It was a financial ask that sparked fierce debate in the Kansas City Council: a developer wanted $700,000 to build roundabouts near the airport. The roundabouts are part of a larger commercial project, and the developer told council members that a broader request for a tax break would be coming soon.
Some council members inquired why they were being asked to finance a sliver of the project before it went through a financial analysis. Some asked for guidance.
“We don't have an economic development policy that guides our decisions that we're making today with respect to this,” 6th District At-Large Councilwoman Andrea Bough said on the day of the vote. “I think we're all flying a little bit blind here today.”
For council members like Bough, who is beginning her second term, the project reflected the need for the city to update its overall economic development strategy.
What is Advance KC?
Kansas City last passed an overarching economic development and incentive policy in 2014, under former Mayor Sly James.
The policy, called Advance KC, developed a scorecard that officials would use to evaluate whether a project warranted tax incentives.
It was primarily targeted toward business development.
According to the ordinance the city passed in 2014, “The City Council supports an economic development strategy that emphasizes active business retention while simultaneously stressing business attraction, all within a fiscally responsible manner.”
"What type of city are we trying to be? Who are we trying to serve?"Councilman Eric Bunch, 4th District
The scorecard evaluated characteristics like the number of jobs a development would bring in and whether the project was located in an economically distressed area. Projects that would bring in high-paying jobs and were situated in a low-income area received a higher score. The scorecard was last updated in 2016.
Kansas City was in a different era then. Economic development was geared toward job creation and enticing big companies to plant a flag in Kansas City. Construction on the luxury One Light apartments downtown had just begun, as part of larger efforts to revitalize downtown.
Today, conversations around development have shifted, reflecting a change in priorities. Preserving and building more affordable housing in the face of skyrocketing rent has taken center stage.
In the face of even more development across the city — a women's soccer stadium on the riverfront, a Ferris wheel near the West Side, an urban park downtown, market-rate apartments seemingly everywhere — residents are concerned that the city’s focus on flashy projects is coming at their expense. In recent years, driven in large part by the activism of citywide tenant union KC Tenants, many residents have come to see such development as fuel for their own displacement.
Councilman Eric Bunch, who represents the 4th District, said an updated economic development policy should clarify the long-term outcomes the city wants to see.
“I think what really needs to be considered is, what type of city are we trying to be?” he said. “Who are we trying to serve, and what kind of long-term goals do we have?”
Other ordinances focused on development
In 2016, city council passed a policy capping tax incentives at 75% of a project’s cost. Last year, council approved an ordinance requiring developers who request incentives to make 20% of their housing units affordable. Under that policy, an affordable one-bedroom apartment would be priced at $1,200 or less.
That garnered criticism from Kansas City Public Schools and KC Tenants, who said $1,200 is still unaffordable for teachers and working-class renters.
A proposed ordinance from Mayor Lucas that would have overhauled incentive policy never made it to the full city council for a vote. It would have created standard incentive packages, with different levels based on the location of a project. It also would have given City Manager Brian Platt power to approve incentive deals.
Critics of the plan said it would have continued over-incentivizing the city’s already developed areas, like Midtown and downtown.
In 2021, city council approved a policy reducing the maximum amount of time for a tax break from 25 years to 15 years and limiting the possible levels of incentives. The decision came after then-Kansas City Public Schools superintendent Mark Bedell called out the city for considering extending a tax break for developer BlueScope, saying it amounted to systemic racism.
The impact of tax incentives
Updating the city’s economic development would include revisiting tax incentive policy — which projects should be incentivized, and to what level.
Kathleen Pointer, policy strategist for Kansas City Public Schools, said the absence of an updated economic development strategy has resulted in the city giving developers tax breaks they don’t need.
“Kansas City is over-incentivizing projects,” Pointer said. “The school district is losing dollars because of it.”
The school district receives the bulk of its funding through property taxes. In 2022, Kansas City Public Schools and charter schools lost out on $45 million in potential funding because of tax breaks given to developers — that’s about $1,700 per student redirected from schools into development projects.
“If we don't really have a standard way of doing things, then we can't say to someone, ‘Well, that's not the way you should do it.'"Councilwoman Andrea Bough, 6th District at-large
Without a strong, updated economic development strategy in place, Bough said the council has had to react to projects on a case-by-case basis.
“If we don't really have a standard way of doing things, then we can't say to someone, ‘Well, that's not the way you should do it,’ or, ‘That's not the way we do things here,’ or, ‘This is not what the council believes as far as economic development,’” Bough said.
Bunch said the city, with input from the taxing jurisdictions, needs to take the wheel and tell the development community what projects the city wants to support.
“Until we actually sit down and agree to what those things are, we're just gonna be kind of playing it by ear,” Bunch said.
What officials want an updated policy to include
As officials debate updating Kansas City’s economic development policy, Pointer said it’s important that taxing jurisdictions like the school district be included in discussions, especially around incentives that directly affect the district’s budget.
Pointer said a new policy should ensure economic development agencies — like the Economic Development Corporation of Kansas City and Port KC — all follow the same rules. Right now, Port KC does not apply an independent, third-party financial analysis to projects requesting incentives. Projects before the EDC do undergo a third-party analysis.
Pointer said each step in the development process — from permitting to zoning to an incentive request — needs to be linked together.
“Things will go for a vote without the full picture of what the ask is gonna be from the public, and really those processes should be running concurrently,” she said. “So we all have a full idea, as a community, of what a project is going to be and what they want and what it needs. ”
Pointer also said projects should be targeted at areas that have the highest need and areas that have not benefited from incentives. She said the city’s decisions around incentives have created market distortion, where a developer will ask for a tax break simply because another developer received one, not because they actually need the financing.
“We just also need to keep in mind when we're using our incentive dollars, that we're also using them in a way that isn’t encouraging displacement,” she said.
Dan Moye, director of land development at the Economic Development Corporation of Kansas City, said via email that an economic development policy will empower the agency to “drive development in a clear and concise direction.”
3rd District Councilwoman Melissa Robinson represents neighborhoods east of Troost, a historically disinvested area. She said an updated development policy should be more strategic and consider where a project is located and how the project will impact residents.
Robinson recently created a plan focused on transforming the 3rd District, through equitable development. The $522 million plan includes a proposal for a youth entertainment district, green infrastructure and utility support for residents.
“That's what I'm looking for in the 3rd District,” Robinson said. “I'm looking to really do some broad scale developments to address the deep blight that's present.”
