With an ordinance introduced this month, Mayor Sly James has begun a needed discussion on possible ways to change parts of Kansas City’s economic development incentive programs.
James introduced a plan to place a 50 percent cap on most property tax abatements for development projects, starting next year. Currently, the City Council can approve 100 percent abatements for 10 years or longer for projects it says really need the assistance.
James said the cap would create a “new normal” in which many businesses would not get such large incentives from City Hall in the future. As a consequence, other public bodies would get more property tax funds to use on behalf of their constituents.
For years, these other taxing entities have been concerned about how much of their tax revenue is being given away by the City Council when it awards property tax breaks for certain developments.
Essentially, businesses have been able to keep hundreds of millions of dollars in taxes that normally would have flowed to the city, counties, school districts, libraries and other governmental bodies that provide public services to Kansas Citians.
Today, the council’s Planning, Zoning and Economic Development Committee will continue hearing testimony on James’ ordinance.
This is the best time for the taxing entities affected by the city’s incentive programs to publicly state what they think about the mayor’s initiative.
The organizations include the Kansas City, North Kansas City, Raytown and Center school districts; the Kansas City and Mid-Continent public library systems; Jackson, Clay and Platte counties; the Metropolitan Community College; a mental health fund; a handicapped workshop fund; and the blind pension fund.
Steve Potter, director of the Mid-Continent Public Library, said Tuesday he was “really happy” that James had started a public conversation about trying to limit taxpayer assistance through property tax abatements.
Meanwhile, development lawyers will have the chance to make their case that crafting special deals is the best way to get companies to stay in or come to Kansas City.
Cindy Circo, a City Council member and new chairman of the Tax Increment Financing Commission, said Tuesday she didn’t have “strong opinions” on the proposal. She said the upcoming weeks of testimony would lead to an eventual vote on the matter on the council. Then, she said, the TIF Commission would put in place whatever she and other elected officials eventually decide.
Ed Ford, chairman of the council’s planning and development committee, said one of the mayor’s other programs — AdvanceKC — already is helping elected officials look in new ways at incentive deals. He also said any abatement cap might have to float depending on the jobs or sites involved.
James made a similar point, saying in a proposed ordinance that the city could grant “increased incentives” in certain cases, such as where the city is fighting other governments for the same jobs.
It’s critical to note that the council already does and likely always will take into account many factors when deciding what kinds of property tax breaks to award businesses. For example, the council has embraced development that keeps jobs in the downtown area or helps remove blight around the city. Those projects may get abatements that exceed 50 percent in the future, for good reasons.
James has started a useful dialogue on an issue that affects many Kansas Citians and the use of their public dollars to help promote development in the city.