Kansas, Missouri battle over companies

[FangKC]

Speaking of relocating with incentives, it looks like AMC may be close to a sale to a Chinese corporation.

http://www.nytimes.com/2012/05/08/busin ... china.html

So they may not even be in KC much longer? Ouch. 50 million down the drain for Kansas if that happens.

I think the speculation is the sale would be for only a part of AMC. Not sure there's much chance of the HQ moving. But you never know. Is there any kind of clawback or anything in the KS deal? That would be hilarious if they were left holding the bag for an empty HQ.

Oh wait....

My concern is not so much about the headquarters being moved out of Kansas City, but how foreign ownership might affect AMC's involvement in operating the Midland and Mainstreet theaters downtown. One could argue that current AMC management would be more likely to stick with operating both theaters out of a commitment to the community. Running the Midland as a live entertainment venue is sort of out of the realm of AMC's main business--movie theaters. I think AMC has done it for so many years as a community service. I also don't know how profitable the Mainstreet is, but I would say that AMC might stick with keeping it running longer if it was a marginal situation than a foreign owner might, who might close it if it's not earning enough profit.

The long-term success of the Mainstreet depends eventually on having a lot of residents living downtown, and I don't know if we are at the point yet that there are enough downtown residents to keep it open in the long-term.

[aknowledgeableperson]

I also don't know how profitable the Mainstreet is, but I would say that AMC might stick with keeping it running longer if it was a marginal situation than a foreign owner might, who might close it if it's not earning enough profit.

As I remember it being reported a few months ago the Mainstreet was a losing operation for AMC. Something about a split operation between Cordish and AMC.

[FangKC]

If that is the case, then I would have concern that a foreign owner would pull out of operating that theater because there would be less inclination to keep it open just because it benefits the community.

I think the Mainstreet could be profitable at some point, but I think that success if based on having a signficant increase in downtown residents. And with the real estate market as it is, and Cordish's reluctance to build new apartments, that appears years off.

I can see holding off on new construction of residential towers, but I still don't understand why the Midland Theater office tower hasn't been renovated into apartments by now. Downtown has a very low vacancy rate compared to other parts of the City, and I would think that there would be demand for those apartments.

Loftguy, do you know why the Midland Theater office tower renovation hasn't happened?

[chaglang]

Propagating the fallacy that there is a "winner" lends legitimacy to the whole fiasco. Please stop.

Not really. Saying that Missouri wouldn't call a truce if they were the ones draining the jobs from Kansas (instead of calling it "winning") doesn't make the statement any more or less true. Don't get hung up on the wording, it wasn't the point.

[kboish]

Propagating the fallacy that there is a "winner" lends legitimacy to the whole fiasco. Please stop.

Not really. Saying that Missouri wouldn't call a truce if they were the ones draining the jobs from Kansas (instead of calling it "winning") doesn't make the statement any more or less true. Don't get hung up on the wording, it wasn't the point.

the real point is...if kansas wasn't poaching jobs from KCMO, then KCMO wouldn't be trying to poach jobs from ks. The only reason KCMO does so right now is to put a shot across the bow of KS---in order to force a truce (how many companies has KCMO given incentives to from MO side suburbs?)...sooo, if KS would stop stealing KCMO jobs, KC WOULD stop poaching from KS and focus on competing with other regions. Like it should be. KCMO seems to understand that real growth must come from the regional level and not in-metro moves.

[pash]

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[kboish]

You guys are nuts. Kansas isn't "winning" anything. They're not creating any jobs for Kansans. The same people, whether they live in Kansas or Missouri, who had these jobs when AMC or whoever had their offices in KC still have them after they move across the state line. Employees' commutes change, a lot of money moves from the pockets of Kansas taxpayers to the pockets of AMC shareholders, and nothing else changes.

I assume you're responding to chaglang? b/c that is the point i was making.

[pash]

.

[KCPowercat]

That's the problem, kansas thinks that it is "winning". Bad for taxpayers.

More jobs have went KS -> MO than the other way around by the numbers.

[FangKC]

The answer is Kansas taxpayers are the losers. They are having to pay tens of thousands of dollars per worker to get companies to move a few miles. They are not new companies for the Metro. And, there is no guarantee that the companies or jobs will stay when the incentives run out, or the company gets bought out by another.

The entire State of Kansas doesn't benefit either, just the suburban Metro communities. So taxpayers in Western Kansas subsidize these companies, and have to make up the difference in taxes these companies would pay if they were in Kansas without subsidies -- for schools, infastructure, social services, etc.

[Zorobabel]

Democracy has an sad tendency to produce short-sighted leaders who come up with even more short-sighted policies. As far as the government of Kansas is concerned, its future largely rests in JoCo. To a some extent, that is true: Kansas' three Fortune 500 companies are all there. The state's only major Kansas-based metro area is Wichita, and the economic news coming out of that city is bleak with Boeing moving out and Hawker going bankrupt. So the policymakers look at the KC metro and probably fancifully envision shifting the economic and demographic core from MO to KS. I don't think it's based on projections or tabulations of taxes, revenue, etc.; as a matter of pride and power, they just want to bring in as many companies as they can regardless of the long-term effects. In the long run, in tea-party Kansas about the only revenue anybody will be getting, state or local, will be from sales and property taxes which just reinforces the point that it is clearly a useless exercise. And if Brownback has his way, Kansas will be running a roughly $1 billion deficit by the end of the decade, and it is unlikely they will be able to afford any more $100,000-per-employee incentives.

[aknowledgeableperson]

They are having to pay tens of thousands of dollars per worker to get companies to move a few miles.

Are they actually "paying"? What I mean, is money being taken from current revenue streams?
When the company is located in MO the KS residents will pay most of their income tax from their salary to MO, and of course the MO residents' income tax will also go to MO. Now the company shifts to KS. The KS residents' income tax (95%) goes from MO to the company so no pay from KS. For the MO residents their income tax (again 95%) goes to the company instead of MO so no pay from KS. The State of KS ends up with a 5% gain, the company gains, and MO loses.
Basically KS is giving up 95% of a future revenue stream. Compare that to a 50% give up with a TIF and 100% give up with a Super TIF.

Not saying KS isn't hurt in the future but at least the cost of the incentive comes from future "new" revenues so that the state does not see the full benefit of the jobs move.

[FangKC]

Yes, they are paying in the sense that the company that moves is not paying full tax collections or revenues to the state or city--depending on the incentive. The company converts what it would pay in tax revenue into building its' headquarters, etc.

The company gets a free ride so to speak, while other Kansas companies don't get one.

So it's left up to other Kansas businesses, and regular taxpayers, to make up for state and local services and infastructure costs on their own.

The problem is that the State of Kansas can't really prove that the incentives to lure companies across the border has any real net benefits. Mostly because they don't keep track of it.

The state hopes that Missouri resident move to Kansas with their jobs, but there is little evidence that they do, so no net gain in property taxes. So the state pins their hopes on some increases in sales taxes. But when you pay $30,000 to $100,000 a job, that employee is going to have to buy a lot of gas, cigarettes, and coffee to pay that much in sales taxes to Kansas.

Besides, everyone knows that if you are close to the state line, you buy your gas and cigarettes in Missouri because of the lower gas and cigarette taxes.

So the incentive just robs both states of revenue to fund services. It's a diversion of personal income taxes away from
public services and into corporate coffers.

The municipalities and state still have to provide services, but there is little net gain in revenue streams. And there is no guarantee that the company will stay put after the incentive runs out.

Kansas is in desperate need to fund government services and needs to increase its' revenue streams. This method is not really doing it. To make matters worse, Brownback is trying to do away with the state income tax. Moderate Republican leaders have said that this puts Kansas' future in peril, and will only result in higher property and sales taxes.

I think it's been stated on this forum before that residential property taxes don't really cover the cost of city infastructure; that it is business that makes up the difference. However, what happens when you only grow jobs by bringing in businesses that pay very little in taxes?

---

A development lawyer said that because many companies taking PEAK are moving operations a few miles away, the incentive does little to move the needle on increasing property taxes because few employees are likely to move as a result.

One former Kansas Department of Commerce official admitted to me once that they do not track these things.

In 2010, state Sen. Karin Brownlee, R-Olathe, said she tried to push the Commerce Department to illustrate the effects of economic development incentives.

State Sen. John Vratil was more blunt about it.

“There’s no benefit to the individual state or their economic development effort,” Vratil told me in 2010, speaking about the economic development Border War between Kansas and Missouri. “The benefit is to the private business that is being courted with huge sums of money.”

http://www.bizjournals.com/kansascity/b ... l?page=all

[FangKC]

So the policymakers look at the KC metro and probably fancifully envision shifting the economic and demographic core from MO to KS. I don't think it's based on projections or tabulations of taxes, revenue, etc.; as a matter of pride and power, they just want to bring in as many companies as they can regardless of the long-term effects. In the long run, in tea-party Kansas about the only revenue anybody will be getting, state or local, will be from sales and property taxes which just reinforces the point that it is clearly a useless exercise.

There is more insight in this statement that most people will recognize.

[KCMax]

Kansas can't keep Jostens from moving to Tennessee.

http://www.kmbc.com/money/31063600/detail.html

[aknowledgeableperson]

Yes, they are paying in the sense that the company that moves is not paying full tax collections or revenues to the state or city--depending on the incentive. The company converts what it would pay in tax revenue into building its' headquarters, etc.

The company gets a free ride so to speak, while other Kansas companies don't get one.

So it's left up to other Kansas businesses, and regular taxpayers, to make up for state and local services and infastructure costs on their own.

YEP. Sounds like a TIF.

[bobbyhawks]

Kansas can't keep Jostens from moving to Tennessee.

http://www.kmbc.com/money/31063600/detail.html

I thought a magical land of no taxes was supposed to work the other way around? Maybe Eduardo Saverin will move there when/if he repatriates. Then, Kansas can complete the transformation to Republican sandbox and secede from the union.

[mistervinix]

[quote="smh"]Speaking of relocating with incentives, it looks like AMC may be close to a sale to a Chinese corporation.

I thought it was odd that the big banner marking the construction site in Leawood says "Support Center" instead of "World Headquarters". Why the (in my mind) lesser designation? Unless they thought the Chinese sale would, indeed, result in the Leawood facility becoming nothing more (?) than the Support Center.

[brewcrew1000]

Are these the type of things KS and MO could face with all these handouts or is this different. Its funny that Rhode Island lured them away from Mass and it looks like it will backfire

http://games.yahoo.com/blogs/plugged-in ... 02526.html

[KCPowercat]

AMC is now owned by Wanda group from China.....says HQ will stay in KC area and day to day operations won't change.

Sad.