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Proposed tax break ban in flood plains wouldn’t apply to Kansas City area

Posted: 8:43 PM, Apr 03, 2019
Updated: 2019-04-03 21:43:44-04
Missouri Legislature

JEFFERSON CITY, Mo. (AP) — With floodwaters again inundating parts of Missouri, the state Senate on Wednesday backed legislation that could limit local tax breaks offered for new developments in flood plains.

A bill given initial approval would prohibit new "tax increment financing" projects in areas designated as flood plains by the Federal Emergency Management Agency. The ban would apply everywhere except in the Kansas City area, which was exempted by an amendment from a Kansas City-area lawmaker.

Flooding and development tax breaks are both common in Missouri — and are not a wise combination, said Sen. Andrew Koenig, who is sponsoring the legislation.

"Incentivizing dollars into a flood plain is bad policy, and it potentially causes more flooding downstream," said Koenig, a Republican from the St. Louis suburb of Manchester.

A tax increment financing district, known as a TIF, allows a portion of the increased tax revenues resulting from a development to be used to pay for it instead of going to schools, fire districts and other local governmental entities. For 2018, the state Department of Revenue received reports from 449 TIF projects in 109 municipalities with anticipated project costs of over $39 billion, of which more than $15 billion was anticipated to be eligible for reimbursement through the tax breaks.

After devasting flooding in 1993, some communities fortified levees to better protect developments in flood plains. But such developments have remained controversial, because high levees along rivers can funnel water to other communities downstream, which may then experience more extensive flooding.

A 2002 state law sought to prohibit new TIF projects in flood plains in St. Charles County, which had seen extensive development along the Missouri River.

This year's legislation sought to apply a similar ban statewide. But the Senate on Wednesday adopted an amendment by Sen. Mike Cierpiot, a Lee's Summit Republican, exempting Clay, Jackson and Platte counties. Cierpiot said the Kansas City area has hundreds of millions of dollars in developments in flood plains that haven't had recent issues with flooding.

The legislation also narrows the criteria for which local governments can declare an area "blighted" to redevelop it with tax incentives. The bill deletes the criteria of "improper subdivision or obsolete platting" and factors that create a menace to "morals." That still leaves plenty of other grounds to declare an area blighted, including inadequate street layout, unsafe conditions and factors that constitute an economic or social liability to the public health and welfare.