Kansas City Developers Aren't Worried About A New Mayor Taking Away Their Tax Breaks | KCUR

Kansas City Developers Aren't Worried About A New Mayor Taking Away Their Tax Breaks

May 30, 2019

For a young professional, The Grand apartment building in the heart of downtown, blocks from the Power and Light district, is a dream — it’s home to the highest rooftop pool in Kansas City, an indoor theater, a yoga studio, a digital sports lounge and a pet spa. Yes, a pet spa.

The repurposed high rise on 11th and Grand offers studio apartments beginning at $1,300 a month.

But the project has drawn the ire of citizens concerned that the city is giving too many tax breaks for projects like these, and the issue has come to the forefront of the mayoral race.  Tax incentives come in several different forms that generally include abating property taxes or redirecting them back to a developer to help with construction costs.

Standing outside The Grand in early May, Jan Parks lamented what she called unnecessary public investment in a part of town that’s already bustling.

"We have school buildings that desperately need repair. And do we really need this level of luxury?” Parks said.

Parks is with a group behind a ballot measure that would significantly lower the amount of incentives the city can give developers.

The Grand got a pretty generous deal. The $67 million project had its property tax essentially frozen, keeping it at the same level as when the building was deteriorating and empty. That’s on top of a previous tax break from a project that never materialized.

Which means the building hasn’t been paying full property taxes for more than 20 years and won’t for another 20.

The project also got state tax credits for historic preservation. Parks says there’s no way to prove the project wouldn’t have happened without the incentives.  

Mayoral candidates say tax incentives aren’t bad, but reform is needed

Councilwoman Jolie Justus says tax incentives are part of the reason this city is on a roll. Still, she says there need to be policies to make sure developers are upholding their part of the deal.  

“We need to put in more clawbacks, safeguards and accountability. And then when they are not met, we need to make sure that we are following through with whatever those clawbacks are,” Justus says.

And Justus says when the city does give a tax break, it needs to have more strings attached — like promises to build sustainable features such as stormwater retention. 

“To make sure that those folks who are getting the incentives are retaining that stormwater so that we as the city don't have to take it all on,” she says.   

Justus’ opponent, councilman Quinton Lucas, also hesitates to say that the city should curb tax incentives.

“I think it is an important time for us to look at incentives from a few different directions, not just from the lens of how do we do fewer, but more so how do we actually get stuff that we need,” Lucas says.  

For one thing, he says the other jurisdictions like schools and libraries that depend on property tax revenue don’t have enough say about what happens to their potential revenue.

“I mean, just absolutely not. If you go over to the Kansas side, the Shawnee Mission (School) District, Blue Valley, Kansas City, Kansas, all have the opportunity to veto in essence, TIF projects,” Lucas says.

He says a developer would have to make a convincing case about the merits of their project for schools to forgo that added revenue. Justus agrees that schools should have a bigger say earlier in the process.

A study of Kansas City economic incentives from 2006-2015 shows where most tax breaks were given out. Both mayoral candidates want to shift the focus away from downtown and midtown and to neighborhoods.
Credit Kansas City, Missouri

Both Lucas and Justus agree it’s time to shift the focus away from downtown hotels and more on neighborhoods.

Justus says the city should be more proactive in marketing parts of the city that need more investment. She says the city can better utilize Opportunity Zones and Enterprise Zones, which provide tax concessions and reduced regulations to lure developers to truly blighted areas.

“We take all of those tools, and we package them together and we go out and we market those areas,” Justus says.

Lucas also advocates for using those tools, but he said in order for someone to select a project at I-70 and Van Brunt over one on the Country Club Plaza, the market should be leveled out.

“And to me, what that means is all the tools aren't available in other areas,” Lucas says.

From developers’ perspective, both candidates are safe

While their talking points are similar, the candidates are trying to distinguish themselves on the issue.

Lucas says he has a better record on the city council of trying to rein in tax breaks. He was behind an ordinance that lowered the amount the city can abate new taxes from 100 percent to 75.

“I worked my tail off to get incentive reform passed. I had six cosponsors on that ordinance. Councilman Justus was not one of them,” Lucas says.

Justus, on the other hand, points out she and Lucas have nearly identical voting records on economic development projects. She says it's unfair to say she’s more pro-development than her opponent.

From the perspective of developers, both candidates are seen as safe. Richard Martin is the head of governmental affairs at construction company JE Dunn, but he does not speak on behalf of the company.

He is also a former political consultant who worked with both candidates on previous campaigns.

“I think most of [the developers] feel like whoever is the next mayor, they're going to have somebody they can work with,” Martin says.

proposed 50% cap on incentives for developers, which both candidates oppose, presents a bigger threat to developers.

Martin, who is heading up the opposition to that ballot measure, says developers aren’t likely to publicly oppose either candidate. But he says he hasn’t heard much concern privately, either.

Real estate developer Butch Rigby says both candidates are balancing business interests with public skepticism about tax incentives.

“I think they're both smart enough and articulate enough to understand that you can't just … say, ‘Well, developers have had too much,’” Rigby says.

Developers don’t seem threatened by either candidate. But as the conversation about tax incentives gets more mainstream, Kansas City’s future mayor will have a lot more eyes on how they navigate the issue.

Lisa Rodriguez is a reporter and the afternoon newscaster at KCUR 89.3. Follow her on Twitter @larodrig.