Kansas, Missouri battle over companies

[FangKC]

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?

If all things were equal, and Missouri, or the City, was offering the same incentives more or less, I don't think AMC would be considering a move at all from downtown.  Kansas is simply buying companies using economic poaching.

However, it does come at a price to local taxpayers, and school districts which are already hurting.  Kansas is setting up a situation where large companies pay very little in taxes.  

And just because a company moves to a new building across the state line, it doesn't mean employees automatically move to Kansas from Missouri. Often, employees might have spouses that still work near their home in Missouri, and kids in school.  Thousands of people work in Missouri and don't move here from Kansas to be closer to work.

The other thing to consider is that Missouri employees may not want to move to Kansas just because the company does.  In many situations, employees would end up paying higher taxes in Kansas -- even if they might no longer pay the earnings tax on their income.

There is always peril in doing this as well.  Sprint has laid off lots of employees over the years and diminished in size, and as we know, mergers can mean that a company could move elsewhere, or the local presence could be vastly reduced or gone. American Airlines received incentives to maintain jobs, and they left anyway.  Transamerica got incentives to come to downtown Kansas City, and they ended up leaving.

The other thing Kansas needs to worry about is if Missouri decides to come up with an equivalent to Star bonds and similar incentives.  Missouri has about twice as many residents as Kansas-- 5.998 million versus 2.853 million, and a state domestic product of $240 billion versus $127 billion. Missouri's manufacturing base is about twice the size of Kansas'.

Missouri's population growth rate in 2010 was 7% versus Kansas' 6.1%. Even if Kansas' population growth was 7% as well, Missouri still added about twice as many people in 2010 than Kansas.

Taxes

Missouri

Personal income is taxed in 10 different earning brackets, ranging from 1.5% to 6%. Missouri's sales tax rate for most items is 4.225%.

In Kansas City, Jackson County, the combined sales tax rate is 7.47%.  

Kansas

Kansas has three income brackets for income tax calculation, ranging from 3.5% to 6.45%. The state sales tax in Kansas is 6.3%.

In Overland Park, Johnson County, the combined sales tax rate is 8.65 percent

My point is that Missouri has a much larger tax base and economy than Kansas. So if push comes to shove, Missouri can afford incentives more than Kansas over the long run.

[aknowledgeableperson]

If all things were equal, and Missouri, or the City, was offering the same incentives more or less, I don't think AMC would be considering a move at all from downtown.  Kansas is simply buying companies using economic poaching.

Don't forget, AMC was thinking about moving to the Plaza West Edge development first.  It was only after that deal fell through that KS entered the picture.

[KCPowercat]

Don't forget, they didn't move.  Companies are obviously going to look for better deals where/when offered.  Are you stating the downtown redevelopment wasn't money well spent and should have been spent on incentives to retain employees of companies already in KCMO?

[aknowledgeableperson]

Don't forget, they didn't move.

Not yet.  Battle still being fought.  The point was that AMC was willing to move from Downtown before KS entered the picture.

Are you stating the downtown redevelopment wasn't money well spent and should have been spent on incentives to retain employees of companies already in KCMO?

You seem to say that it is all this way (redevelopment) or all that way (incentives).  Basically my criticism is that the city pursued development and redevelopment without an overall plan or policy for downtown or the city as a whole.  Some downtown redevelopment was justified but even after all those big bucks were spent, or committed, Kansas City still seems to be at best treading water with regards to jobs.  There has been some growth downtown, I guess, but much of that so-called growth has come from other areas of the city instead of from outside the city, and as a percentage of metro area jobs it has probably decreased.

Kansas City does get shorted by the state of MO.  The legislature does seem to favor the St. Louis area and I don't know how that area stands in competition with the state of IL.  I think it favors St. Louis area for many reasons with the primary two being its size and the ability of the suburbs and the city to present an united front.

I have been painted as anti-development but I am not.  What I am against is the apparent throwing of money against the wall and seeing how much of it sticks. 

[Highlander]

I have been painted as anti-development but I am not.  What I am against is the apparent throwing of money against the wall and seeing how much of it sticks. 

And yet you continuously voice support for Kansas doing exactly that. 

[KCPowercat]

Not yet.  Battle still being fought.  The point was that AMC was willing to move from Downtown before KS entered the picture.

Wrong.  KS with their known incentives are always in the picture for a company looking for the best deal.

You seem to say that it is all this way (redevelopment) or all that way (incentives).

Which is opposite of your posts which say nothing.

Basically my criticism is that the city pursued development and redevelopment without an overall plan or policy for downtown or the city as a whole.

Sasaki plan

Some downtown redevelopment was justified but even after all those big bucks were spent, or committed, Kansas City still seems to be at best treading water with regards to jobs.

That infrastructure isn't going away next year.  spending money was a long term investment even without an immediate score.

There has been some growth downtown, I guess, but much of that so-called growth has come from other areas of the city instead of from outside the city, and as a percentage of metro area jobs it has probably decreased.

Yet you support this when KS does it?

I have been painted as anti-development but I am not.  What I am against is the apparent throwing of money against the wall and seeing how much of it sticks. 

that wasn't the plan, despite how you classify it.





[/quote]

[FangKC]

It is true that St. Louis is favored over Kansas City in the state legislature. I met with a city council member who told me this has happened for years.

Kansas City is the largest municipality in Missouri--not St. Louis. Kansas City has 140,000 more people than St. Louis.

One example of this is that St. Louis gets the vast majority of state historic tax credits to revitalize their central city.

The problem for Kansas City is that St. Louis suburban municipalities vote with St. Louis legislators more consistently that KC suburbs do.

The other problem is most of the suburban population of St. Louis lives on the Missouri side. About 40 percent of the KC Metro lives in Kansas, thus our number of urban legislators are diluted, and our metro voters are divided more between two states.

[pash]

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[aknowledgeableperson]

Wrong.  KS with their known incentives are always in the picture for a company looking for the best deal.
They were not going to KS, to the Plaza.  KS wasn't an option until the Plaza deal fell through.

Which is opposite of your posts which say nothing.
If I have said nothing than how can that be an opposite?

Sasaki plan
Had nothing to do with financing or incentives.  Of course the President Hotel was to be demolished.

That infrastructure isn't going away next year.  spending money was a long term investment even without an immediate score.
That sounds like someone saying "There's always next year."  Just as an example, do you spend $10M plus to pay debt for the P&L or use the funds for other infrastructure repairs?  Use revenue bonds for the garages.  Use water and sewer bonds for those utilities.  Go ahead and take funds from ATA and the Police and Fire Departments and general fund supported functions when revenue falls short.  In other words, it may take time to explore other ways of funding, like a CID sales tax to help.

Yet you support this when KS does it?
Not supporting KS, just stating that this is the rules of the game being played .  But you have to realize that the City can be hurting one area of the city to benefit another area of the city.  In other words one shouts that downtown has gained X number of jobs or X number of retail sales, which is true and sounds good, but that does not mean the city as a whole has gained that number.

that wasn't the plan, despite how you classify it.
What plan is there?

[aknowledgeableperson]

Kansas City is the largest municipality in Missouri--not St. Louis. Kansas City has 140,000 more people than St. Louis.


One example of this is that St. Louis gets the vast majority of state historic tax credits to revitalize their central city.

This is what I said:

I think it favors St. Louis area for many reasons

I have friends who receive them for fixing up houses in an historic St. Louis neighborhood.

[kcmetro]

Kansas City needs to worry about fostering the conditions that make businesses want to be downtown rather than bribing them to stay.  That means focusing on providing the public services that press the one big, inherent advantage of downtown (its centrality) and that accelerate its redensification. Build the infrastructure that makes plain the business case for being downtown and Kansas has to make a far better pitch, and offer more money, to lure firms to the suburbs.

Right now, the business reasons for being downtown are not apparent to many business people.  That's because there aren't any, in some cases, or because the balance tilts to more obvious and more significant disadvantages.  H&R Block's boss cited worries about sufficient parking, about crime, about being left alone in a vast concrete wasteland if downtown's redevelopment didn't pan out. It was partly a leap of faith (and, yes, partly incentives) that built the new Block headquarters.

Most firms aren't willing to make that leap of faith. (Sprint surely wasn't.)  A few years ago, it took courage, and a desire to help shape the city's future to choose to locate your business in downtown Kansas City.  That calculus has changed a bit, but the city can't rely on the civic-mindedness of its business community to drive the future of downtown.

First up has to be transit: convenient transit, transit people want to use to get around the city. Good transit does more than move people from A to B.  Good transit reduces reliance on cars, freeing up urban land for more productive uses than parking. Similarly, it decreases the "what-about-parking" mentality and builds a constituency of urban residents, residents who are work for companies that know they will lose them if they set up shop in the 'burbs.

All the light-rail plans proposed in the past couple of decades have been about far-flung commuter lines, lines that bring people in and out of the city.  (MARC is still engrossed in these sorts of plans.)  That's wrong, first because a commuter train is useless if you can't step off it and onto convenient transit that gets you where you're going within the city.  The priority should be intracity transit. The BRT-lite lines are a good start.  The pie-in-the-sky solution, the best solution, is precisely the sort of transit that's been derided in the past as "tourist transit". A rail line right down Main Street, from the River Market to the Plaza, would connect the city's densest residential neighborhoods (the Plaza, Hyde Park/Westport) to its densest business districts (the downtown loop, the Plaza) and would provide the backbone for future spurs into the city's other most transit-ready neighborhoods.  It's a bonus, really, that this corridor is also hosts many of the city's entertainment options and tourist destinations.

I think rail is the only real hope, despite its cost, mostly because any major transit project in Kansas City has to be as much about changing perceptions (of transit, of the city) and creating a sense of urban vitality as it has to be about moving people around.  You just can't do that with buses, nevermind the reasons why.  The other reason I think rail is necessary is because any transit project shouldn't really be a transit project at all.  It should be what planners these days are calling "transit-oriented redevelopment", a wholesale rethinking and revitalization of sections of the city along a transit corridor (again, ideally Main Street).

Anyway, that's a long-winded way of saying that offering incentives to businesses to stay downtown, to my mind, is merely a very expensive way of treading water.  If downtown Kansas City has a future that's brighter than its present, it's going to be because downtown offers residents and business things that other parts of the metro cannot.

Excellent post.  This is what KC leaders should be focusing on.  Transportation is HUGE, and will only be more important as oil becomes more expensive.  If you give people the option to ride an efficient rail system to work downtown, more companies will choose to relocate there, and the city won't have to bribe them down there with incentives.  It really is very pathetic that this metro doesn't even have a light rail line in the works.  Hell, even a very extensive bus system would be nice, connecting all the suburbs with the city that gets passengers to their destination in minutes instead of hours.

[pash]

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[KCMax]

Missouri wants truce on cross-border business poaching

Missouri Rep. Mike Talboy is pursuing a truce on cross-border business poaching, but he?s skeptical Kansas officials will accept the olive branch any time soon.

Talboy, whose district includes downtown, told the Economic Development Corp. board last week he?d submitted legislation that calls for no public incentives to be offered to companies moving less than 30 miles - if the other state reciprocates.

"I've talked to Kansas legislators and they're open to the idea," Talboy said. "They're also concerned about sustaining the amounts of money they've been spending.

Over the past 15 months Kansas has provided incentives that have lured several companies from the Missouri side of the area, including JPMorgan Retirement Plan Services, Hoefer Wysocki Architects and KeyBank Real Estate Capital.

The current target is AMC Entertainment, which is being offered an incentive package valued at $47 million to move from downtown to the Sunflower State.

[knucklehead]

That fact of the matter is that there isn't much office development going on in the suburbs either.

The only movement that is going on right now is tax subsidized poaching.

Call Centers are still being developed, but those are low wage jobs.

Cerner is expanding but look at the tax breaks they got to go to Village West.

My guess is the total demand for office space is not much bigger today than it was 10 years ago. Anyone have any data on total metro occupied office space including single tenant buildings?

[trailerkid]

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?

If you give any company with a couple hundred employees $50 M wouldn't they move anywhere...even the middle of a void.

[aknowledgeableperson]

But AMC was going to abandon downtown for the Plaza without the incentives being offered by KS were even in the picture.

Of course, maybe people feel that development can't be done without incentives.  Afterall, a few posted on this site they thought incentives were appropriate to give to the PS law firm so they would relocate to downtown.  And this is after a developer is willing to build an office building without incentives and a company would occupy the building without incentives.  When was the last office building built in the city's core without the use of incentives?

[KCPowercat]

Expand that question to anywhere.

[chrizow]

When was the last office building built in the city's core without the use of incentives?

Expand that question to anywhere.

exactly.  50% of johnson county wouldn't exist without incentives, to say nothing of boondoggles like village west, briar-TIF, etc.

[beautyfromashes]

Missouri wants truce on cross-border business poaching

You only call a truce when you don't care to fight or don't have the fortitude to win.  If these two don't want to fight for our best interests, then vote them out.  Instead, they just want to give up.  Fail!

[FangKC]

AMC hasn't said yet that it will abandon downtown.  Just because they considered space at West Edge doesn't really mean anything. They just considered it among their options.  Looking outside of downtown might just mean they couldn't find enough space for rent there.  There aren't that many buildings downtown that could accommodate their space needs--400 employees.  I think One Kansas City Place and Town Pavilion might have enough tenants right now that there wouldn't be enough room for them. What other large buildings downtown could rent space to AMC?

So, the only other option for them downtown would be to build a new building to accommodate them.  AMC might not want to own, but rent.  They might not want to go through the process of building a new structure for themselves.

This might be the straw that breaks the camel's back, and Missouri might realize it needs to pass legislation to create something to counter Kansas' Star bonds.

In a perfect world, it would be great if Polsinelli-Shughart and AMC could share space in a new building downtown--say at 13th and Grand where the Law Building was.  But it's not a perfect world.

The process isn't over yet.  Gov. Nixon and city officials are attempting to keep them. How, I don't know.  Perhaps the City, State, DST, and Cordish might eventually come up with a plan to build a new structure to rent space to AMC.  But without equal power to do incentives like Kansas, there may not be a way to swing it now.