Waddell & Reed will have a week to get city officials and Kansas City Public Schools on board with an incentive deal for its new headquarters.
The Kansas City Council on Thursday reduced the company's incentive package and delayed a vote on tax breaks for the project.
The financial services firm is seeking $40 million in incentives to move from its current headquarters in Overland Park to downtown Kansas City, Missouri. It already has been awarded $62 million by the state of Missouri.
Waddell & Reed wants a 15-year, 75% property tax abatement to build a $140 million office tower and parking garage at 1400 Baltimore Ave. The council reduced that abatement to 37.5% for the last five years of the deal.
Under the proposed agreement, its lease at that building will also be 15 years.
Kansas City Public Schools and the Kansas City Public Library, entities that would miss out on future revenue under the deal, oppose it.
In a statement, the KCPS board of directors said the incentive package would cause the district to forgo more than $900,000 per year —money the board said could be used to expand college prep programs, add pre-K classrooms and hire counselors for trauma support.
“This request is simply too much for a project lacking financial transparency and accountability,” the statement said.
While the reduced incentive package is a step forward, Shannon Jaax, KCPS' director of planning and real estate services, says there’s still more work to be done.
“We’re about halfway to where we believe we need to be,” Jaax says.
The amended deal reduced the abatement by $5 million, the district says. The district is asking that the abatement to be capped at 10 years, which would reduce it by another $5 million. Jaax says Waddell & Reed rejected that proposal earlier this week.
Dave Frantze, an attorney for Waddell & Reed, told council members last week the company would be paying rent far higher than the market rate for downtown office space.
District officials have publicly testified that they were not given financial information about the project until after the plan was sent to the city council for consideration.
That information, the Kansas City Business Journal wrote, “including the total amount of public tax dollars going into the project has not been available to the public through standard channels and public meetings because of the covert nature of the project,” known as ‘Project Decoy’ until last week’s hearing.
Kansas City Mayor Quinton Lucas, who campaigned, in part, on stopping the practice of handing out tax breaks to wealthy developers for buildings downtown, has indicated his support for the current deal.
During his campaign, Lucas told KCUR he would severely limit the amount of tax incentives available to developers west of Troost Avenue, with few exceptions.
Speaking to KCUR last month, Lucas said the promise of 1,000 high-paying jobs was enough to merit an exception for Waddell & Reed. A majority of those jobs will simply relocate from Overland Park.
“I mean, that is the type of economic impact that you would at least say is making some sort of difference that it's not just a one-off luxury multi-family development,” Lucas said.
Waddell & Reed’s move is one of the last projects that was allowed to proceed before a truce in the so-called “Border War,” which sought to end the practice of awarding generous tax breaks to induce companies to move across the state line.
As part of that truce, Lucas said he would limit tax abatements in Kansas City, Missouri, to 10 years, which would fall in line with Kansas’ rules. That piece of legislation has been tabled until next year.
Lisa Rodriguez is the afternoon newscaster and covers Kansas City, Missouri, City Hall for KCUR 89.3. Follow her on Twitter @larodrig.
