After eight months of intense behind-the-scenes negotiations, the Kansas City Council is poised to vote on a new policy to rein in tax incentives for development.
The Council’s Neighborhood, Planning and Development Committee on Wednesday endorsed a measure that reduces available incentives. The ordinance goes to the full Council on Thursday for a vote.
The proposal 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 breaks for luxury developments in prosperous parts of town take too much tax money away from urban schools, libraries and other services.
“There is a deepening feeling that the city is prioritizing the needs of wealthy corporations over the needs of residents,” she told her colleagues last week.
Some developers meanwhile, have warned that the projects would not happen without tax incentives, and growth could simply stall or migrate to neighboring cities.
Robinson and Councilwoman Ryana Parks-Shaw have held numerous work sessions with stakeholders from the school districts, other government agencies and the business community to try to find a workable 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 incentives 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 Wednesday’s committee meeting, 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 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 score card for evaluating which projects are worth funding. Robinson said that time frame allows the council and stakeholders to work on the scorecard revisions and other necessary reforms.