Public agencies in Kansas City, Missouri, are fed up with having their funds diverted to developers in the form of tax incentives.
BlueScope Construction has already pulled $7 million away from schools and libraries, but that hasn’t stopped the company from asking for another $8.4 million in incentives to stay in town.
The full Kansas City Council is expected to take up the issue next week, but the Neighborhood Planning and Development Committee heard arguments over a tax-break extension on Wednesday.
The construction company said the deal was in the works before leaders in Kansas and Missouri agreed earlier this year to a truce in what’s been called an economic border war. But Shannon Jaax, the director of planning and real estate for the Kansas City Public Schools, pointed out that an incentive package is meant to create a thriving business that eventually comes back onto the tax rolls.
“What we have instead is a company with $1 billion in annual net profits that’s shopping for another incentive package, pitting Kansas against Kansas City. It’s proven how this is a zero-sum game for cities,” Jaax said. “It’s why the business and civic community worked on the border war truce for a decade.”
BlueScope is an Australian company that acquired Butler Manufacturing. Their original agreement with the city, a 100% property tax exemption, was set to expire in 2021. The proposed extension is for a 13-year, 75% tax abatement and includes a parking deal worth $2.4 million.
The extension got a lukewarm reception from members of the Neighborhood Planning and Development Committee, but concerns about coronavirus job losses could push the proposal forward.
“The city’s policy has been ... job retention is just as important as job attraction,” said Roxsen Koch, a Polsinelli lawyer who is representing the construction company, “and when it would take another 1,000 jobs to make up a difference in the e-tax, that tells us a lot about the importance of maintaining these jobs in Kansas City, Missouri.”
Councilwoman Teresa Loar said that while she’s not exactly happy about the proposed extension, the city has to put its own interests ahead of public agencies.
“Losing that much e-tax and having a building sit vacant and a garage sit vacant for possibly years? Because let me tell you, with the economy like it is now, ain’t nobody gonna be moving in anytime soon,” Loar said.
Councilwoman Heather Hall isn’t on the Neighborhood Planning and Development Committee anymore, but she called in to Wednesday’s hearing anyway.
“Yes, we do (tax incentive funding) differently in the Northland,” Hall said. “We always work with our school districts and all the taxing jurisdictions to make sure everybody is in agreement before we do it, but sometimes they work differently in different parts of the city because of different needs.”
The city has approved tens of millions of dollars in tax incentives in recent years, including $35 million for Waddell & Reed in December. But if the city council rejects this part of the deal for BlueScope, a larger ask for a property tax break from one of the city’s many tax boards is also likely to fail.
Correction: An earlier version of this story misstated the value of the incentive package BlueScope Construction wants. The total value of the incentive package is $8.4 million, of which the city's share is $4.2 million.
