Nice work, KCK. Now will it work?

[KCgridlock]

Posted on Tue, Jul. 08, 2003

KCK leaders rethink tax-break strategy
By MARK WIEBE
The Kansas City Star

In 1997, when Wyandotte County leaders granted an eye-popping, 30-year tax abatement for a $252 million NASCAR racetrack, they wanted more than a Winston Cup event.

They wanted to attract more businesses and houses to an area that had long seemed ripe for development. The goal was the same with the county's now-burgeoning 400-acre tourism district adjacent to the track: Use sales-tax revenue bonds to create a first-class retail development, and watch the rest of western Kansas City, Kan., take off.

Now, nearly six years after arguing that the Unified Government needed to offer large incentives to revitalize a struggling local economy, Mayor Carol Marinovich is saying: Enough. No more abatements for businesses near the speedway and the tourism district.

On June 26, to make her point, Marinovich issued her first-ever veto of a measure approved by the Unified Board of Commissioners of Wyandotte County and Kansas City, Kan.

In a letter to the commission, Marinovich turned down a proposed 10-year tax abatement for a $3 million medical building. The building would be at 110th Street and Parallel Parkway, across from Kansas Speedway.

"We already spurred development by the investment we made with the speedway and Village West," she said, explaining her veto.

Village West, the 400-acre tourism district, has attracted Cabela's, Nebraska Furniture Mart, Great Wolf Lodge and the T-Bones minor-league ballpark.

The tourism district, in turn, has helped spark a 30-year high in the number of housing permits issued. Also, the county is now courting the likes of Lowe's, without plans to offer incentives.

The Unified Board of Commissioners approved the abatement resolution in an 8-1 vote on June 19. The resolution would give the property owners a tax break of about 50 percent. Without the resolution, they would pay nearly $1 million in property taxes over 10 years; with it, they would pay more than $500,000 in lieu of taxes over the same period.

After the vote, Marinovich announced her intention to veto the measure. On Thursday, the commission will have an opportunity to override the veto, a move that would require seven votes.

The veto blindsided the physicians who had proposed the project.

"To have the rug jerked out from under us was a bit surprising and disappointing," said William Taylor, president of Heartland Primary Care doctors group. "We are a small business. The issue of trying to raise capital to build a $3 million building is difficult."

Heartland has outgrown its current building, next to Providence Medical Center, and has proposed a 25,000-square-foot building that would allow the practice to grow. But just as important, the group says, it would help the county -- which is losing doctors -- attract new physicians. The abatement is crucial to the project's financing, they say.

When the physicians approached the Unified Government last year, they learned that the final word on abatements rested with the commission. But they also learned that abatements were rarely, if ever, rejected once they had received the staff's recommendation.

"In my 28 years of recollection, there's never been a turndown once it gets to this point," said Unified Government development director LaVert Murray.

About two months ago, the Unified Government administration put a moratorium on abatements for office developments west of 64th Street while it reviewed its abatement policy.

Heartland's abatement had been proposed before the moratorium. It appeared headed for easy approval after Unified Government staff members and a standing committee determined that the project met the criteria for abatement.

Taylor, the Heartland president -- who happens to be Marinovich's personal physician -- said he didn't know what Heartland would do if the veto stood. The group could stay at its current location, try to negotiate a new deal with the commission, or perhaps build in another county.

"I don't want to say it's a strong possibility," Taylor said, referring to a possible move.

Because eight commissioners supported the abatement, enough potential votes exist to override the veto. But not every commissioner is committed to casting the same vote.

Commissioner Mike Gilstrap, who supported the abatement, said he had changed his mind after listening to the mayor's arguments and would not support an override.

Commissioner Joe Reardon, who also supported the abatement, said he was undecided. He echoed Heartland's concerns about possibly losing more physicians but added, "The mayor has a very compelling argument....I think we need to be very careful about what abatements we do and when we do them."

Commissioner Kelly Kultala, whose district includes the proposed medical building and who brought the abatement policy to Heartland's attention, conceded that the issue wasn't "black and white" and that the Unified Government needed to be very selective about tax abatements for developments near the tourism district.

"On the other hand," she said, "I don't know that it's fair to this project to stop it midstream."

Kultala also expressed concerns about the effect that a "no-abatement" policy would have on future development. "It's a competitive business world out there," she said. "If someone can go to Edwardsville and be able to use (sales tax revenue bonds)...does that put us at a competitive disadvantage?"

Dennis McKee, president of County Economic Research Institute Inc. in Johnson County, admitted that there was risk in the mayor's emphatically stating that she opposed more tax abatements for that area. If a mammoth project were proposed, he speculated, some sort of incentive might be appropriate.

"I guess if I were advising someone in her position, I would advise toward a flexible policy that didn't tie you too rigidly to any particular stance," he said.

At the same time, McKee said, the success of the speedway and Village West has demonstrated that Wyandotte County's strategy has paid off.

"The question is whether or not that strategy will work in the long run," he said. "I suspect that it will."

[KCPowercat]

yeah, about time to stop that sieve. Now, why doesn't she try to redevelop the area that really needs it, KCK under 18th street.....she will prove something to me if she does something there, not contibuting to sprawl.

[phxcat]

I thought that was a big step too, but I kind of think they ought to let the hospital go through first.

You are right, KC, now lets get on to the core!

[dangerboy]

Way to go Wyco, now is the right time to slow down the tax breaks and reap the rewards of the earlier breaks. Once again Marinovich proves to be one of the more forward thinking leaders in the metro area. Her plan seems to be working very well - use big tax breaks to lure the Speedway and Village West developments, then after a hot area is established other tax-paying businesses will be attracted to it.

[KCPowercat]

danger...the question is WILL anybody else be attracted...how many more white trash business are out there (big joke there)

let's not call a mayor that is driving people out with even higher property taxes, ignoring her core, and questionable in her practices forward thinking, let's just call her the old KCMO school board.

[dangerboy]

I think on the whole that Marinovich has done a good job, especially considering the mess that the city/county was in before she came along. She deserves a lot of credit for turning around a county that was pretty much in the crapper - economically, financially, politically, and perception-wise.

The city-county merger was a huge accomplishment, something that doesn't happen very often anywhere in the country. Savings from that merger will take time to accumulate, and during the recession it will be hard to cut taxes. There are some improvements and new housing going into the core - it may not as much or as fast as you want, but any new development east of I-635 is pretty much a miracle in KCK. Look at how long it took to reclaim KCMO neighborhoods like Quality Hill, Hyde Park, Volker, etc. - and KCK is just now getting started. Before the Speedway and related development KCK had no hope of being able to stop the bleeing of residents and money, and certainly no way to pay for improvements in the core.

If she ever moves to Missouri I would love to have her as mayor of KCMO. Probably her best quality is that she is not a policitian, but a true public servant. She ran for mayor because she wanted to help the city, not because she wanted to move on to a higher office.

[trailerkid]

Kudos to Marinovich. I hate the way the doctors act as if the tax break was owed to them ("Rug pulled from underneath them"). Everyone else has to pay their taxes and doctors should be no exception....it's detestable.

[KCPowercat]

danger...she's no saint....she's STILL driving people out of that city/county....I just know people that have had a more inside relationship with her and the KCK government.....that shiny development on the west side is not representative of how she treats things like basic city services.

[KCK]

Way to go Wyco, now is the right time to slow down the tax breaks and reap the rewards of the earlier breaks. Once again Marinovich proves to be one of the more forward thinking leaders in the metro area. Her plan seems to be working very well - use big tax breaks to lure the Speedway and Village West developments, then after a hot area is established other tax-paying businesses will be attracted to it.

Well I dont see any of the huge development outside of village west yet. Even the movie theater they promised has yet to be built, and the Legends pushed back its development date. Im against tax abatements, but maybe they were helping.

You are right KC, I dont trust Marinovich either. She has failed the real citizens of KCK to promote her tourist district.