Pressured by Kansas City schools, City Council trims Waddell & Reed incentives
Under pressure from school district officials, who mounted a public campaign against a massive tax incentive package for Waddell & Reed, the Kansas City Council on Thursday decided to hold off on a vote, allowing more time to negotiate with the project’s developers.
Council members voted 10-3 for an amendment trimming $5 million from the $44 million local incentive package Waddell & Reed is seeking. The financial services firm is planning to move from Overland Park and build a new corporate headquarters at 14th Street and Baltimore Avenue in downtown Kansas City.
Members then voted 10-3 in favor of delaying a final vote on the deal for one week.
“It’s an improvement over the original incentive package,” said Shannon Jaax, director of planning and real estate services for Kansas City Public Schools.
The state of Missouri already granted Waddell & Reed about $62 million in incentives from the Missouri Works program to move more than 900 employees and hire another 120 over the next six years. The firm was set to get another $44 million in local incentives through a property tax abatement, sales tax exemption on construction materials and a redirection of half of the new earnings and utility taxes created at the site.
The package had included a 75% property tax abatement for 15 years. Thursday’s amendment trims that to a 75% abatement for 10 years and a 37.5% abatement for five after that. That brings the overall local incentives to $39 million and the total package to $101 million — more than 70% of the project’s $140 million budget.
School district objections
School officials object to such a generous incentive package for a company moving only a few miles.
The Kansas City school board on Wednesday took the unusual step of adopting a formal resolution opposing the project, which members argue would deprive the school district of future tax revenues. The board’s chair, Pattie Mansur, said it was the first time the board took such an action since she joined the body in 2014.
“This resolution is not an attack on city leaders,” Mansur told The Star on Thursday. “It is a part of our fiduciary responsibility to stand up for the educational needs of the children of this city and to protect the resources we have for this district.”
Mansur said the district wants to be included early on in such incentive projects, “and not when the deal is nearly done. We think it is unusual for the city to take a position on a deal of this size without transparency and financial review.”
“We’re a major piece of that financial package,” Jaax said. “And no one came to talk to us about it. The process was frustrating with this particular project.”
Waddell & Reed is expected to be among the last companies to benefit from Kansas and Missouri’s longstanding “border war,” which used state and local funds to draw companies across the state line without necessarily creating new jobs for the region.
Thursday’s vote came as school officials put pressure — both public and private — on members of the City Council and Mayor Quinton Lucas, who has supported the deal, somewhat of a departure from his normal skepticism surrounding incentives.
Aside from the heft of the incentive package, Jaax said the project didn’t receive the usual rigor of financial review as originated with the city’s obscure Enhanced Enterprise Zone board before moving to council.
‘This is good compromise’
Lucas said he met with Kansas City Public Schools Superintendent Mark Bedell on Thursday and had a productive conversation.
He said his office and the council continue to ask tough questions about incentive deals, while also communicating with affected taxing jurisdictions.
“But the code word for us is compromise,” the mayor said. “None of us said we would come in and shut the door on everything, nor did any of us say that we would grease the skids for everything. I think that this is good compromise and I’m proud of it every step of the way.”
The council’s action on Thursday didn’t deliver everything the school district had hoped for.
School officials asked the city to limit the property tax abatement to 10 years, which would have trimmed $10 million of public support.
“The $10 million could have been used for additional pre-K classrooms, counselors for trauma support, expansion of our Early College Academy and other academic support,” the district said in a statement.
That compromise was rejected by Waddell & Reed, school leaders said.
Dave Frantze, the development attorney representing Waddell & Reed, could not immediately be reached for comment. The company declined to answer questions about the project or its talks with the district.
“We’re eager to share more details once we have a fully executed and signed lease agreement,” spokesman Roger Hoadley said in a prepared statement.
Frantze has previously said Waddell & Reed will pay a rent of at least $40 per square foot — significantly higher than other office rents downtown. Plans prepared by engineering firm Burns & McDonnell show the company plans to occupy an 18-story tower at 1400 Baltimore. The first 10 floors will be dedicated to parking for 951 vehicles.
The City Council’s amendment approved on Thursday would require that the company make parking available to the public on nights and weekends.
Waddell & Reed recorded $184 million in profits last year, according to the company’s 2018 annual report. The financial services firm touted more than $60 billion in assets under management.
Council members Melissa Robinson, Brandon Ellington and Ryana Parks-Shaw voted against the amendment. Council members Heather Hall, Lee Barnes and Ellington voted against delaying the vote a week.
This story was originally published December 12, 2019 at 7:16 PM.
