Crossroads proposal prompts clash over TIF development incentives
Kansas City urgently needs to overhaul its policies for development incentives — tax breaks and long-term abatements for hotels, apartments and other businesses. Incentive reform must be a top priority for the new mayor and City Council.
Question 1 on Tuesday’s ballot is a citizen-led attempt to accomplish that goal. Unfortunately, the proposal is too broad in some ways and not broad enough in others. It’s poorly written, and it could actually diminish the prospects for true incentive reform.
We recommend a no vote on Question 1.
To be absolutely clear: The intent behind the proposal is sound. It would cap the use of property tax incentives such as abatements and redirections to 50% of the increased revenue from a project, down from the existing cap of 75%.
While a 50% cap sounds like a good idea, it is a blunt instrument. Some projects don’t deserve any incentives. Others may need 100%. Imposing a hard limit takes away important flexibility for policymakers.
Supporters say the cap could be waived for significant projects in distressed neighborhoods. If that’s true, why have the cap at all? Offering a measure assuming built-in loopholes isn’t a good strategy.
Question 1 backers admit that the proposal has flaws but say passage would send an important message to City Hall and to developers. It’s a question of fairness, they say: Why should rich developers get help for luxury hotels, while center city neighborhoods crumble as a result of disinvestment and neglect?
They’re asking the right questions. Kansas City provides too many public incentives to the wrong projects. Our disagreement is over tactics: Would Question 1 bring real incentive reform, or just the appearance of it? We think it’s the latter.
The better option is for voters to reject Question 1, then insist the new mayor and City Council overhaul incentive policies by the end of 2019. Here’s what real reform would look like:
▪ An absolute moratorium on any incentives of any kind for downtown projects. It is far past time for new developments in the central business district to stand on their own merits and pay their full fair share of taxes once completed.
▪ Added incentives for projects in struggling neighborhoods. New development in poor census tracts should qualify for 100% abatements, sales tax waivers and other public support.
You want to build a luxury hotel? Build it on the East Side, or build it on your own dime.
▪ Incentive priority for projects that promise affordable housing and needed neighborhood amenities, including grocery stores in underserved areas. Abatements should also be provided to low-income homeowners who improve their homes or who build on vacant property in poor neighborhoods.
It should be easier for a small business to get incentives than for a big corporation.
▪ Strict, enforceable community benefits agreements for developers who use incentives. Projects should meet goals for minority employment in construction and operation, and pay penalties if the goals aren’t met.
▪ Increased clout for taxing jurisdictions such as schools and libraries. School officials should have a veto over any incentive that exceeds the guidelines established by the council. Expanding the number of representatives from taxing jurisdictions is also a good idea.
Incentive reform will also depend on quality appointments to the various boards and commissions with development oversight. The next mayor must appoint members who will scrutinize proposals carefully and reject those without a clear community benefit.
Opposing Question 1 is a gamble. It’s half a loaf, which, some argue, is better than nothing. There is a danger that defeating the plan will leave Kansas City without any reform at all.
That view is understandable. But if Question 1 passes, public momentum for additional improvements to incentive guidelines will stall. Kansas City would be left with an inflexible policy that could actually hurt poor communities, the very neighborhoods incentives are supposed to benefit.
Opponents of Question 1 said they will support real incentive reform if voters reject this measure. Kansas City should hold them to their word.
The new mayor and City Council should be given the running room to make needed changes to incentive policies this year. If voters reject Question 1 on Tuesday’s ballot, the city’s leaders will have an important opportunity to implement targeted, meaningful reforms.