Nearly a year after border truce, Kansas City firm wants millions to hop state line
Update: A Kansas City City Council committee voted Wednesday on whether to grant incentives to BlueScope Construction. Story here.
Another company is setting up a battle between Kansas and Missouri over tax incentives and jobs more than 10 months after the states agreed to halt their economic development border war.
BlueScope Construction, an Australian company in the West Bottoms, is in line to receive more than $20 million if it moves to Kansas, according to documents on file with Kansas City. Those documents say Missouri could offer up to $5.6 million for it to stay put and add 90 jobs over six years.
In August, Missouri Gov. Mike Parson and Kansas Gov. Laura Kelly reached a deal to stop the much-criticized practice of using state tax incentives to lure companies back and forth across the state line without necessarily adding any new jobs to the wider region. In turn, Kansas City agreed to limit its own local incentives.
But BlueScope is grandfathered in because negotiations began before that border deal was made, the Kansas Department of Commerce said in a statement.
Kansas City Mayor Quinton Lucas declined to comment Tuesday.
This week, the company is asking the City Council to extend and sweeten a parking deal it struck with the city in 2001. The city has been giving the company a discount on employee parking in a nearby city-owned garage. The ordinance on the Neighborhood Planning and Development Committee’s agenda Wednesday would eliminate the fee altogether, a benefit of $2.4 million over 10 years.
If the company doesn’t add as many jobs as it expects, the city could claw back some of that parking rent.
BlueScope is also expected to ask for a 13-year 75% property tax abatement through the Planned Industrial Expansion Authority. It is nearing the end of a 20-year 100% property tax abatement it already received from the authority.
All told, the company could receive about $14 million from Missouri and Kansas City to remain in the West Bottoms and add 15 jobs per year. That also includes $5.6 million from the state and a sales tax exemption on construction materials for improvements to the building.
Kansas’ commerce department would not comment on the exact total and type of incentives that state is offering.
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.
A representative declined to comment Tuesday but said the firm was looking forward to discussing its options with the City Council this week.
The issue echoes a a similar controversy last year, after the declared end to the border war. Missouri granted Overland Park-based Waddell & Reed up to $62 million to move more than 900 employees downtown. Kansas City granted another $35 million in local incentives. The firm’s new headquarters is now under construction at 14th Street and Baltimore Avenue.
Waddell & Reed was considered by officials to be grandfathered in, meaning it had sought incentives before the two states agreed to the truce. According to records provided by the state of Missouri, there are nine Kansas companies that Missouri believes have the same rights. They could receive subsidies to move more than 360 jobs.
Kansas has yet to fulfill a similar records request, which was made in January.
BlueScope employs 339 people at its current West Bottoms location.
“It would be a tremendous loss if they left,” said Bill Haw, who has led redevelopment of the Stockyards District in the area.
The proposed incentives in Missouri have already garnered some criticism.
Shannon Jaax, director of planning and real estate services for Kansas City Public Schools, said on Twitter that the district, public library and mental health services suffer the most in lost revenue from the existing 20-year abatement. She said 74% of the funds the project received would have gone to those organizations.
On the other hand, the gains — mostly in earnings taxes collected from employees — have gone to the city.
Kerrie Tyndall, the city’s economic development director, said the district would not be worse off with the new incentives. But if the company moved to Kansas, the city would suffer the most because it would lose the earnings taxes.
Jaax said some had suggested the school district wouldn’t receive any additional funds if BlueScope moved to Kansas.
“Wrong!” she wrote. “In 2022, the property goes back on the tax rolls at 100%. Even if it is vacant (and) depreciates, the property will be worth more than 25% of today’s value.”
Haw previously served on the board of Butler Manufacturing and once owned the site where BlueScope operates. But since its acquisition, he said he’s had no contact with the firm.
While he wants the company and its workforce to stay in the neighborhood, he criticized its request for incentives.
“I think it’s a horrible dirty, nasty, trick that I would do too if I were in their shoes,” Haw said. “I think they’re doing just exactly what anybody else would do which is to pretend like, ‘OK, either give me all this stuff or I’ll go away.’”
Haw said he’s actually not asked for public assistance on his various projects in the Stockyards District, including the refurbishment of the historic Livestock Exchange Building.
But he realizes he’s in the minority.
“That is what everybody does now,” he said.
The Star’s Steve Vockrodt contributed to this report.
This story was originally published June 17, 2020 at 5:00 AM.
