Conflicts of interest, $19 million unspent — KC’s East Side tax program must be audited
The Kansas City Council is close to ordering an audit of the Central City Economic Development program, known as the CCED. It’s long overdue and urgently needed.
In April 2017, voters approved a one-eighth-cent sales tax to fund the program. It generates around $11 million annually, providing seed money for development projects along the impoverished Prospect corridor.
The tax was a laudable strategy to strengthen struggling East Side neighborhoods. But the execution has been lacking, and there are continuing concerns — even among community leaders who supported the program — that the funds aren’t being spent wisely, or quickly enough. An audit, conducted by the new city manager and potentially the city auditor, would help answer those questions.
City Councilman Brandon Ellington proposed the study.
City figures show that the board overseeing the tax program has spent more than $330,000 to date on consultants. Is that a wise expenditure? Have the two consulting firms involved brought a better focus to board decisions? A careful audit should answer those questions.
The city should also review the speed in which allocated funds are actually disbursed. A balance sheet provided to The Star Editorial Board shows spending of only about $6.9 million, out of $26 million raised to date.
That means more than 70% of the fund is still in the bank, not on the street. While a deliberative allocation process is required, allowing millions of dollars to sit unspent for this long is doing a significant disservice to neighborhoods that desperately need a shot of adrenaline.
“We make the CCED go through a lot of steps every time they try to get something done,” Mayor Quinton Lucas said. “It’s far too slow of a process.”
Lucas points out — correctly — that it would not be smart to simply push money out the door to satisfy impatient observers. The board, and ultimately the City Council, must take some time to judge the quality of proposed projects, and the quality of the applicants.
It isn’t fair to judge the CCED program more harshly than other city incentives, which often take years to work. Like it or not, though, the success or failure of this effort will be judged by tangible evidence of progress — real brick and mortar, with real jobs and real dollars.
There is evidence that the CCED board understands this concern. At the same time, the potential conflicts of interest that plagued earlier boards may not have entirely disappeared.
The board, for example, has recommended up to $5 million in funding for a project called the Overlook, a massive mixed-use development at Swope Parkway and Chestnut Avenue. The developer is Community Builders of Kansas City, a firm with deep experience on the city’s East Side.
Conflict of interest with Ken Bacchus?
The chairman of the Community Builders board of directors is Ken Bacchus, a former city councilman. Bacchus is also a member of the CCED board. The appearance of a conflict of interest is clear.
“The Board was aware that Ken had a conflict on the Overlook project,” said DJ Pierre, chairman of the CCED board. “He immediately disclosed it, recused himself from any discussion on that project, and left the room prior to any discussion.”
Is that enough? A CCED board chairman resigned a year ago after similar revelations about a conflict of interest. Bacchus did not respond to a request for comment.
“With Kansas City being such a small community, it is not uncommon for dedicated and experienced leaders such as Mr. Bacchus to find themselves serving on more than one board,” said Emmet Pierson, President and CEO of Community Builders of Kansas City.
“Sometimes the interests of these community boards intersect,” he said. “When a conflict, or even the appearance of a conflict, arises, recusal is the ethically required course of action.”
The audit should give this decision special scrutiny. “These situations certainly present some level of concern,” Lucas said. “I would hope the CCED board would find a way to address (this) in the future.”
These concerns need not be fatal to the CCED program. There is evidence that the board is working to more clearly define its mission — although that effort, too, is mired in disagreements over how to judge progress, and what changes must be made to achieve it.
Ultimately, Kansas Citians will want to see visible signs of progress in the improvement district, which is Ninth Street to Gregory Boulevard, Paseo Boulevard to Indiana Avenue. If you drive through those neighborhoods today, there are few signs that the CCED tax has made a tangible difference.
“I think that is a very fair critique,” the mayor said. “We have more work to do.” A fair, focused audit is the first step toward addressing those problems.
This story was originally published November 13, 2020 at 5:00 AM.