The Pitch recently published an article about a TIF (Tax Increment Financing) proposal that has created a stir in Kansas City. Shirley Helzberg is requesting $5 million in future taxes to help fund the redevelopment of her property at 1640 Baltimore in Kansas City. The property will house the headquarters of architectural firm BNIM.
The TIF, which is small in size compared to some TIFs that have been handed out in the metro, has brought criticism from numerous voices in Kansas City which includes the Kansas City Missouri School District, parents of students in Kansas City, the local NAACP, and the Kansas City Star editorial board.
One of the concerns with TIFs is that they prevent taxing entities access to the future property tax revenues from developments funded by the TIFs. Often, school districts and other entities funded by property taxes don’t get any of the property tax revenues for a total of 23 years. Cities benefit from the TIFs because only 50% of the sales and earnings tax revenue is diverted back to the developers.
Making matters worse, the construction of the TIF commissions are tilted in favor of the cities. The mayor is able to appoint 6 members of the 11 member commission. The other five are made up of members of the taxing jurisdictions which suffer the most financially with the loss of the property taxes.
TIFs have become the norm in Kansas City and abound throughout the Kansas City metropolitan area. The Kansas City Economic Development Council lists a total of 59 TIFs: 23 for Downtown and the Riverfront, 9 for Midtown and the Plaza, 9 for the Crossroads and the West Bottoms, 13 in the Northland, 6 in East Kansas City, and 9 in South Kansas City.
Recently, a $65 million TIF was proposed for Metro North Mall redevelopers (from the Kansas City Business Journal), IAS Partners, to help pay for the $187.5 million project. IAS wants to have a standard TIF which would divert 100% of future property taxes and 50% of the sales and earnings taxes back to the developer. Taxing jurisdictions affected by the TIF are fighting for annual payments in lieu of taxes which would help gain back some of the lost property tax revenues.
Some think that TIFs need reform like the free-market think tank Show-Me Institute. They recently published an article about the failure of an $18.5 million TIF for the St. Louis Mills Mall. The mall was just auctioned for $9 million which is 6% of the original construction cost. The Show-Me Institute has lobbied legislators in Jefferson City for TIF reform. SB 774 was proposed last session to change the make-up of TIF commissions in Boone, St. Charles, Jefferson, and St. Louis Counties.
What do you think about TIFs in general or in the Northland? Comment below!