Kansas City is one step closer to approving part of a massive financing plan to help rebuild the Country Club Plaza.
The city council could vote Thursday to approve a $210 million tax increment financing plan that would divert sales taxes to fix crumbling infrastructure and aid in new development.
Gillon Property Group, the Dallas-based firm that owns the plaza, plans to add new office space, residential units and hotel rooms to the district. The developer has opened one new store per month from March to August to target the outdoor shopping mall’s vacancy rates and has restored the district’s carillon bells.
In addition to improving security and lighting, Gillon also plans to address public safety and fix aging stormwater and sewage lines as well as crumbling sidewalks, roads, parking garages, streetlights and utilities.
The plan was proposed last year and is now being finalized. This week, the council could choose to either approve the current plan or make minor changes that would delay approval until Dec. 3 at the earliest.
Council member Johnathan Duncan represents the city’s 6th District, which includes the plaza. Duncan is typically a vocal opponent of TIF projects but said he supports the plaza plan because he believes it’s necessary for rebuilding the district.
“This TIF is for public infrastructure,” Duncan said. “This isn't free money. These are redirections, but these are redirections necessary for public infrastructure that has been deferred maintenance for over 100 years at some points in the plaza, which is why I support this.”
What’s in the deal?
The $210 million tax increment financing plan, or TIF, is proposed through the Economic Development Corporation of Kansas City.
The plan would abate future economic activity taxes, or EATs, to finance construction of improvements to the plaza. It does so by creating a TIF district, which would include the plaza from Pennsylvania Avenue, Summit Street and Jefferson Street on the west, West 47th Street and West 46th Terrace on the north, Mill Creek Parkway on the east, and Ward Parkway on the south.
This project is what’s known as a Super TIF, which is a designation given to a development that is already occurring within a TIF district. In this case, it will enhance local incentives for the development of the plaza.
The EATs include sales taxes paid on purchases at shops on the plaza, earnings taxes generated by employers on the plaza, and money earned in the area that would ordinarily go into the city’s public safety sales tax.
Typically those taxes would go to Missouri or Kansas City to pay for public safety expenses, capital improvements or other government services. If approved, the TIF will redirect a lot of that money to work on the plaza.
The plan includes redirecting $110 million of EATs revenue to the developer’s infrastructure costs and an additional $100 million for public infrastructure work, like sewer separation.
What could change?
The city council could choose to approve the existing plan with no changes at its Thursday meeting. But it could also change the plan to not include EATs from the city’s public safety sales tax.
If it does the latter, the TIF plan couldn’t be approved until the council’s Dec. 3 meeting at the earliest because changes would trigger a mandatory delay. That would give the Economic Development Corporation of Kansas City time to adjust the fine print and notify all parties. The delay would be required because the city would be reducing its originally agreed-to portion of additional city EATs to fund the development.
Council member Kevin McManus, who represents the city’s 6th District at large, said at Tuesday’s meeting that public safety is one of the biggest concerns on the plaza. He wants the plan to move forward.
“I'd hate to see this kind of get hung up on something. I think that's a pretty narrow issue that I think could be resolved with just some communication about what those uses are and some clarification,” he said.
Removing the public safety sales tax dollars from the additional city EATs would reduce the city’s financial obligation by about $20 million. That money would be shifted over to the developer’s responsibility, raising it from $110 million to $120 million.
In theory, that change could ultimately save the city money over the decades of the TIF plan. But since the work has not yet started, it would take a while to determine what the actual savings are.
The city could also choose to leave the public safety sales tax dollars in the plan, and keep them included in the additional city EATs, while placing stronger rules around how that money is used.
That would mean that when the developers submit their costs to the city’s TIF commission for certification, only the portion of the work that could be considered public safety would be reimbursed with a portion of the city’s EATs that come from the public safety sales tax dollars.
At Tuesday’s Finance Committee meeting, Duncan urged his council colleagues to approve the plan with no changes.
“I think it's interesting that in discussions last week, that folks maybe have either just realized how TIF works or tax redirections work,” Duncan said. “I'm a firm believer that keeping it simple is best. … Let's just better explain what the infrastructure benefits are of this TIF.”
