In spring of 2005, the Kansas City area ReclaimDemocracy.org chapter and other local organizations fought to stop a $27.5 million Tax Increment Financing (TIF) package for a shopping center redevelopment anchored by a Wal-Mart.

Editor's Note: TIFs are a form of subsidy offered as tax breaks over years, rather than an up-front payout. Misuse of TIFs is a widespread problem. Our friends at Good Jobs First have many excellent resources for scrutinizing TIFs and stopping taxpayer rip-offs.

But the TIF application and approval process lacked transparency and accountability, and by the time citizens mounted opposition, the TIF was a “done deal.”

To work toward stopping subsides that lack clear public benefit, our KC chapter commissioned economists at the University of Missouri-Kansas City to scrutinize city TIF projects and report on their use for a Citizen's Guide to TIF and campaign to restore public power over the process.

The resulting study, "Uneven Patchwork: Tax Increment Financing in Kansas City," was authored by Dr. Michael Kelsay, a professor of economics at UMKC, and released January 17, 2006. The full report is available at reclaimdemocracy.org/rdc/kc/tif_report_1.07.pdf.

Among the major findings is a pattern of awarding TIF projects to the city's most economically advantaged areas and bypassing those most in need of economic development. While the initial purpose of TIF was to encourage development of blighted areas, only 14% of the TIF projects have been approved in the two most blighted of six city districts. Tens of millions of dollars are awarded annually for TIF projects in Kansas City, and the numbers are growing: since one TIF project was implemented in 1984, the numbers grew to 21 in 1994, and a whopping 52 in 2004.

Mary Lindsay, spokesperson for Reclaim Democracy.org-Kansas City, stated, “The findings of this study bring into question decisions of City Hall, where for years the awarding of economic incentives has been directed away from the communities in the city that need them the most. The city's lack of an economic development plan to guide the TIF Commission puts developers in the driver's seat.”

The Kansas City chapter of ReclaimDemocracy.org hopes this study will inform the discussion in the upcoming City elections. To that end, the group is cosponsoring a mayoral forum that will take place January 23, 2007 at UMKC's Grant Hall from 6-8 PM.

Below is a news report on the study from the Kansas City NBC affiliate, KSHB.  Mary Lindsay, Chapter vice-president, opined on the study in this op-ed for the Kansas City Star.

 

Poor districts left out of tax incentive process, study shows

KANSAS CITY , Mo. – An independent study of how Kansas City hands out big tax breaks to developers in the form of TIFs criticizes the process saying the city council is ignoring the poorest parts of the city.

The boarded up buildings show the blight in parts of Kansas City 's third and fifth council districts, the poorest in the city.

"They are clearly neglected by the TIF process," said Mary Lindsay of ReclaimDemocracy.org .

The study, the first of its kind, shows those neighborhoods get the fewest Tax Incentive Financing breaks for developers. The TIFs are supposed to be used to overcome blight by attracting business to the area.

"Have they gone to the truly blighted areas, areas that really needed incentives," Lindsay said.

ReclaimDemocracy.org is a non profit group that hired a UMKC researcher to map out how those tax breaks are divvied up across Kansas City .

Dr. Michael Kelsay said the wealthiest parts of the city, the second and fourth districts, get the most TIFs.

"A TIF policy needs to be implemented by the city to close the loopholes," Dr. Kelsay said.

Fourth district councilman Jim Glover defends the use of TIFs, although he said he has voted against some.

"It's important that you examine each project on a project-by-project basis," he said.

Glover said tax breaks turned around midtown blight when he brought in Costco and Home Depot.

"We removed about 35 acres of blight and brought in a lot of jobs to Midtown. If you go into Costco you'll see a lot of people from the neighborhood who have good paying jobs."

Lindsay said still the poorest districts are being left out.

"If you look even superficially at some of the TIFs around the plaza," said Lindsay. "It's very clear that money draws money, including, from my point of view, TIF money."

TIFs are now a controversial issue in the campaign year because of the city committee vote last week regarding the Briarcliff development. The city gave tax breaks to that upscale area.

The study was commissioned more than a year ago. It recommends that tax breaks be tied to future performance.

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