. But across Prospect from Research is a long stretch of vacant, developable land.
The Rev. Vernon Howard, a sales tax advocate, said the projected sales tax revenues “won’t solve a four-decade deterioration of the inner city.” But, he said, they could help push developers to focus on “pockets of development … maybe two to five locations where there’s stuff going on now and help us figure out how we can build on that.”