KC City Council seeks more detailed policy for special taxing districts

In the wake of several hotel requests for special taxing districts, the Kansas City Council is seeking a more detailed policy.

Councilman Quinton Lucas is asking the city manager to propose changes to the existing community improvement district (CID) policy, to address issues raised by recent proposals from the InterContinental Hotel near the Country Club Plaza and the downtown Marriott hotel complex.

The council has approved the hotel requests to impose special 1-cent sales taxes on those properties to help with interior guest room improvements. But the InterContinental request in particular sparked some public criticism because it required a finding of “blight” on a luxury hotel on the outskirts of the upscale Country Club Plaza.

Critics pointed out that most community improvement districts in the past have been for multiple properties, like commercial shopping areas and shopping districts, where the special taxes imposed benefited the broader community of users. They said the InterContinental Hotel owners should fund the $16 million in proposed improvements themselves rather than seeking an extra sales tax on guests to pay part of the cost.

Supporters responded that the tax would primarily affect out-of-towners rather than local residents, and that having a high end hotel on the Plaza enhances the city’s tourism offerings and economic development potential.

Lucas has introduced a resolution, which the full council will consider soon. It asks City Manager Troy Schulte to come up with possible amendments to the existing policy within 60 days, and Schulte said staff is already working on that.

“Recent requests to establish new CIDs have created questions as to whether the existing policy adequately reflects the Council’s priorities, provides for the fair treatment of those within certain industries, and provides adequate guidance to the Council in approving new CIDs,” the resolution said. Lucas said he hopes the policy can include a better definition of “blight” and can address some of the public’s questions and concerns about the proliferation of CIDs and special taxes for single-property owners in the city.

While that policy is being developed, the City Council continues to get requests for additional community improvement districts. The latest request seeks not one but two CIDs, and two 1-cent sales tax increases, for a proposed apartment and hotel development at 46th Street and Wornall Road.

The two CIDS would raise an estimated $7 million to help pay for a parking garage serving the hotel and apartment project.

The City Council was scheduled to vote Oct. 13 on that request but postponed a vote until Oct. 27. Councilman Lee Barnes said he is trying to negotiate a “community benefit agreement” in which the 46th and Wornall developers would provide some financial benefit to the larger community. Barnes helped negotiate a similar agreement with the InterContinental Hotel, for some funding for blighted home repairs and for jobs for city residents at the hotel.

While CIDs draw more attention from Kansas City leaders and residents, they’ve also attracted the attention of Missouri State Auditor Nicole Galloway. Using new powers provided by Senate Bill 1002, which took effect in August, Galloway has the authority to audit CIDs without a citizen petition.

Galloway announced Thursday that she will begin reviews of the finances and operations of the Independence Center CID in Independence and the Ward Parkway Center CID in Kansas City. She said those were two of the largest community improvement districts in the state. The audits won’t be completed until sometime next year.

Of the 300 CIDs in Missouri, Galloway noted that about 50 are located within Jackson County.

This story was originally published October 14, 2016 at 3:46 PM with the headline "KC City Council seeks more detailed policy for special taxing districts."