KC Council panel gives unanimous support to Burns & McDonnell headquarters expansion

Burns & McDonnell is on track for starting its $139.5 million headquarters expansion at 9400 Wornall Road later this month following unanimous support from a Kansas City Council committee Wednesday.

The full council is expected to approve the project Thursday. The Burns & McDonnell expansion will replace a dilapidated former synagogue with an office campus that’s expected to accommodate the 2,100 additional employees the Kansas City engineering firm plans to hire over the next decade.

Company officials say environmental cleanup of the former Beth Shalom synagogue should begin by late May. Once completed, demolition and then construction will begin this summer. The first phase, a 316,000-square-foot, four-story office building and 885-space garage, is expected to be completed in 2016.

A later phase will include a 150,000-square-foot, four-story office building and a 668-space garage. The expansion, next door to the company’s world headquarters at 9400 Ward Parkway, also includes surface parking. A skywalk also is planned to connect the new project with the current headquarters.

In addition to the 2,100 jobs the firm plans to add at an estimated average annual salary of $126,000, an economic analysis by Springsted, a private consultant, estimated an additional 1,800 spinoff jobs with an average salary of $72,000 are expected to be generated by the Burns & McDonnell expansion.

About half the workers are expected to be on the Missouri side of the area, based on current company employment patterns, with 25 percent living in Kansas City.

Members of the Council Planning, Zoning and Economic Development Committee said the expansion, coupled with the new Cerner office campus planned for the former Bannister Mall property, should re-energize the Bannister Road corridor.

“This project generates a great message that south Kansas City is a good place to invest,” said Councilman Scott Taylor, who represents the area. “Burns & McDonnell is the type of company we want to retain.”

The development deal endorsed by the committee, however, is being assisted by substantial tax incentives.

The plan includes $41.9 million in tax increment financing assistance over 23 years and a Chapter 100 bond that will save the company $41.8 million in property taxes over 25 years. About 82 percent of the total cost of the project will come from private sources.

Tax incentives for what is arguably one of Kansas City’s strongest companies — the 18th-largest engineering firm in the country, reporting $2.3 billion in sales in 2013 — have been criticized by some opponents, notably the libertarian-leaning Show-Me Institute think tank based in St. Louis.

A representative of the Show-Me Institute, Patrick Tuohey, criticized the incentive plan as “sadly misguided” in a statement given to the council committee. Tuohey also held a news conference at the project site to criticize the deal.

“By any economic development standard, giving company tax dollars to simply expand close to its own existing campus is an egregious use of other people’s money,” the statement said.

But Burns & McDonnell representatives have said the incentives were required because of the substantial additional cost of cleaning up and demolishing the old synagogue, tackling drainage problems at the low-lying 17-acre development site and building structured parking for employees.

The synagogue, vacant for three years, has been vandalized extensively and must have toxic substances, including mold and asbestos, removed.

Even with the incentives, David Frantze, the development attorney representing Burns & McDonnell, estimated the additional jobs would yield more than $44 million in additional earnings tax revenues alone to Kansas City over the 23-year life of the TIF plan.

The city is expected to gain $93.6 million in total tax revenues over the life of the development plan, according to an independent cost-benefit analysis. Other taxing jurisdictions also are expected to benefit: Jackson County, $16.4 million; Center School District, $21.9 million; Metropolitan Community College, $5.3 million; and the state of Missouri, $1.5 million.

There are jurisdictions expected to lose revenues in the analysis: the Mid-Continent Library, $1.9 million; Mental Health Fund, $339,000; and Development Disability Services of Jackson County, $217,000.

Council members said they were eager for demolition to begin, as the old synagogue building had become a neighborhood hazard.

“It does eliminate a significant blighting influence in that area,” said Councilman John Sharp. “This project is a huge boost for south Kansas City employment with over 2,000 jobs, all well paid.”

Mike Talboy, director of government affairs for Burns & McDonnell, praised the committee vote.

“We’re excited to take the next steps and move into the building phase and creating jobs,” he said.

This story was originally published May 14, 2014 at 7:34 PM with the headline "KC Council panel gives unanimous support to Burns & McDonnell headquarters expansion."