After repeated delays, Kansas City moves closer to limiting incentives for developers
After months of negotiation, Kansas City officials on Wednesday moved closer to cutting back on the generous tax incentives City Hall grants developers to build apartments, offices buildings, hotels and more.
Members of the City Council’s Neighborhood Planning and Development Committee voted unanimously in favor of an ordinance further limiting incentives. But it’s a more meager reform than the sweeping proposals council members first introduced. It contains exemptions for broad categories of projects.
And its primary champion said that, though she is optimistic, the city still has a “long way to go.”
“This is progress,”said Councilwoman Melissa Robinson, “and I understand the need for deeper reform. It’s just something that we’ll have to continue to organize around, that we have to give voice to and continue to work together. So it’s just one step.”
The legislation the committee passed limits property tax abatements to 70% for 10 years and 30% for five years after that. Current city policy allows those incentives up to 75% for 10 years and 37.5% for 15 years after that.
The only member of the public who spoke in the committee meeting was Jon Copaken, a prolific downtown developer. He acknowledged it may seem “counterintuitive” for a developer who has repeatedly received incentives to offer his endorsement of a reduction, yet he offered his support.
Copaken previously told The Star he thought the lower cap, which would cut 10 years off of the incentive deals developers can get, would work for most projects. He said he supported the legislation and reforms still to come because new provisions will give developers quicker answers on whether they will be granted incentives.
For decades, Kansas City has used incentives to encourage developers to build housing, hotels and office buildings, helping to revitalize neighborhoods across the city, particularly downtown. But more than a decade into the transformation of downtown and surrounding areas, critics say developers don’t need the boost to build in already wealthy areas. That assistance should go to spur development in needier areas.
While the City Council and boards appointed by the mayor decide whether to award property tax abatements as incentives, it’s the city’s schools, libraries, mental health providers and other taxing jurisdictions that stand the most to lose, especially those in the urban core.
That discussion, a constant refrain, once again rose to the top of the council’s agenda last summer as protests over racial injustice gripped the U.S. At that time, City Hall was considering a property tax exemption for Bluescope, a West Bottoms company that had already been receiving tax breaks for two decades.
Kansas City Public Schools criticized the deal, and Superintendent Mark Bedell said such a deal would “never be inflicted on the majority-white school districts in the Northland.”
KCPS says the property taxes redirected from its budget are worth close to one-quarter of its local revenue. And that figure has been rising, which Robinson said is a trend that is “just not going to create the city that we’re all hoping to be part of.”
Between May 1, 2019, and April 30, 2020, the city, school districts, libraries and other taxing jurisdictions saw more than $79.6 million in property taxes redirected toward development, according to an initial estimate in the city’s Comphrenesive Annual Financial Report. That figure was then revised even higher to $83.6 million.
Soon after council members rejected the Bluescope deal, Robinson and Councilwoman Ryana Parks-Shaw introduced legislation meant to give KCPS and other districts more of a say in development deals.
At one time, the proposal would have limited property tax abatements to 50% of the taxes otherwise due on a developer’s property for 10 years. If a developer wanted longer or deeper incentives, the district would have to sign off. But the sweeping reforms became more and more incremental along the way.
The legislation committee members endorsed Wednesday includes exemptions for:
▪ Projects offering affordable housing.
▪ Projects creating at least 100 entry-level jobs that offer a living wage and locate on transit lines
▪ Projects in severely and continuously distressed census tracts
▪ Projects involving historic buildings
▪ Projects that support manufacturing or serve as distribution centers
“Part of me feels that I didn’t reach my end goal, but the other part of me feels that we have made progress,” Robinson said.
Robinson said the legislation is just one step toward reforming the city’s incentive policies. Next, City Hall will have to consider updating the scorecard it uses to evaluate development deals and determine whether they should be awarded incentives. Mayor Quinton Lucas has also proposed consolidating the disparate boards and commissions that weigh in on incentive deals — which he believes interpret city policies differently — into one “super board.”
The cap legislation won’t take effect, however, for 120 days — or until the City Council revises that scoring process, whichever is first. KCPS was critical of that component, which leaves the door open for developers to apply for incentives over the course of the spring and have their projects be grandfathered in.
“As incentive reform flounders, how many more luxury buildings in affluent neighborhoods will generations of students be forced to subsidize?” Bedell wrote in a letter to the City Council on Monday that was obtained by The Star. “How many more parking garages will be built with public dollars?”
This story was originally published February 24, 2021 at 3:36 PM.
