BNIM, a prominent Kansas City architecture firm, announced Thursday it is abandoning its ambitious downtown headquarters proposal that became the focus of a big fight over development tax incentives.
BNIM had hoped to be the main tenant in a vacant warehouse at 1640 Baltimore Ave. owned by developer and philanthropist Shirley Helzberg. The building was to be redeveloped as a state-of-the-art environmental showcase.
But critics of the financing deal petitioned to put it to a public vote, and BNIM could not wait for the outcome of an election.
“We did not anticipate our project becoming a lightning rod in a much larger incentives fight,” the company said in a statement Thursday, adding that it will look for a new headquarters location somewhere in the area.
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The City Council on Oct. 29 supported tax incentives to renovate the warehouse. But a group of Kansas City school district parents and other social justice activists objected to the $5.2 million in tax increment-financing for the $13.2 million project.
The petitioners said the deal redirected too much school district property tax money back to the development over the 23-year life of the TIF.
More broadly, they said tax breaks should be used to motivate development in truly needy and blighted areas east of Troost, not in up-and-coming neighborhoods like the Crossroads Art District.
They gathered sufficient petition signatures to force repeal of the council’s decision or to put the TIF financing on an election ballot.
Helzberg and her supporters argued that the incentives were necessary to make the blighted building viable, that the Crossroads is still fragile and needs help, and that BNIM’s project could be transformative for the city.
They objected to making this project the centerpiece and main casualty of a much larger battle over how and where the city awards tax breaks.
In recent weeks, the city, other taxing jurisdictions, the developer and BNIM tried to reach a compromise that would appease the petitioners, and provide more money annually to the school district.
But various proposals were rejected, including one floated just this week. The petitioners released a statement Thursday, prior to BNIM’s announcement, saying many people were fed up with tax incentives for projects in thriving neighborhoods.
“Our position has not changed and will not change unless the project moves from the Crossroads to a truly blighted neighborhood,” the petitioners said.
After so many negotiation attempts had fizzled, the architecture firm finally couldn’t wait any longer. BNIM said it needed to explore other location options in the area because it is losing the lease on its current Crossroads office in the former TWA Building at the end of this year.
“In spite of a willingness on our part to make multiple revisions to the proposal, including one that would add millions to the KC public school system, petitioners were unwilling to compromise,” said the company, which just last year was named Small Business of the Year by the Greater Kansas City Chamber of Commerce.
BNIM said it remains committed to the city, today and in the future. But with its recent growth and planned projects, it said it will also “begin the process of shifting some future growth to our offices in other cities until such time as we have an office plan in the KC metro.”
Kansas City Mayor Sly James said he was deeply disappointed.
“It’s disheartening to learn of BNIM’s decision but I understand the firm’s need to make a tough business decision in this uncertain environment,” James said in a statement.
James worried the company’s decision may mean high-quality jobs in architecture and related professions won’t be retained in Kansas City. And he said it’s a loss of what would have been a great project.
“BNIM’s headquarters was to be a world-class laboratory for sustainable design,” the mayor said, adding that it would have provided a public green space next to the warehouse, along with a business incubator to teach environmentally progressive approaches to both professionals and students.
The mayor agreed Kansas City needs to continue evaluating the appropriate level of economic incentives, but said it needs to be done in a way that adds jobs and fosters innovation.
“Unfortunately, this outcome is a step in the wrong direction,” he said.
It’s uncertain what will happen now with the long-vacant building at 1640 Baltimore Ave., which Helzberg acquired in 2005. She has said she tried for years to find a tenant, without success. She and others said the building, which is dilapidated and outdated, needs to be gutted and rebuilt for modern office use.
Helzberg and her development partners said they were disappointed with BNIM’s withdrawal from the proposed renovation at that building, but hoped the project could eventually become a reality somehow.
“It would truly be a transformative project for the Crossroads and Kansas City,” the SOBEL Development Corp. said in a statement.
“While we fully understand the complexity of the issues, the existing controversy over incentives makes it impossible for us to proceed at this time,” it said. “Therefore we will now pause and reassess the situation, carefully evaluating the future for this property.”
Former City Councilwoman Cindy Circo, who now leads the city’s Tax Increment Financing Commission, predicted this will have a chilling effect on other developments in the city.
“I can’t imagine how an outside investor would be so inclined to come into this climate and invest in our community,” she said.
Circo said she believed the petitioners had hurt themselves in the long run.
“They’ve decreased what the school district would have gotten in the long run,” Circo said. “Who else is going to come up behind this and try to invest in that site. It’s going to sit.”
Crosby Kemper III, executive director of the Kansas City Public Library, has repeatedly backed efforts over the years to rein in incentives and prevent his taxing jurisdiction from losing revenue in TIF projects.
But he said Shirley Helzberg and her husband, Barnett, are among Kansas City’s greatest philanthropists, and he lamented that she and BNIM “were caught in this terrific chaos in the city’s economic development policies.”
Kemper laid blame on the mayor for not offering the taxing jurisdictions and the petitioners any concrete details on a long-term plan to limit tax incentives or require payments in lieu of taxes to help agencies like the school district and libraries. These are payments that developers agree to provide to make up for tax breaks granted through the city council and development agencies.