Port KC muscles up to become stronger player in tax break game

With the help of public subsidies, here’s what the 10-story Corrigan Station at 19th and Walnut streets in Kansas City could look like by the end of 2016. The shorter building (front) has only been proposed.
With the help of public subsidies, here’s what the 10-story Corrigan Station at 19th and Walnut streets in Kansas City could look like by the end of 2016. The shorter building (front) has only been proposed.

The historic Corrigan building is in a prime spot in the bustling Crossroads Arts District, just yards away from Kansas City’s close-to-opening streetcar line.

With a newly announced office reuse of the structure at 19th and Walnut streets, downtown boosters say the 10-story Corrigan project is another example of how the streetcar is going to entice new development.

But hold off on any full-scale celebration.

The $42 million project will receive more than $3 million in property tax breaks. These future revenues will be diverted from entities that include the city, Jackson County, the Kansas City Public Library, mental health providers and especially Kansas City Public Schools.

Once again, the good news of bringing in new jobs and renovating an old structure is tempered by the fact that schools, libraries and other public institutions won’t directly benefit much from the deal — at least not in the short term. They would get more money to improve their services to the community, of course, if full taxes were imposed.

The involvement of Port KC in what developers Copaken Brooks and 3D Development are calling Corrigan Station provides an excellent opportunity to examine the controversies and complications surrounding the incentives game in Kansas City.

Port KC is a state-authorized institution. So when it backed the diversion of property taxes from taxing entities, Mayor Sly James and the City Council had no power to endorse or reject that deal.

The city officials elected to oversee spending of city tax funds also won’t be able to control whether Port KC eventually goes forward with a taxpayer-subsidized plan that would make it possible to build a hotel at 2001 Main Street, which is right on the streetcar line.

Port KC recently has become more involved in high-profile development projects beyond the riverfront, its former main priority. Port KC also is active within the boundaries of the streetcar line’s transportation development district and in south Kansas City.

City Manager Troy Schulte and others said recently that development lawyers are eyeing Port KC as a good place to take their business rather than seek public incentives from agencies that could require more scrutiny by city departments and more extensive public discussion.

While developers attracted to Port KC can avoid some of the bureaucratic hassle that slows projects down, we should never lose sight of the fact that handing out taxpayer incentives shouldn’t be a walk in the park.

Port KC President and CEO Michael M. Collins last week offered an upbeat assessment of his agency’s work.

While admitting that “not everyone’s happy,” Collins said growing employment in Kansas City is his No. 1 priority. “We need more offices. We need more daytime jobs.”

Collins said an architectural and engineering firm attracted to Corrigan from the suburbs will offer more than 100 well-paying professional jobs.

“They’re going to eat downtown,” he said. “They are going to shop downtown.”

While James and other city officials don’t control Port KC, Collins said, agency officials “view ourselves as partners of the city.”

James and the council do approve appointments to the voting board of Port KC.

At some point, if the city decides Port KC is getting too lavish with its tax breaks, James especially should step in to try to halt it. He recently yanked a member from the Tax Increment Financing Commission after that person took actions the mayor thought were at odds with the City Council’s guidance on a specific development project.

Asked last week whether he was watching for similar concerns on Port KC’s board, James responded, “I haven’t even thought about that.”

The taxing jurisdictions outside City Hall are concerned about how Port KC awarded incentives for Corrigan Station.

“They’re taking the prime source of our funding, and that’s what concerns me,” said Debbie Siragusa, chief financial officer for the Kansas City Public Library. This new property tax break will be on top of the $2.9 million of annual public revenue already diverted from her agency.

Calvin Williford, chief of staff to Jackson County Executive Frank White, said Port KC officials often don’t engage in meaningful negotiations with taxing jurisdictions concerned about the size and duration of tax breaks.

The process “appears to be designed to expedite approvals and exclude public comment,” Williford told The Star.

In a statement on Port KC’s actions, Williford added, “This approach is nothing but a way to further remove taxing jurisdictions from the economic development discussion.” He said it “directly contradicts” James’ intent to use a city process designed to bring more transparency and legitimacy to development deals.

So far no citizens initiative has been mounted against a Port KC-approved project. By contrast, petitions are challenging council-approved deals to build a new downtown hotel and reuse a Crossroads building as the new headquarters for the BNIM architectural firm.

Going forward, the public could benefit from several actions.

The mayor should insist that all Port KC deals go through a city-approved process for evaluating tax breaks, as carried out by the Economic Development Corp.

Port KC could become more laser-focused on what should be its prime mission of riverfront development, too long a bleak spot devoid of success.

Most notably, fuller discussions with taxing jurisdictions could lead to incentives that are awarded for reasonable time periods and amounts.

In an editorial earlier this month, we noted that 2016 should lead to “major, lasting and fair reforms of how tax breaks are doled out in Kansas City.” An important part of that agenda is keeping a closer eye on the actions of Port KC.

Rethinking incentives

This is part of an occasional series by The Star’s editorial board exploring ways to improve how millions of dollars in public development incentives are given out in Kansas City and the suburbs. The initial editorial can be found here.