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Kansas City Developers Were Getting Millions In Tax Breaks — Now More Of That Money Will Stay With Schools

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Workers continue construction on the Waddell and Reed's Kansas City headquarters scheduled to be completed in 2020.

The Kansas City Council approved a deal to cut back on tax breaks for developers. Some city officials say it's time to prioritize residents over 'wealthy corporations.'

Fed up with development tax breaks siphoning money away from urban schools, the Kansas City Council approved a new policy Thursday to rein in those tax incentives.

The council voted unanimously for a measure that limits the potential level of subsidies for most projects and reduces the maximum time frame from 25 years to 15 years.

Councilwoman Melissa Robinson, one of the co-sponsors, explained that property tax abatements for luxury developments in prosperous parts of town take too much tax money away from city schools, libraries, mental health and other services.

“The city was prioritizing the needs of wealthy corporations over the needs of residents,” she told her colleagues Thursday. “Corporations have to pay their fair share to make our city work.”

Councilwoman Ryana Parks-Shaw, the other co-sponsor, said the Council is not anti-development but wants it to be more equitable.

“We must address this critical issue of how tax abatements exist at the disadvantage of our students,” she said.

Some developers have cautioned that key projects would not happen without tax incentives, and growth could simply stall or migrate to neighboring cities.

But Mayor Quinton Lucas noted that the Council adopted modest incentive limits in 2016 without adverse consequences. He commended his colleagues for adopting this more ambitious incentive reform, just a month after it approved new requirements for affordable housing units in residential projects that get incentives.

Over the past nine months, Robinson and Parks-Shaw held numerous work sessions with stakeholders from the school districts, other government agencies and the business community to try to find a workable incentive compromise.

Under Kansas City’s existing program, approved in 2016, most developers are limited to a 75% tax abatement or redirection of new taxes back to the developer for 10 years, and 37.5% for 15 years after that.

The latest reform proposal cuts that to 70% for 10 years and 30% for five years after that. It aims to give clearer direction to developers and create consistency among different economic development agencies.

Exemptions to these incentive limits would apply in distressed areas, or for projects that provide affordable housing, significant job growth, historic preservation, or industrial/manufacturing or distribution services.

The ordinance also requires initial project review within eight weeks, so developers don’t face months of costly delays.

At a council committee meeting Wednesday, developer Jon Copaken, principal with Copaken Brooks, testified in support.

“It may seem counter-intuitive for a developer to be supporting a reduction in incentives, but the basis of the support is that there’d be a greater degree of certainty in the process and there’d be a greater degree of timeliness,” he said. “So those are two issues that being a developer in Kansas City that we sorely lack.”

Copaken agreed many more issues of community equity linger, but said this ordinance “is progress.”

This week, Kansas City Public Schools Superintendent Mark Bedell wrote a letter to the city council, arguing that incentive reform is “years overdue.”

“How many more luxury buildings in affluent neighborhoods will generations of students be forced to subsidize?” Bedell asked. “In just the last few weeks, several more applications have come in asking for 25 years of abatement — in Downtown, Martini Corner, and the River Market.”

Bedell was concerned that a provision postpones the ordinance effective date for 120 days or until the council adopts a revised scorecard for evaluating which projects are worth funding. But Robinson said that time frame allows the council and stakeholders to work on the scorecard revisions and other necessary reforms.

Lynn Horsley is a freelance journalist in Kansas City. Follow her on Twitter @Lynn Horsley

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