COMMENTARY
After decades of neglect, downtown is relevant again to the metro and that’s vital not only for the well-being of our city as it competes nationally for talent and investment, but for its nearby neighborhoods as well, particularly the East Side.
Back in 2002, when The Kansas City Star, did an important series on downtown revitalization called “Mending Our Broken Heart,” a scientific poll found about half the residents of the metropolitan area hadn’t been downtown in years.
From the look of the crowds attending the Big 12 Tournament a couple weeks ago, and the throngs coming to First Fridays or residents moving into the thousands of new apartments, that sad state of affairs has changed significantly.
But anybody who’s visited peer cities such as Denver, Minneapolis, Indianapolis, Austin or Nashville knows that while our downtown finally is back in the game, it’s still lagging.
That’s why next Tuesday’s mayoral primary election is vital to continue the momentum. CityScene KC is not going to endorse a candidate, but it does have some things to say about what’s needed in the next mayor.
First and foremost, we need to elect a mayor who does not buy into the divisive and toxic notion taken hold among some critics that’s what is good for downtown is bad for the East Side.
Economic development is not a zero sum game and development, particularly the revival of Troost, doesn’t equal gentrification.
The bottom line: a thriving downtown creates jobs that are accessible to people living in nearby city neighborhoods.
All you need to do is look at a Kansas City bus map and you can see quickly downtown is the best bet for creating employment opportunities that don’t require spending half your income on gas to reach.
The new Loews Kansas City Convention Hotel alone will create almost 650 permanent jobs when it opens in 2020, many of them entry level positions. The booming Hospital Hill healthcare complex draws 13,000 employees, students and faculty.
And that Hospital Hill growth is spurring a big ripple of redevelopment along the adjoining Troost corridor, with 1,000 apartment units either completed or in the works along the stretch from 27th Street to Armour Boulevard.
Whoever is elected our mayor needs to, as the winning Royals put it a couple years ago, keep the line moving.
That means continuing to push hard attracting more investment downtown, particularly job-creating employers. More housing is needed too, with a percentage set aside as affordable–if we can ever define what that means.
Which leads to another quality important for the next mayor, a smart, judicious approach to the use of tax incentives.
There is a destructive myth, perpetuated either willfully or ignorantly by critics, that tax incentives are hard cash coming from the city treasury and/or money being taken from schools and libraries. It’s not.
Tax incentives are generated by the new revenues that would not have existed without a private developer investing in a project. That property continues to pay the same amount of taxes to the city, schools, libraries etc. as it did before.
In return, a blighted building or a vacant lot that was dragging down property values and a security hazard is returned to useful, productive life. Leaving it abandoned by denying incentives will do nothing to push reinvestment to the East Side.
Believe it or not, there were some people who’d rather see a parking lot continue to pay $52 per year in property taxes than have it replaced by a $38 million hotel that will employ 40 people and accommodate visitors who’ll patronize downtown businesses.
Last but not least, after observing what it takes to succeed as a mayor in Kansas City, one thing is certain, you have to be very good at creating a consensus to lead. That’s why former Mayor Kay Barnes was so successful.
Kansas City, for a lot of historic reasons, many of them now woefully outdated, has done a mighty job of hobbling strong mayoral leadership at City Hall.
The current weak-mayor system, where the mayor’s vote has no more clout than 12 other council members, is coupled with a city manager who actually runs the show. Power is diluted further by having independent parks and police departments.
Excellent interpersonal skills and being able to articulate your vision and excite people about it are essential to guiding our city. A little charisma helps too, as evidenced by our outgoing Mayor Sly James.
CityScene KC has invited the mayoral candidates for their opinions on downtown. You can read them here: Jermaine Reed, Jolie Justus, Steve Miller, Scott Taylor, Alissia Canady, Scott Wagner and Phil Glynn.
Don’t miss any downtown news, sign up for our weekly CityScene KC email review here.
Incentives are especially powerful when used to create jobs in a city that has an earnings tax that funds a significant amount of the city’s budget. Thanks for your advocacy on the use of these tools. So, once more, a little louder:
“There is a destructive myth, perpetuated either willfully or ignorantly by critics, that tax incentives are hard cash coming from the city treasury and/or money being taken from schools and libraries. It’s not.
Tax incentives are generated by the new revenues that would not have existed without a private developer investing in a project.”
I believe much of the rhetoric coming from the candidates is based upon a perceived need to appeal to a liberal-progressive (high turnout) voter base –a voter base that is inherently (perhaps congenitally) suspicious of the private sector. We often hear the sloganeering terms “giveaway” & “hand-out” followed by “greedy/wealthy developer” and I understand this plays well to the crowd, but at the same time, reinforces the mis-notion that the taxing jurisdictions cut a check to the developer before even a shovel of dirt is turned.
Unfortunately, no candidate has come to the strident defense of incentives, even if they may fully support them or even wish to expand them. I personally would like to see the process streamlined so that smaller developers could access them without significant time and expense. I also think the process could be improved by a deeper analysis on a project by project (or district by district) basis – the essence of the “but for” analysis. The taxing jurisdictions must realize their leverage is higher in the central business corridor than it would be in other parts of the city, and use that leverage to negotiate for lower abatements, making sure that no money is left on the table. I also think some weight should be given to the effect a new development will have on the valuation of adjacent, but unabated properties. A formulaic approach, such as a 50% across the board cap, is certainly more efficient, but it likely costs the taxpayers in the long run.
While some discount economic development, preferring to advocate for neighborhoods, infrastructure and crime reduction, economic development is like the sales department for the city – without it, there is little money to invest in neighborhoods, infrastructure or crime reduction. Hopefully, post-election, the new mayor will accept a tempered reality that incentives must remain a key component of economic development – and economic development itself – a key component to creating revenue that will help fund neighborhood, infrastructure and crime reduction initiatives that candidate is now promising.
“I personally would like to see the process streamlined so that smaller developers could access them without significant time and expense.” If this happened, could the developers create small shell companies and use it to their benefit? It’s more than a stereotype. Developers have received “hand-outs” from City of Kansas City officials, this is a fact.
What I would like to know is how often the city negotiates rather than presumes that the developer is going elsewhere if the city doesn’t make them happy with a high percentage tax abatement. If the City of Kansas City is so proud of its city and #HowWeDoKC, then they should give more value to it by not giving away incentives.
Here’s one recent example of a developer that decided to bail on a downtown project after saying the city wasn’t offering enough tax incentives: https://cityscenekc.com/drury-checks-out-on-proposed-downtown-hotel/
The developer said there will be enough downtown hotel market saturation in Kansas City by the time the hotel would have been completed. In this case city officials knew they could do better. Do we even know the city intended to give the project a chance from the first conversations (and that rendering)?
Per your article:
City economic development officials believe the hotel chain was asking not only for financial help to build its project, but to buffer it from the growingly competitive downtown hotel market as well.
“Drury antiquates that a substantial decline in revenue per available hotel room will take place over the next several years while the market absorbs this unprecedented growth in available rooms.”
Hello Robert, large developers wouldn’t need to create small companies because a streamlined process would be equally accessible to any developer, regardless of size. In the interest of asset protection, however, large developers typically already form a subsidiary for a particular development. I wouldn’t consider them “shell companies” since the subsidiary typically holds title to the land and its improvements.
For the next Mayor, Jobs, Jobs, and Jobs… Period. Kevin you are right on about the importance of growing the employment base downtown. Let’s incentivize and lure business here, that’s another solid way you expand the footprint downtown. We don’t need another Starbucks situation where a large employer looks then bails because we don’t have enough viable office space. New Mayor please make employment a top priority.
While I think the writer is technically correct about incentives EVENTUALLY generating revenue where little to none is coming in from a lot of the land/buildings, but this assumes several things:
1. That these businesses will still be operational in the minimum 10 year timeframe for a portion of the incentive to expire.
2. That developers will even finish their projects to begin with.
On the revenue for education topic, if you look at most cities around the country that are thriving, education plays a critical role in creating a competitive and culturally interesting community. If we want the same in KC, we need to stop allowing taxes to be diverted from our schools. We are literally talking about the future of our city. There’s a reason so many parents who have the option move their families to the suburbs while their kids are in school and the tax diversion perpetuates the challenging education environment that creates the sprawl, further depleting government coffers.
Again, the school district continues to receive the property tax revenues it did previously from whatever project/property is granted incentives. The key question is whether the project/investment can proceed or not without those incentives, the so-called ‘but-for’ test. If denying incentives kills the project, nobody benefits including the school district.
All future development should increase our ability to educate our kids and create the workforce that these businesses will need in the future.
Unfortunately, there’s no test for whether or not developers can truly move the project forward without incentives. We rely solely on their word and that creates an environment in which the city is handcuffed and unable to negotiate. In the early days of downtown revitalization, 100% incentives were likely more logical. Now we have a thriving downtown where the city can show the benefit to developers of building here and take some risks on a few of them deciding to go “elsewhere”. As if there’s a more valuable part of the city to exist.
I like the Lucas ordinance, 75% for 10 years, 37.5% for the next 15. It’s fair and requires everyone to have skin in the game. I might be off in the years there.
The Lucas ordinance actually is the guiding factor these days in awarding incentives. Believe me, there’s room for improvement in the ‘but-for’ analysis but the professionals reviewing incentive requests don’t rely solely on developers’ words. Documentation justifying the requests is a big part of the review. And as the commentary stated, while downtown KC is much better than it was 15-20 years ago, it’s still far from ‘thriving’ when you look at our peer cities.
While the Lucas ordinance guides a lot of the discussion, it’s not a hard and fast rule, it should be.
Again, our kids are being left out of the conversation and they’re the city’s most important future asset.
The hypothesis that growing and strengthening KC’s downtown is good for the east side doesn’t hold up under scrutiny. Please do two things. 1. Pick a spot on the east side, how about 63trd and Paseo, or 59th & Walrond? Then contact the KCATA and find out how many buses a body needs to take to get from that point to the downtown P&L District. While you’re at it, ask the total transit time one way. 2. Go to the P&L District and look at the workers in various venues there. Count the people of color in proportion to others working. You will find very few workers of color. Now drive through the east side and observe the characteristics of the folks who live there; they are disproportionately people of color.
Before anyone pivots to the “they just need to pull themselves up by their bootstraps” narrative, consider the other social hot rails in our local news: public education shortfalls on the east side, continuing disproportionate profiling and imprisonment of people of color, and racism – one conceivable explanation for the low numbers of people of color working downtown. The reality doesn’t match your current vision.
Comments are closed.