Kansas, Missouri battle over companies

[FangKC]

This is just another example of Kansas buying a corporate headquarters, and poaching from KCMO, with no net gain for Kansas.

The reason KCMO can't compete with such a giveaway is because current economic incentives in Missouri are set up for attracting or creating new jobs, and not retaining them. In addition, AMC is not able to promise new jobs in the future with tied incentives to that gain. It's not a factory, so there is no plant infastructure investment either, so again, Missouri's hands were tied.

Perhaps the Missouri Legislature will change that; however, it's unfortunate that taxpayers are now in the position of giving employers a free ride. On a more positive note, Missouri has an economy twice that of Kansas, so if the Missouri Legislature sets up more competitive incentives, Missouri is in a better position to outspend Kansas in the border war. But again, the only parties to benefit from this situation are corporations and larger employers.

[FangKC]

I believe the Mainstreet Theater is still owned by the KCMO, and Midland is owned by AMC.

I believe AMC has an operating agreement for the Mainstreet.

Keep in mind that any boycott of the downtown Mainstreet or Midland as a protest of AMC might have unintended consequences. If the downtown movie theater fails, it most likely will close. It will be hard to get another operator there. Other theater chains might not recognize it as a boycott of AMC for moving, and see it as a failure to draw patrons to a downtown theater.

In addition, other retailers, bars, and restaurants considering the P&L District will see the closing of the AMC Mainstreet as a bad sign--that the P&L District can't draw enough business.

A boycott of the Mainstreet and Midland will punish KCMO, so think about that before you do it.

Finally, once a business becomes a public corporation, it no longer makes business decisions based on loyalty to a community, or even the convenience of its' own employees.

The spin that they considered an out-of-Metro location is probably a lark just to make them look good for staying in the Metro. I doubt it was ever under serious consideration.

[FangKC]

The only way for this poaching to stop is for the Missouri Legislature to develop better incentives and outbid Kansas. In fact, poaching a few high profile Kansas companies might do the trick, and end the battle for good.

Not only should Missouri lure JOCO and WYCO companies over the border, they should also poach from Wichita and Topeka.

[KCPowercat]

AMC is not a publically owned company.

Sly has some great quotes in the Star article calling this what it is...a waste of taxpayer money.

[pash]

.

[FangKC]

Well, AMC is owned by JPMorgan Partners (managed by CCMP Capital), Apollo Management, the Carlyle Group, Bain Capital, and Spectrum Equity Investors. Thus, the leadership of AMC must answer to investors, most of whom don't live in Kansas City, or Missouri. There were attempts at IPO in 2006 and 2010, but adverse market conditions caused management to withdraw.

Thus, the company is very sensitive to profit and market demands--probably waiting for another opportunity to go public.

AMC doesn't have any loyalty to Kansas City or Missouri--not like in the day Stan Durwood ran it. It's no longer a company where a controlling ownership is a local family or person.

AMC sold their building six years ago. Perhaps had they not sold their building, the maintenance complaint wouldn't be an issue, and they would have more control over leasing, and had room to grow in place.

http://en.wikipedia.org/wiki/AMC_Theatres

[FangKC]

The only way for this poaching to stop is for the Missouri Legislature to develop better incentives and outbid Kansas.

Absolutely not true. That is a surefire way to surpass Kansas in doling out corporate handouts with negative public benefit.

[/quote]

I get your point. I don't like it either, but that's the world we live in.

I would think Kansas taxpayers would be up in arms about it as well, but they don't appear to be. In some respects, I think some Kansans get a perverse pleasure out of poaching companies from KCMO.

I also wouldn't minding seeing Missouri try to coax Black & Veatch, Bushnell, Koch Industries, Waddell & Reed, or YRC across the border.)

And in a few years, JP Morgan, Sprint, Garmin, Farmers Insurance, and the GM Fairfax plant.

[knucklehead]

So AMC got a minimum of $45 million (that is just the state PEAK program portion of the of the incentives the rest of the incentives are undisclosed) to move 450 "employees and contractors" about 25 miles.

That is $100,000 a job, and some of them are just temps (that is what contractors means).

This is nuts.

update: I Now see where the Star is reporting it was $47 million for 400 jobs.

That works out to be $117,500 per job to move jobs 25 miles. I would be really upset about this if I lived in Kansas. Talk about government waste.

It begs the question, were kickbacks involved? The only way incentives like that get paid is through government corruption.

Here is another way to look at it. The business journal reports AMC is leasing 115,000 square feet. If you spread the incentives over 10 years, that is $40.87 cents per square foot (4.7/115,000).

If you spread it over 20 years it is $20.43 cents per square foot.

The market rate is about $18 to $20 per square foot.

[KCMax]

AMC is not a publically owned company.

Sly has some great quotes in the Star article calling this what it is...a waste of taxpayer money.

Its funny how much fire KCMO gets for TIFs on the Plaza and in tony neighborhoods in the Northland, yet JoCo hands out whopping incentives and the anti-government folks seem to be quiet.

[AJoD]

Sporting Life KC,

I understand you can't go into detail about your conversation with Lopez, but can you give any perspective on whether there were real financial incentives that could have taken jobs out of KC entirely.

Even though I believe that was a throwaway line, I don't have a good sense of how incentives are used in other cities to retain corporate HQ. I had never really considered the idea that we benefit from the state line because there are two government entities that throw money at corporations to stay in the region. I don't believe this either, but again, I don't really have a frame of reference.

[GRID]

I read several business journals every week and well as get the washington post daily (very good paper for keeping up with business) and the only place you see these kinds of figures thrown around is KC. Nobody else even comes close. You will see incentive packages and new job incentives etc, but an average of ten million dollars per 100 jobs? No way, you don't see that any place else, not even when talking about luring from out of town. The KC stuff is just to move companies around town.

It's no wonder the taxes are so high in Kansas and yet there is nothing there to show for it. The KS side of KC is nearly a million people has it has the transit system of a town of 50,000 for example.

There is absolutely no way that Missouri can compete with what Kansas is doing. No way in hell. It would bankrupt the state.

Kansas has nothing to lose, but they are sure burning a lot of bridges, creating a lot of resentment and harming the very city that keeps the largest economy in Kansas an attractive place to live or work in the first place.

KC is seriously messed up and wow, Kansas is just being absolutely brutal to kcmo. What's even worse is how stories like this tend to be supported by most people in joco and kansas as just an example of kcmo failing and people actually enjoying such perceived failure as a positive for kansas.

[GRID]

Also as far as AMC leaving town. That is total bullshit. There is not another state or city that would offer them 47 million plus to move there. Not unless they were going into downtown Camden, NJ or or something to totally rebuild a dead city and even then 47 million is highly unlikely.

There is no place else where AMC would get that much cash to move to a brand new office building in a wealthy, desirable suburb.

Kansas is just stupid on all levels here and the residents are just as stupid for supporting this crap.

[kboish]

Its funny how much fire KCMO gets for TIFs on the Plaza and in tony neighborhoods in the Northland, yet JoCo hands out whopping incentives and the anti-government folks seem to be quiet.

That is the thing I don't get. For some reason people's perspective of this kind of move is always "well, kansas must just be a more attractive place b/c of schools, the weather, the beach, blah blah blah". no one ever recognizes or acknowledges the fact that MILLIONS of dollars are be handed over in bribes to the company. and on a scale way beyond anything KCMO does.

[knucklehead]

The Kansas is just better argument is internally contradictory.

If the companies are not moving because of the incentives, then paying the incentives is just plain stupid.

So saying the companies would have moved without the incentives cause Kansas is better is saying the government of Kansas is stunningly incompetent.

[aknowledgeableperson]

Have you ever considered that company announcements on issues such as this are spun for greatest PR benefit?

I am not talking about PR releases. What KCMO economic officials need to do is have an one-on-one talk, like an exit conference, with the decision makers of AMC and find out the story behind the story. If it is just incentives behind the decision then fine. But maybe there are other issues that are a factor in the decision.

[mean]

I'm not sure what other factors there would need to be. If you want to buy a $500,000 house in my town, and I give you $600,000 to do it, does it really matter that you weren't happy with the small garage in your old house? That may have been a factor in you wanting to move in the first place, but the money is going to seal the deal on where you go and why.

[KCMax]

AMC Not to Blame in KC Metro State Line Battle

AMC has a clear goal of minimizing corporate expenses and maximizing corporate revenue. They are owned by a multi-national investment company, the Carlyle Group, that according to their own media info, "seeks to deliver attractive returns for our fund investors." Pretty clear what AMC CEO Gerry Lopez has been tasked with delivering back to the parent company.

Much as they cannot be blamed for their decision, they also cannot be considered good civic citizens. In taking the tax incentive package, worth anywhere between $60-67 million they are certainly returning an attractive return to their investors. However, for the Kansas City metro area, those are tax dollars lost for core investments in our community. The economic development experts are not only shifting tax revenue from one state to the other, and from one municipality to the other, they are taking dollars out of the coffers of the entire metro.

When was the last time any of the economic development teams in Kansas City lured a Fortune 1000 headquarters from another city to anywhere in the metro area? If we are going to give away $60 million in tax incentives, shouldn't the return on investment be completely new dollars to the area?

As citizens we musty demand better from all of our elected officials and the people they hire. The civic leaders of our city also need to stand up and work to grow our region, not just one small areas.

[DaveKCMO]

maybe we should just go burn lawrence down again.

[FangKC]

Perhaps KCMO should create incentives to share the burden of a big city with JOCO, and Kansas. In this scenario, KCMO creates an authority to purchase and rent homes in JOCO to poor families to give them the opportunity to attend JOCO schools, and benefit from their vastly superior living environment.

KCMO moves some of the most troubled families to JOCO, so they can enjoy the splendors of living there, and benefit from good schools and nearby grocery stores and retail.

Working also with HUD, KCMO would place the majority of qualified low-income families in JOCO apartment communities and rental houses.

Under the KCMO-owned rental house program, the City would not do maintenance or employ strict rental guidelines--like doing criminal background checks. Under this program, KCMO would target families with gang-members, and other troubled youth.

The goal of this program would be to equitably share the burden of low-income residents and associated problems of society with our more affluent neighbors, who can afford the additional costs of these urban problems. Let JOCO leaders take on some of these challenges.

It would probably be cheaper for KCMO to do this than traditional economic development projects.

Then KCMO could buy up empty homes of former residents and renovate them for upwardly mobile professionals, and start rebuilding the old city and repopulate these distressed areas.

With more affluent residents replacing low-income ones, and rising property values, the City could more easily afford things like the zoo, transit, and pay for parks and streets.

Companies would want to move downtown to be near this population of younger, educated citizens, and flee some of the suburban poverty in JOCO.

[KC Sporting Life]

Sporting Life KC,

I understand you can't go into detail about your conversation with Lopez, but can you give any perspective on whether there were real financial incentives that could have taken jobs out of KC entirely.

Even though I believe that was a throwaway line, I don't have a good sense of how incentives are used in other cities to retain corporate HQ. I had never really considered the idea that we benefit from the state line because there are two government entities that throw money at corporations to stay in the region. I don't believe this either, but again, I don't really have a frame of reference.

I've not heard, read, or been told anything ever about the potential of AMC leaving the metro area entirely. There is an article on the Pitch website where they reference a NY Times article from months ago that mentions the offer from Leawood. So it sounds like one side of the state lin or the other were the two big options. Here is the link:

http://www.pitch.com/plog/archives/2011 ... or-leawood




Lopez seems to sincerely love KCMO and at times when I spoke with him even seemed troubled by the situation. He talked about the Main Street 6 theater and how much it means to them to keep it going. Obviously as CEO he has a lot of influence, but as has been mentioned here earlier there are plenty of other groups and investors with a lot of pull regarding the direction of their company.

Personally, I'm with most people on here, I'm angry that they're leaving, and as a downtown KC business owner I'm frustrated that the neighborhood is losing so many jobs. I felt like I had just been punched in the stomach when he told me it was official. I wanted to grab him and shake him and scream NO!!!!!!!!!!!!!!!!!! But I'm also of the opinion that boycotting a business like that, especially one right in our backyard won't fix the problem and will only make it worse. This is a symptom of a larger issue that needs to be addressed by city and state leadership, and sparked by voters. I believe our time and energy is better spent trying to influence that change.

Besides, I usually go to Screenland anyway.