Development And Government Incentives Will Always Be Political And That's Okay
A week ago, a Main street project to revitalize the Katz Drugstore with 200 luxury apartment buildings with several amenities such as a pool and virtual golf simulator!!! was killed at Kansas City Missouri City Council over a dispute about the appropriate level of tax incentives and other requirements including affordable housing and access to the parking garage.
The developer had requested a tax abatement for 25 years where they would not pay the increased taxes triggered by the new development and increased value.
Kansas City’s third party analysis determined that they could complete the project with only a 10 year tax abatement.
The City Council committee who first heard and decided on the project settled on a compromise: 10 year tax abatement with a review to add an additional 5 years to the incentive deal.
But by this time, the can of worms had been opened.
A confluence of affordable housing, historic preservation, and tax incentive reform advocates converged together with their own beefs.
That said, if the city and the developer followed the process, it should have flown through with a 10 year tax abatement, the whole issue would be moot, and the developer would have themselves a project.
Today, the project was revived for more conversation.
While this project will probably be the most unique case the city sees over the next few years, I could vividly hear developers, their attorneys, and other business interests groaning over how development and tax incentives are so political.
The reprise goes something like this: development and tax incentives shouldn’t be political.
A generous reading of that statement would lead you to the conclusion that they want a more fair, transparent, and widely beneficial tax incentive process. This would lessen intense debates and create a less bumpy path for their projects and endeavors while also making clear to the public the benefit they are receiving.
I’d argue that for this to be 100% true there needs to be way more transparency about the proposed projects, their ongoing benefit to the city and taxing jurisdictions like the school districts, and also for there to a be cohesive group working fervently to align development and tax incentives with city goals.
As a general observation, many of these private interests, despite some having good intentions, have to be pulled up to the table only to come up with worse solutions as conversations drag on from weeks into months into years.
Perhaps, if there had been more intense efforts years earlier they wouldn’t have a well-organized tenant advocate group in KC Tenants prepping to tilt the balance of power in a city where very few people vote.
A less generous reading would lead you to believe that they just want the tax incentives and to get their way without having to answer to the public.
When you account for all development interests in the city, I think there is definitely a spectrum when it comes to “politics” and development.
That said, I hate to break it to them: politics in development and government incentives is here to stay.
And that’s a good thing.
Politics gets a bad wrap because it’s messy, emotional, and all over the place.
But it serves a purpose.
Development that utilizes tax incentives is essentially breaking the social contract we all have with one another. It argues that because it provides so much more good to the community it shouldn't be bound to pay taxes for a certain time period like the rest of us. Or it asks for public dollars that are not given to normal people.
That process is inherently political.
And why shouldn’t it be?
If we as a society (through our elected officials) are exempting someone or some organization from the social contract or giving someone public resources, the community should have a say in that and it should be as out in the open as possible.
As long as development interests continue to ask for this exemption from taxes or ask for additional public dollars, they should be prepared to engage in politics. They already do but when things doesn’t go their way that’s when we hear the complaints.
But if people want to make development and tax incentives less (not not) political, here’s some free advice that your attorneys with fancy chandeliers in their Zoom background won’t tell you.
Transparent Data—Development interests need to advocate for a transparent data sharing platform that includes annual reporting on vacancy rates, rental rates, and development income.
This needs to be shared with the public.
The public is not dumb.
Two-thirds voted to reject a 50% tax incentive cap because they understand tax incentives.
Good Faith Partners—Developers need to be good faith participants and actively advocating for tax incentives to best align with city goals and working with the city to fix the issues that prevent the alignment.
Too often with incentive reform talks, business interests filibuster any sort of reform with months and months of “work grouping” solutions only to end up barely moving the needle.
It looks bad and doesn’t give the public or our elected officials much faith in “good faith” negotiations.
Police Your Own—Building trust is ensuring others don’t abuse the system. It would help if development interests actually called out abuses of the system and people who aren’t actively contributing to the city’s goals.
There should’ve been a group tapping city council members on the shoulders saying the Katz project should receive incentives as recommended by the third party analysis since that’s the agreed upon process.
I’m 100% sure that didn’t happen.
I and many other people have been saying that business interests need to actually be addressing our social issues or they are going to get run over by a “broad social backlash.”
If development continues to rely on intensive public financial involvement, they need to embrace the politics of the process.
They need to work to help solve the problems otherwise the backlash will only continue to grow and the Bull will constantly be breaking down their door.
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