In a room packed with developers, school districts and other community leaders, a Kansas City Council committee discussed changing how much in incentives developments in the city should receive.
It’s the first time a committee has held a public hearing on an ordinance to limit how much tax abatement should be offered for private development projects.
"In an ideal world, we would have no economic incentives and be able to attract companies and jobs to Kansas City. But sometimes to close the deal and make something happen, we have to use the economic development tools to make it happen,” said Councilman Scott Taylor, who heads the Planning, Zoning and Economic Development Committee.
Councilman Quinton Lucas, who represents the 3rd District, introduced the ordinance. It would reduce the level of tax abatements by one-forth, limiting the amount of property tax revenue that developers can divert, abate or exempt from 100 percent to 75 percent.
Tax abatements and incentives have been scrutinized by school districts, libraries and other tax jurisdictions for years. Instead of getting money from potential property taxes, they argue it goes back to “wealthy developers and corporations.”
"All of this subsidy, all of this tax subsides is going to real estate. We’re getting nice buildings out of this and Main Street does look better, downtown does look better, but we are not creating jobs,” said Crosby Kemper, the executive director of the Kansas City Public Library.
According to Kemper, about 90 percent of the library’s budget comes from property taxes. For the past several years, their revenue has been low.
"We are really down about 15 percent in terms of our tax-supported employees,” he said. "There are fewer services we can offer because we have fewer librarians. Pretty soon we will have to change our hours. We’re going to have to look at our hours, if this continues and then we will have to look at buildings that will close.”
Developers, however, argue these abatements help cut their costs and makes it easier to get their jobs.
Lucas’ ordinance would include exemptions to the cap, including projects within economically distressed areas and those that qualify for historic tax credit financing.
"We want to live in a city that’s growing, where people are moving in and schools are vibrant because we have students coming into the school system rather than moving out. Sometimes to create the employers, to create the jobs for people to work in KC and live in KC, we need the economic development tools,” said Taylor.
According to the council, other cities with similar abatement caps include Memphis, Baltimore and Indianapolis.
Ariel Rothfield can be reached at Ariel.Rothfield@KSHB.com.