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Tax Breaks Helped Spark Retail Growth In Belton, But Their Use May Be Coming To An End

Samuel King
KCUR 89.3
The Belton Towne Center is one of the developments boosted by the use of tax tool called tax increment financing.

Twenty years ago, the stretch of Belton along U.S. Highway 71, now Interstate 49, looked a lot different than it does now. Only a few major retailers had set up shop in the city, with most bypassing Belton. That forced people who lived in the city to leave the county or even the state to shop at most big box or other stores.

“This was kind of all farmland out here,” said Michael Krei, a longtime Belton resident. “I think maybe the McDonald's was the first thing out here. But all these other shops, nothing was out here, not at all.”

Krei was shopping with his wife Carolyn outside Target on 58 Highway. It’s one of the many stores in Belton to open in the past two decades, development propelled by the use of tax increment financing, or TIF.

Now state lawmakers may be closer than ever to restricting the practice, tightening definitions on how and where it can be used. Belton officials believe that’s fine, because they have what they needed, though some question if these tax incentives cost the city much-needed revenue.

“We haven't TIF-ed now in three years, we don't have to because we've jump-started our economy,” says Mayor Jeff Davis.

An unproven market

Credit Samuel King / KCUR 89.3
KCUR 89.3
TIF funding helped pay for $33 million in infrastructure improvements in Belton, including along 58 Highway.

Tax increment financing first developed in Missouri in the early 1980s. The tool allows developers to keep some of the sales or property tax revenues from a project for a period up to 23 years. That helps them offset some of the costs for projects in blighted or hard-to-develop areas.

Belton has used TIF since 1989, but didn’t always use it for retail development. Former economic development head Art Ruiz saw an opening.

“We were an unproven market on the outskirts of Kansas City,” Ruiz says. “Retail was not considered economic development back when I started chasing retail here in Belton, Missouri. And we saw the need for it and we figured we could pull from South Kansas City being that Bannister Mall was failing, and capture the market that was coming from the south into the city to spend the money before they went over to Overland Park.”

In time, there grew to be eight TIF districts in Belton, most involving retail. The city has joined other communities in borrowing money to pay for infrastructure improvements around the development with the idea that the increased tax revenue provided by growth will pay for it.

In Belton, Davis said TIFs have provided more than $33 million in funding for roads and storm sewers.

Opportunities and risks

Credit Samuel King / KCUR 89.3
KCUR 89.3
Brandon Buckley, vice president of Lane 4 Property Group, says TIFs carry both opportunity and risk for communities and developers.

For developers, TIFs can present opportunities and risks. Lane 4 Property Group is in a TIF agreement with the City of Belton for the Cedar Tree Shopping Center on I-49 and Missouri Highway 58. Its vice president, Brandon Buckley, saw upgrading the center as an opportunity for both sides.

“They were interested in speaking with us to maybe see if there's a way to help the aesthetics of the shopping center a little more because when you drive into a certain community, the properties you see, the cleanliness, are things you sometimes judge a community on,” Buckley says. “So it was an opportunity to provide an amenity to the city, maybe bringing in a better tenant mix as opposed to keeping the center the way it was.”

But for years, some experts and lawmakers have said those risks are something developers should take on for themselves.

“I mean, if people want to risk their own money, that's fine, but you know, we should be leery whenever we're putting taxpayer money for build(ing) a private business,” says Sen. Andrew Koenig, R-St. Louis County.

Koenig has sponsored legislation that is one of the latest attempts to restrict tax increment financing. Along with barring new developments in floodplains, it also puts new restrictions on how it can be used for retail projects. It also tightens the definition of blight, which critics have said has long been loose in Missouri law.

“If you look in the St. Louis area, a lot of the affluent areas are getting TIFs and the areas that have more poverty are not getting TIFs,” Koenig says.

Koenig’s bill has passed the Senate, and has a committee hearing in the Missouri House scheduled for Wednesday.

Buckley says he understands the concerns, but that TIF is an important tool to help communities grow their economies.

“If you provide an incentive to a project and it helps get sales tax and property tax up, the city's benefiting from that,” Buckley says. “So it’s really an investment from the city to maximize their taxing income long-term.”

The costs to the community

Art Ruiz, who helped establish some of Belton's first retail TIFs, now says the risk of abuse is high without oversight.

“From my experience, the abuse is coming from the local politicians or elected officials who really think that it's kind of a giveaway program,” Ruiz says. “And then let's see what's in it for me.”

Missouri auditor Nicole Galloway’s Office uncovered another potential risk: shortchanging local schools and other government units.

In 2016, Belton schools, city government, the county library and the Metropolitan Community College District received less in tax revenue than they should have because of a miscalculation by the Cass County Clerk. The TIF in question has now expired.

Galloway says the office’s focus has been on individual communities, but her office will soon undertake a statewide examination of the issue.

“Oftentimes there's taxing districts that are layered on top of each other, so that's difficult to administer from the municipality point of view,” Galloway says. “We've also found instances where there was not proper planning of how that public money was going to be spent.”

Mayor John Davis says even though Belton did nothing wrong with the TIF, he understands using the development tool is a trade-off.

“The ironic part is, is there's so much pressure on schools and I was a school teacher and a principal and a coach,” Davis says. “You’ve got to know that they're starving for more money all the time and you gotta keep a balance in there for all the other jurisdictions for that matter.”

Six TIFs remain on the books in Belton, with two set to come off in the next couple of years. Davis says the TIFs did their job by putting Belton on the economic map. Now he says the city now needs to focus on other issues like housing.

Samuel King is the Missouri government and politics reporter at KCUR 89.3. Follow him on Twitter: @SamuelKingNews

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