By Paul Thompson
Northeast News
October 5, 2016
KANSAS CITY, Missouri – The Kansas City Council’s Planning, Zoning, and Economic Development (PZED) Committee proposed changes to the AdvanceKC economic development scorecard on Wednesday, September 28 that paves the way for economic incentive reform Ordinance #160383 to be voted on by the full City Council on Thursday, October 6.
The economic incentive ordinance, championed by 3rd District Councilman Quinton Lucas, would cap the real property tax abatement that the city could offer a development project at 75%, among a host of other limits to economic incentive packages. The ordinance would also create the Shared Success Fund, which would in turn reinvest the extra funds generated from the incentive caps into some of the most economically distressed parts of the city. Lucas notes that the measure is intended to curb an over-reliance on economic incentives for development projects.
“We want to make sure that the public knows that we’re actually thinking about incentive policy and that we’re not just giving away the farm all the time,” said Lucas.
The ordinance has been in limbo since May 12, when it was first directed to the PZED Committee. It would be held on the agenda on six different occasions: May 25, June 8, June 22, July 6, August 10, August 24, and August 31. On September 7, a second Committee Substitute received a ‘Do Pass’ designation, and the ordinance went before the full council on Thursday, September 22. Despite being co-sponsored by Council members Quinton Lucas, Lee Barnes Jr., Jermaine Reed, Alissia Canady, Heather Hall, Teresa Loar, and Katheryn Shields – what would amount to a majority of the council – the measure was once again held until October 6, 2016 after 3rd District Councilman Jermaine Reed was forced to leave the meeting to handle a personal issue.
During that September 22 City Council session, 1st District Councilman and Mayor Pro Tem Scott Wagner explained his own hesitancy to pass the incentive reform measure by bringing up Section 9a of the ordinance, which relates to the AdvanceKC Scorecard that grades the merits of the city’s economic development projects. Wagner noted that the scorecard was already scheduled to be discussed at the September 28 committee meeting.
“It would seem to me that there has to be some resolution to the tool before you have some resolution to the policy,” Wagner said.
The PZED Committee had their chance to discuss the AdvanceKC Scorecard on September 28, though Councilman Lucas and 1st District Councilwoman Heather Hall weren’t able to attend the meeting. Committee chair Scott Taylor was joined by Lee Barnes Jr. and Katheryn Shields for the discussion.
The current language associated with the AdvanceKC Scorecard encourages incentives “only as necessary” while emphasizing the public benefit and a “positive fiscal impact on taxing jurisdictions” as part of the threshold for granting economic incentive packages. The scorecard also prioritizes new development of quality jobs, as well as development practices that would emphasize elements like historic preservation and expanded housing choices for Kansas City residents.
Revisions proposed to the AdvanceKC Scorecard ahead of the September 28 committee meeting included an increased focus on development projects in economically distressed census tracts, splitting the economic development scoring system into separate “job-based” and “site-based” scorecards, and a switch from a “confounding” 300-point system into a 100-point system that will be easier to weigh.
On September 28, the PZED Committee added extra points for developments which create indirect jobs that pay prevailing wage, bumping up the maximum from 10 points to 15 points on their site-based scorecard. The committee also added new point-scoring possibilities for properties that (1) have been vacant longer than three years; (2) have seen taxable property values decrease over the past five years; or (3) are being converted from an obsolete use.
For the job-based scorecard, a proposed alteration would provide additional points for projects that include second chance programs that encourage the hiring of employees with prior criminal records.
After adjustments were proposed on September 28, the PZED Committee agreed to hold the measure so that Lucas and Hall can add their two cents during the October 5 meeting. From there, the plan is to advance the ordinance, allowing the new AdvanceKC Scorecard to be set before the second committee substitute for Ordinance No. 160383 comes back before the full council on Thursday, October 6.
Lucas contends that the prospect of changes to the scorecard should not be reason enough to hold the ordinance the following day.
“I wouldn’t expect the AdvanceKC Scorecard to have any effect on how Ordinance 160383 is written,” said Lucas. “I continue to think that it’s an unnecessary delay to hold up incentive reform.”
Lucas added that the incentive reform ordinance would be a boon for the Northeast by providing dollars through the Shared Success Fund and directing investment incentives to the Independence Avenue corridor.
“The ordinance would play out exceptionally well for the Northeast area,” Lucas said.
Kerrie Tyndall, Kansas City’s Director of Economic Development, said the revenue that goes into the Shared Success Fund will be pooled together, as opposed to being designated for certain areas. How much money the Shared Success Fund generates, and thus how much the Northeast area stands to benefit, will be tied to the state of economic development throughout the city.
“It’s going to depend on the overall development pipeline,” said Tyndall.
As it relates to the ordinance, Wagner had previously taken issue with the power that the Planning, Zoning, and Economic Development Committee would have to add one-time funding to the Shared Success Fund. Mayor Sly James also conveyed doubts after originally conceiving the Shared Success Fund as a separate measure controlled by an appointed board. Councilman Lucas, however, countered that section 13 of Ordinance No. 160383 has remained consistent since the measure was first introduced.
“One of the things that has never changed in this ordinance over the past five months is the Shared Success Fund, and the Planning and Zoning Committee’s role with this fund,” said Lucas.
The 3rd District Councilman has strongly defended the ordinance, both before and after the September 22 Council meeting. The Shared Success Fund has been a persistent issue, as it would only be available to portions of the city qualifying as “Shared Success Fund Eligible Areas,” excluding high-performing sections of the city.
“Councilman Wagner made the point that much of the Northland is not included,” said Lucas of the proposed ordinance’s Shared Success Fund component. “I would love it if tomorrow, none of the 3rd District was severely distressed. If we’re not eligible for Shared Success funds, then that’s a great thing.”
Wagner, however, countered that the ordinance could cause developers to set their sights on neighboring municipalities for future development projects.
“Liberty can’t wait for us to vote on this, because they will use this ordinance against us,” Wagner warned.
Wagner added that he would like to see some form of official support from area taxing jurisdictions before agreeing to a deal that might prove divisive.
“The reason why we’re doing this ordinance is to get to a place of certainty and agreement with the taxing jurisdictions,” said Wagner. “There is a real apprehension about what is going to happen in Kansas City related to development, to the point that I think what we need to be looking for is some sense of certainty.”
One solution that Wagner suggests could represent a compromise would be for the council to pass Ordinance 160383 now, but make the implementation of the ordinance contingent upon reaching a certain percentage of support, in writing, from area taxing jurisdictions.
“What I’d like to see is something that is consistent with what we pass,” said Wagner. “To me, one of the easiest ways to do that is to say that our legislation doesn’t take effect until a certain portion of the taxing jurisdictions adopt similar economic development policy.”
Councilwoman Katheryn Shields, who represents the 4th District, spoke in favor of Ordinance 160383 during the September 22 City Council session, noting that many key taxing jurisdictions have already voiced their support for the incentive reform ordinance.
“Councilman Lucas and myself have spoken to the heads of the KC Library Board, the KCPS, and Jackson County,” said Shields. “They’re indicating that they are in support of this policy…To me, that really says it all.”