This Obscure Kansas City Agency Does Not Need Your Approval To Keep Giving Tax Breaks To Developers | KCUR

This Obscure Kansas City Agency Does Not Need Your Approval To Keep Giving Tax Breaks To Developers

Aug 31, 2019

Port KC is one of Kansas City’s most powerful economic development agencies, often handing out lucrative tax breaks, but some critics say it has too much clout and reforms are needed to give elected leaders more oversight.

CEO Jon Stephens understands the concerns at a time when the new mayor and the public are skeptical about incentives for wealthy developers. Still, he strongly defends his agency’s activities as essential for Kansas City’s vitality and job creation.

“We are focused on Kansas City economic development, Kansas City transportation and jobs and affordable housing,” Stephens told KCUR’s Up to Date. “We all share the issues of workforce housing, affordable housing, quality job development and redevelopment of neighborhoods that are struggling because they have not had reinvestment.”

Stephens, who assumed his position 10 months ago, acknowledged that Port KC is an obscure agency that until recently has “flown under the radar.” It can grant generous tax abatements, borrow money, condemn property and set up special taxing districts without city council or voter approval.

Bar K Dog Park opened in in 2018 in Berkley Riverfront Park. Port KC is overseeing other developments there, including an urban village with apartments, retail shops and office space.
Credit Laura Ziegler / KCUR 89.3

But Stephens said he was hired in part to bring more transparency to the organization’s deals. He said he and his unelected board are committed to working closely with Mayor Quinton Lucas and the city council on shared goals.

“There’s a lot more focus,” he said, “on making sure that we clearly articulate the advantages and benefits of Port KC and what we do collaboratively and in partnership with the community.”

What is Port KC?

Originally known as the Port Authority, Port KC was established in 1977 with broad powers to promote residential and commercial development, business and industrial parks, terminals, port and commerce facilities, multi-modal rail and freight assets and to redevelop the downtown riverfront.

Despite its name, its state-established boundaries extend far past actual port locations to include everything within Kansas City’s city limits.

It has a nine-member citizen board of commissioners appointed by the mayor. But it is a subdivision of the state of Missouri and isn’t directly accountable to the city council or to voters.

Key projects

  • Berkley Riverfront. Port KC is overseeing plans for a 55-acre urban village with offices, apartments, retail and amenities like the existing Bar K dog park and restaurant space.  As part of that initiative, Stephens said Port KC has announced plans for a $15 million apartment project of up to 75 units, more than half reserved as affordable, that could open in 2021.
  • Richards Gebaur. Port KC oversees and manages nearly 500,000-square feet of office and industrial space at a commerce park at the former Richards Gebaur Air Force Base in south Kansas City. It also operates a port terminal in the West Bottoms and has interests in other large industrial distribution facilities.
  • Downtown and Country Club Plaza. Far from any waterfront site, Port KC also awards tax abatement and other financing for projects such as the redevelopment in 2016 of the Board of Trade Building near the Plaza to retain the Populous architecture firm. Earlier this year, the Port KC board approved an 18-year tax exemption for the $85 million redevelopment of the City Center Square office tower at 1100 Main St.

Stephens said he wasn’t with Port KC when the Populous deal was reached. He said the City Center Square project revitalizes an underused 1970s-era building into high-class offices that will retain quality jobs downtown.

Bypassing city council

Critics have suggested that developers approach Port KC to circumvent the politically charged incentives debate at City Hall. But Stephens pushed back on that assertion. He also noted that Port KC is in agreement with a much-heralded bi-state truce, in which both Missouri and Kansas agreed not to offer subsidies to poach companies across the state line.

The most recent deal that has raised eyebrows involves Port KC considering issuing up to $25 billion in bonds over 35 years to support a Google data center in Clay County.

Google’s initial investment could be $600 million but the project is only expected to generate about 30 jobs at the start. Google’s investment in Kansas City isn’t a sure thing, but if it happens Port KC could issue bonds providing a property tax exemption for 25 years.

Stephens countered critics who don't believe Kansas City would really benefit by offering a hugely profitable company tax breaks to create so few jobs. Data centers generate millions of dollars in energy taxes, Stephens said, and can bring in highly skilled, high-paying contracting jobs that service the centers. He said the project would also generate payments in lieu of taxes benefitting the North Kansas City School District.

Cities aggressively pursue these data centers, Stephens said, so having Port KC help land the Google project would be valuable to show that Kansas City and Missouri are “open to tech development, tech growth, tech investment and tech jobs for the future.”

Some observers have suggested that Lucas should seek the resignations of the current Port KC board members so he can appoint people sensitive to the overuse of developer subsidies. Former Mayor Sly James also sought resignations from citizen boards after he was elected so he could appoint his own representatives.

Lynn Horsley is a freelance journalist and was a veteran reporter for The Kansas City Star. Follow her on Twitter @LynnHorsley.