Myths and Facts
Incentives reduce blight. The law defines blight very loosely. There are professional companies who are hired to “prove blight.” Downtown and Crossroads fell into disuse and some assistance was warranted. They are no longer blighted but continue to get incentives. The Country Club Plaza was never blighted, but has long a history of incentives. Struggling areas see far less investment.
Blight is a problem to be addressed. ‘Blight’ is a term from agriculture that means crop disease. Communities of color were considered blighted as part of redlining and urban renewal. Today it is more subtle. Too often the drive to stabilize neighborhoods results in displacing its residents. Displacement has many negative consequences and reduces wealth generation across generations.
Financial information is objective. Source data confirming lender support are rarely disclosed. The public does not know the real "gap" or whether one really exists. Some proxy agencies require independent review of developers' financial assumptions. Others do not, or use an internal staff review. The processes is correctly said to be 'developer-driven' and agencies with the highest standards have the fewest incentive applications. During the application developers can change their numbers to boost scores. After approval developers can raise rents or protest taxes to increase revenue, making the incentive a nice discount rather than a necessity.
Without incentives development wouldn’t happen. This is hyperbole, in reality this is not an either-or proposition. Some development would happen regardless. In many cases incentives add scale and luxury. Incentives in KC are developer-driven and don’t respond to public priorities. Incentives are frequently used to fill the financing gap of large construction, luxury finishes and parking garages. Market studies, zoning, and costs/benefits to the general public are not important in these decisions.
KC needs incentives to be competitive. Many cities try to lure development with tax incentives, creating a “race to the bottom” under the belief that bigger discounts will attractive more businesses. In fact, quality schools and a trained workforce are more attractive to companies. Sometimes companies already in a city can abuse the process, claiming they will leave if they can’t get a better deal than what is offered somewhere else. Kansas City offers deeper and longer tax discounts than most other cities. While this has improved the wallets of the developer class, and looks good politically, it has not helped large segments of our community.
Limiting incentives will kill development. Over the past few years Kansas City has made very mild improvements, capping percentages and duration of its tax incentive offerings, along with allowing exceptions and big loopholes. The number of developments seeking incentives has increased during this time.
Incentives are used sparingly, only to fill financing 'gaps.' Development proposals have simply conformed to successive "cap' efforts. It is often a numbers game with the veneer of substance. Developers maximize whatever incentive is available; that is their job.
Advocates will never give up incentive reform efforts. Actually, that one is true.