As David Alvey takes stock of Kansas City, Kansas, just 14 months into his term as mayor of the Unified Government, he spots incremental signs of progress.
There’s going to be a grocery store in downtown KCK. A microbrewery is in the works not far away on Central Avenue. A popular barbecue joint is looking to expand to take in more customers.
For the once moribund downtown KCK, these are signs of a slow shift toward recovery and improvements in the quality of life for residents of the city’s urban core.
“Large scale development is great, and we do what we need to bring in large scale development,” Alvey said. “But I think we need to double down on neighborhood and quality of life issues.”
Accomplishing that continues to be a challenge in KCK. Financial headwinds loom for the Unified Government in the form of underfunded pension obligations, deep outstanding debt levels and the effects of an anticipated recession in the next two to three years.
Couple that with residents expecting more and better services from their local government while also clamoring for continued reductions in their property taxes, two desires that have difficulty co-existing and it’s easy to see the challege ahead for Alvey in his first term.
Alvey, who gave his second State of the Government address on Tuesday, discussed KCK and Wyandotte County affairs in a wide-ranging interview with The Star this week.
Taxes versus services
In 2016, the Village West shopping district near the Kansas Speedway paid off its public debt and went on the tax rolls. That gave the UG a $12 million windfall. Former UG Mayor Mark Holland and the UG Commission used some of that money to reduce the city’s infamously high property tax rate.
In the years that have followed, modest decreases have followed.
But City Hall still gets the complaints: Why are tax bills going up?
Part of that is because valuations are increasing as people come back to KCK, invest in their homes and give small businesses a reason to set up shop in the city.
Across KCK, property values have increased 6.5 percent. In the UG’s 2nd District, which covers most of downtown, property values have increases by 11 percent, an indication that residents and businesses are taking a chance on the KCK’s urban core.
“That tells me people are bidding up the affordability (of downtown),” Alvey said. “They’re finding affordable housing, they’re finding viable homes to invest in, live in, they’re coming in, rehabbing it and raising the property values.”
Growing property values, which Alvey tells residents is a good thing, results in more taxes that the UG can collect.
“If we can bring improvements to neighborhoods and it increases property values, that’s a good thing because it’s a deepening of the tax base,” Alvey said.
A deeper tax base, in theory, should result in more and improved government services.
But a long term financial forecast shows financial pressure gathering on the horizon for the UG.
A report by UG staff examining City Hall’s finances up to 2024 says that while KCK has rebounded from the Great Recession of 2008, local government is expected to spend more than it makes every year from 2019 to 2024.
That will eat into the UG’s savings.
Moreover, the UG is grappling with pension obligations that are underfunded as City Hall expects that about one-fourth of its public work force will be eligible to retire between now and 2024.
The UG’s pensions are 67 percent funded, which is considered average to weak in the pension world.
Add to that the UG’s debt, which credit rating agencies say is high for a combined city and county of the UG’s size. Nearly half of every dollar collected in city property taxes in KCK goes to pay off existing debt.
Alvey pointed to forthcoming developments that could increase economic activity in Wyandotte County. Food service provider Scavuzzo’s is considering a new headquarters to anchor the former Indian Springs Mall redevelopment project in Midtown. The University of Kansas Health System is putting the long-vacant Environmental Protection Agency building in downtown back to use.
The American Royal, a livestock exhibition organization based in the West Bottoms since 1899, is still working on a new complex near the Speedway. Alvey said he thinks they could break ground on that $200 million project within a year.
American Royal officials tell The Star they will have more news about that project, which envisions a new complex that will allow for more events as well as developments for agriculture business, later this summer.
The American Royal project is one of several sites in the Kansas City region offered up to the U.S. Department of Agriculture, which is considering relocating its research functions out of Washington, D.C. Kansas City, along with Indiana and North Carolina, are the three finalists for what could amount to hundreds of new jobs to whichever region lands the USDA.
The USDA, however, has signaled a preference to move into existing buildings. Nothing has been built at the planned American Royal complex in KCK.
Alvey said other large developments in KCK that received incentives will come on the tax rolls in a few years as their subsidies expire and can help shore up the UG’s revenues. The General Motors Fairfax Assembly Plant, for example, comes on the tax rolls in 2025.
In the mean time, Alvey talks about ways to attract residents, small benefits that can entice people to consider living in KCK. One example: Why not have the Board of Public Utilities waive sewer fees to people who build on vacant lots that dot the KCK landscape?
“What we’re doing is creating customers,” Alvey said. “They’re going to be customers of the BPU. We’ll get the money back out of them.”
Public safety pensions
The UG is currently negotiating a labor contract with the union representing the Kansas City, Kansas, Fire Department.
The negotiations are important; public safety takes up nearly 40 percent the UG spending.
Wage increases are a central issue.
Alvey said 2% increases are on the table for fire fighters, in line with most UG employees. KCK Police got a 3% increase, which the UG says is to help recruit officers in a competitive job market.
Alvey also said that the UG is negotiating to improve how fire fighters trade shifts. Holland, the former mayor, said the practice of shift trading within the KCKFD was a corrupt black market that upper-level fire fighters and union officials exploited, drawing the ire of the fire fighters union and contributing to his loss to Alvey in 2017.
Fire fighters typically work in 24-hour shifts. Holland claimed, and produced a payroll analysis to support his allegations, that senior fire fighters traded off shifts without reciprocating, resulting in fire fighters getting paid for shifts they never worked to the tune of about $900,000 in 2017.
Alvey said the practice can use some improvement in KCK.
“My position is that shift trading is a helpful tool for firefighters because of the shifts they work, but the accounting of it has to work for the department that is trying to provide a service,” Alvey said. “The problem with Mayor Holland is he basically said it was evidence of widespread corruption. I didn’t think that was helpful.”
Alvey was mostly tight-lipped on the future of Schlitterbahn, the water park near the Kansas Speedway that shows no sign of opening for the 2019 season and may be up for sale.
“The only thing I can say is that water park and that property is too valuable for everyone for it not to become something better,” Alvey said.
He acknowledged he’s had some discussions with Schlitterbahn but declined to shed further light on the situation.
Schlitterbahn has been mired in upheaval since the 2016 death of a young boy on a water slide.
EPR Properties holds a mortgage on Schlitterbahn’s property in KCK, which expands far beyond the water park. The Kansas City real estate investment trust had warned investors that Schlitterbahn may have trouble repaying its loan but signaled recently that Schlitterbahn may have a third party lined up to pay off the note.
Schlitterbahn and EPR Properties have not commented.
Fast food in Argentine
Alvey said he continues to have concerns with a proposed fast-food development in Argentine that sought heavy public subsidy and had no private equity in the deal.
A nonprofit in Argentine sought to build a Wendy’s and Pizza Hut at 18th Street Expressway and Metropolitan Avenue. The proposal sought to recoup future sales and property taxes generated by the fast food chains, as well as a $400,000 UG grant and a $600,000 federal government grant, to pay for project costs.
“It just didn’t seem to me to be a good deal that worked for the city,” Alvey said.
Nevertheless, he said he is willing to consider a reconfigured deal. The project was put on hold last year when the Kansas Department of Transportation, which owns the development site, said it would not sell it to the UG until it had completed a study of the 18th Street Expressway.
Now the nonprofit is considering building the project next to a Save-A-Lot store across the street from the original development site.