Kansas, Missouri battle over companies

[FangKC]

Kansas steals another MO company--Evogen.

http://www.bizjournals.com/kansascity/n ... a=e_du_pub

[FangKC]

KC tries hard to keep AMC from moving to Kansas.

http://www.kansascity.com/2011/03/03/26 ... p-amc.html

[KCPowercat]

47 million in incentives for 400 employees. What a freaking joke.

I still don't understand how the residents in kansas want this.....they see their budget cut to nothing and then see these incentives.....not to mention most love to the burbs to get AWAY from the traffic and congestion that offices bring.....now they are bringing it to their doorstep which is going to end up costing them even more to maintain the infrastructure. Seems insane but spite is powerful emotion I guess.

[smh]

47 million in incentives for 400 employees. What a freaking joke.

I still don't understand how the residents in kansas want this.....they see their budget cut to nothing and then see these incentives.....not to mention most love to the burbs to get AWAY from the traffic and congestion that offices bring.....now they are bringing it to their doorstep which is going to end up costing them even more to maintain the infrastructure. Seems insane but spite is powerful emotion I guess.

In my opinion, it also shows that AMC has very little loyalty to Kansas City, their history here, and what this city has helped them to accomplish.

[FangKC]

Yeah, I'm getting pissed about how little loyalty some companies have to Kansas City, and to some extent, Missouri. It appears that Kansas' economic development policy is just to steal as many jobs from Missouri and Kansas City as possible.

I realize they are in business to make a profit, but at some point, it is just obscene.

I'm still convinced local businessmen are working the system.  They got Kansas to come up with these incentive packages, and after they suck Kansas dry, they will get Missouri to do it as well, and move back.

[macnw]

I knew Mr Durwood, and he would not let this happen if he were alive. I cannot believe AMC will bolt, but I cannot believe KC won't do anything to prevent it. Gotta be something that can be done

[dangerboy]

I knew Mr Durwood, and he would not let this happen if he were alive. I cannot believe AMC will bolt, but I cannot believe KC won't do anything to prevent it. Gotta be something that can be done

Did you actually read any of the news coverage?  KCMO is trying to keep the company.  The problem is that the State of Kansas is offering a lot more than KCMO and State of Missouri can match. 

The real problem is at the state level, not as much KCMO vs OP or JoCo.  Kansas offers much better incentives at the state level than Missouri, so KCMO has less state support in these types of situations.

[KCPowercat]

Isn't the problem incentives on both sides that favor "new jobs" vs "retention of jobs"?  Both ks and mo have much better incentives for new jobs. Just that kcmo has more jobs to poach.

[dangerboy]

Isn't the problem incentives on both sides that favor "new jobs" vs "retention of jobs"?  Both ks and mo have much better incentives for new jobs. Just that kcmo has more jobs to poach.

Yes, incentives skewed towards new vs retention is a big problem.  But even the "new job" incentives Kansas has bigger tax breaks.  A particular advantage is Kansas can front the cash on Day 1 and then repay itself over time from the company's taxes.  Missouri doesn't offer this option.

[pash]

.

[aknowledgeableperson]

Yeah, I'm getting pissed about how little loyalty some companies have to Kansas City, and to some extent, Missouri.

What loyalty are you talking about.  Employers don't have it with employees.  Employees don't have it with employers.  Governments don't have loyalty with businesses (via incentives to some and not others; and giving incentives to new developments that poach businesses from older developments).

[GRID]

http://www.washingtonpost.com/local/pri ... story.html

Northrop Grumman picks Virginia for corporate headquarters

I wanted to show these articles to people in KC because I think it really puts into perspective what's going on in KC with the economic development war that that Kansas has declared on Missouri and just how destructive and unproductive this is to not only Missouri, but Kansas as well.  It's a definite net loss for metro KC for sure.

Here in the DC/Balt area, economic development is as fierce as any place in the country.  You have the central cities of DC and Baltimore competing with some of the most powerful corporate suburban counties in the nation and the metro as a whole is competing with every large metro in the country and the world.

If people think KC has issues with political boundaries, imagine what it's like in DC where ALL your suburbs are in TWO  different states that are totally independent from the city.

These suburbs are not not all that different than those in KC.  Family oriented, cheaper, more land to work and they all want economic development.

The numbers thrown around out here are so low compared to what I'm used to in KC that I always have to read them twice and remember, that economic activity in this region is probably triple that of KC.  For example, 500 jobs and a ten year lease in metro DC is going to generate far higher eco development numbers due to much higher salaries and cost of doing business.

So the next time Kansas offers 30 million to bring 200 jobs across state line from KCMO, think about what they are doing and just how out of the ordinary such practice really is.

In the end, Virginia, with its nearly $14 million incentive package, won, bringing 300 to 400 high-paying jobs to an office park near Falls Church.

Now this is an extreme example because most of the time, no or very little incentives are offered.  This firm MOVED FROM LA to the DC area.  You see, you won't see such aggressive incentives to lure a company from VA to MD or DC to VA or DC to MD It doesn't happen.  I also don't see it happening in Baltimore and its suburbs.  Actually, Downtown Baltimore seems to be the premier choice for Baltimore area companies, but if they do move to Townson or something, it's not because they were lured with tons of cash.

Yet, the incentives offered here to bring a new company HQ to metro DC from LA are far less than the 47 million Kansas has offered to AMC to move across state line.  I mean, this is like AMC hitting the lottery, it will be difficult for them to say no and even more difficult for Missouri to even attempt to keep them. (as I have already stated many times).

Lets compare!
14 million for 400 jobs (200k salary) from LA to metro DC.
47 million for 400 jobs (60k salary) from KCMO to suburban KS.

The other article I posted goes on to say:

Virginia is expected to give Northrop $12 million to $14 million in grants and cash incentives, with the exact amount based on which location the company chooses, said Jay Langston, senior researcher manager at the Virginia Economic Development Partnership. That amount surpasses the $4.6 million given to Hilton Worldwide and $8.5 million given to Science Applications International in recent years.

So, to bring a new company headquarters all the way across the country and its 400 high paying jobs (200k plus average), VA hands out 12-14 million which dwarfs other recent incentive packages to bring in new companies.

All while kansas REGULARLY hands out TENS OF MILLIONS to lure a company from as little as 5-10 miles away within the same metro.

How can anybody find any reason to defend this?  It's not sustainable and the real sad thing is that even though Kansas looks like the king of offering ridiculous amounts of corporate welfare, they get few takers that are not already in their backyard.  That says a whole lot to me about just how desirable KS really is.

But wait.  It's about to get even worse.

http://www.bizjournals.com/kansascity/p ... faces.html

Kansas wants to expand PEAK to companies that are in Kansas too (not just those bringing in jobs from far away places like KCMO).  Crazy.  What's next, letting anybody and everybody use STAR bonds to subsidize greenfield development?  (oh snap!)

And people wonder why taxes are so high in KS and you get so little in return.  Expect that trend to continue.

But maybe a few people have gone to see the wizard of oz and found their brain...

She also questioned offering incentives to companies right across the state line in Missouri, such as the reported $46 million in tax credits offered to AMC Entertainment Inc. to move from downtown Kansas City to Johnson County.

"A lot of their employees are already here," Lynn said.

Really?  You don't say!

[KCMax]

I'm not sure why you bring up the DC example because the DC area is one of the more attractive markets with some of the fastest growing suburbs and its proximity to the federal government. Of course it takes less in incentives - people want to be in that area. And it kinda undercuts your argument that this bi-state poaching is somehow unique to our area when suburban VA and MD are fairly aggressive in competing with DC for companies. So your post is a bit puzzling.

I do agree that I don't see the benefit in offering subsidies if you're going to give up the payroll tax. What exactly would bringing AMC bring in benefits to KS if many of the employees already live there? Added infrastructure costs, and I guess you can put on a Kansas Chamber of Commerce brochure that AMC is a Kansas company, but when you're cutting funding for schools, it seems to be a twisted sense of priorities.

[GRID]

I'm not sure why you bring up the DC example because the DC area is one of the more attractive markets with some of the fastest growing suburbs and its proximity to the federal government. Of course it takes less in incentives - people want to be in that area. And it kinda undercuts your argument that this bi-state poaching is somehow unique to our area when suburban VA and MD are fairly aggressive in competing with DC for companies. So your post is a bit puzzling.

I do agree that I don't see the benefit in offering subsidies if you're going to give up the payroll tax. What exactly would bringing AMC bring in benefits to KS if many of the employees already live there? Added infrastructure costs, and I guess you can put on a Kansas Chamber of Commerce brochure that AMC is a Kansas company, but when you're cutting funding for schools, it seems to be a twisted sense of priorities.

Big difference between aggressively going after companies within the same metro with an absurd amount of incentives vs a region collectively competing for a brand new HQ from the other side of the country.

Do I really have to hold your hand and lay this all out for you?

[KCMax]

Big difference between aggressively going after companies within the same metro with an absurd amount of incentives vs a region collectively competing for a brand new HQ from the other side of the country.

Do I really have to hold your hand and lay this all out for you?

The region did not "collectively" compete for a brand new HQ. Fairfax beat out Arlington, VA; Prince George, MD; and Washington, DC. IIRC, DC actually offered a better incentive package.

So, you're okay with suburban sprawl and incentive competition, so long as suburbs don't offer as much as Kansas? 

[GRID]

The region did not "collectively" compete for a brand new HQ. Fairfax beat out Arlington, VA; Prince George, MD; and Washington, DC. IIRC, DC actually offered a better incentive package.

So, you're okay with suburban sprawl and incentive competition, so long as suburbs don't offer as much as Kansas?  

Good lord max, I do have to hold your hand.

Collectivity competing as in all area jurisdictions that want to land the HQ put an offer on the table and hope for the best, nobody in the area is fighting to keep the same company and the area jurisdictions are not going after an existing regional company.  No matter what happens, the region comes out ahead.

It's similar to the battery plant that Lee's Summit recently landed after "collectively" competing with KCMO, Riverside, Olathe, Belton and others.  Lee's Summit did not set out to steal the battery plant from Olathe.

It's not perfect, it's still not right that a well off suburb like Falls Church be able to out bid older inner ring suburbs like PG County.  Like in KC, it encourages blight and subsidizes sprawl (although at a FAR lower level than what's going on in KC).  Incentives should be used to help level the playing field for redevelopments or investments in places like PG County where white flight has taken its toll or expensive urban areas like DC.

Still, if you don't see the point of my post without the Kansas bias, than there is little I can do.  But just remember, the more you can justify this type of stuff, less you can wonder what the hell is wrong with Kansas City as a whole and why the area has so much blight and decay and subsidized sprawl per capita yet can't even get a four mile starter light rail line off the ground.

It all comes back to things like this.

If regular members on a forum like don't get it, then it's no wonder 99% of the general population of metro KC is so clueless.

[GRID]

I'll sum it up like this.

If Kansas was not offering AMC 47 million.  There is not a chance in hell they would even be considering the state and instead of KCMO scrambling to offer them a tax free situation to stay (which still wouldn't come close to closing the gap), AMC and KCMO would be focused on exactly which part of the Downtown or Plaza area they want to be a future part of.

But what may happen is what has already happened dozens of times.  AMC moves to Kansas and leaves a big hole in the heart of KC that goes FAR beyond and loss of tax dollars.   But even just looking at the tax dollars is a net loss anyway for the entire metro, so what was the real gain?

[KCMax]

I don't think we're really disagreeing. I agree that Kansas' use of incentives are penny-wise, pound-foolish, bad for the metro, and probably even bad for the state.

What I don't get is why you're lauding this DC deal as some sort of great regional cooperation. I think we all know that if an LA company were announcing they were moving to KC and were opening up the bidding for incentive packages, and Overland Park won the bid over Lee's Summit and KCMO with an $14 million incentive package from Topeka, you would not be lauding them for their regional collective effort.

Still, if you don't see the point of my post without the Kansas bias, than there is little I can do.

Yes, it is me that is coming off as a bias in this thread. 

[aknowledgeableperson]

If I understand the $47M incentive correctly KS will not lose the entire amount, or one could say KS is already losing 1/2 of the amount.  If half of AMC employees live in KS there is already giving a credit to these employees via taxes paid by these employees to other states worked in.  And, if the company does move to KS those employees who live in KS will probably stay and a few more employees may move to KS from MO which, over time will be to the benefit of KS.  Does KS completely recover the incentive I don't know but the state must feel that it does since it is still being offered.
This begs another question.  Why is AMC considering to move from Downtown in the first place?  Afterall, it's had a longtime history there and KC has made all of these investments in the dt area - are they the right investments?

[KCPowercat]

47M incentives is why.