I haven't had much time for Kansas City politics lately (thus, the few blog postings), but I have been following with some casual interest the Citidel Plaza project in KCMO. (And atip of the hat here to TKC, who has actually used his blogging time wisely by doing a good job of covering this strory -- it's a shame he doesn't put his writing skills to this good of use all the time.)
The proposed project is for a shopping district at 63rd and Prospect. For those not initiated with 63rd and Prospect, the neighborhood has has long been in a neglected part of the city. The 64132 zip code has a poverty rate of 29% (more than double the state average. 13.7% of the population has an income 50% below the poverty level (also more than double the state average). The zip code has lost nearly 20% of its population since 1990.
Everyone on the council knows the Citidel Plaza project is a loser financially for the city. There is no way a shopping center in that location is going to pay out in the TIF money they need to build it. And given the current economic situation of the city, taking on more TIF losses doesn't seem like the most responsible thing to do.
But politically it's a loser too. No one disputes that something needs to be done to help this area....which is, at this point, overgrown with weeds and the blight is becoming a haven for crime. Denying redevelopment TIF money to a blighted and forgotten part of town is not good either.
But it doesn't take much driving by the area to realize that the Citidel Plaza area may be the least of the area's problems.
Drive two blocks west and you get to your first abandoned office building.
If you drive another 2 blocks, you get to another shopping center that sits about 1/3 full of businesses.
If you go another 2 blocks, there is a shopping mall/center that is pretty rough looking, and appears to have several open sites:
And two blocks later, you get to the now-empty building that used to house the Cleveland Chiropractic College:
Given all of this vacancy along 63rd Street, I find it hard to believe that building more buildings is actually in the best interest of the area. Maybe the answer should be, that instead of building another shopping center, maybe we should provide an incentive for people to fix up and fill the empty building space that blights the area. Maybe once we can get these buildings remodeled, and filled, maybe then, the new shopping center might make sense. But building more buildings for shopping, while others sit empty just blocks away, doesn't make sense: financially or logically.
Helping these buildings get improved and inhabited would likely require less subsidy than the Citidel Plaza project. And it would also be helping benefit the neighborhood that badly needs it (which will help the city council politically by not turning their back on the area -- not to mention, it would be the right thing to do). Besides, even if they build the Citidel project, they're likely going to have to subsidize this blight anyway (especially when they can't compete with the new development that has tax incentives).
Maybe it's a horrible idea. If it is, tell me why. But it seems like better solution for the neighborhood, and a better financial situation for the city.
At last, a voice of reason! Your proposed approach makes a tremendous amount of sense, logically and politically.
Posted by: InsideBub | July 03, 2009 at 06:55 AM
I think it's ironic that this area is exactly the type of area TIF was invented to help. I agree with you that another shopping center is the last thing 63rd street needs. Maybe would could provide some TIF money for something besides retail in that area. OH WAIT! We can't afford it any more, not after the handouts we've given in places like Briarcliff and West Plaza.
Posted by: Casey | July 04, 2009 at 11:06 AM
No doubt Casey. I'm not sure why virtually all TIF projects seem to want to involve retail...it's like we've forgotten that retail needs people to support it. And more than anything, this area needs people -- people living in the now-empty homes and people working in the now empty office buildings. If you get a lot of people there, retail will succeed. But without the people there first, it will not.
Posted by: Brent Toellner | July 05, 2009 at 04:13 PM
Casey,
Sometimes I wonder just how well you understand how TIF does and does not work. Your comment above gives the impression that you think that a TIF district comes with money to be given to the project. That is only true if a bond is issued upfront to finance the project; otherwise, most TIF projects are "pay as you go" - in other words, the project only get the TIF revenues that it creates. No project, no revenues. So, if a "pay as you go" TIF project under performs, the project is the entity that suffers because there is less TIF revenue to repay eligible project costs.
Your comment about Briarclif makes me realize that you don't remember what it was like before the TIF project began. It was a mined-out, overgrown, semi-lunar landscape with homeless camps and other assorted junk littered about. Those funny-looking hose and pump contraptions that you see on the lawns are actually part of on-going work to fill the mines with flay ash and thus ensure the future stability of the site. Yes, Briarcliff is quite lovely and appears to be relatively healthy financially - because of TIF. Don't hold it up as a poster child example of TIF "abuse."
Posted by: InsideBub | July 05, 2009 at 04:30 PM
Brent & Casey,
The reason that so many TIF projects have retail components is because they tend to generate Economic Activity Taxes (EATS) - sales taxes, local earnings, utility taxes, etc.. 50% of the increased EATS generated in a TIF projects are captured by the TIF and used to pay for eligible project costs.
The reason that there are so few housing TIF projects is because of the way residential property is assessed in Missouri. Commercial property is assigned a market value, but is assessed on 32% of that market value. Residential property is also assigned a market value, but is assessed on only 19% of that market value. This makes is very difficult for residential property to be developed using TIF.
Hope this helps.
Posted by: InsideBub | July 05, 2009 at 05:07 PM
What the urban core needs more than retail is decent paying jobs. Let's save our subsidy for small to medium manufacturing or some other average to higher paying job. The shops at Blue Parkway don't seem to be doing so well and that is a nice shopping center so stop trying to force something that isn't there. The retail that follows rooftops assumes that the people have jobs to support shopping. First things first. Create jobs.
Posted by: Becky | July 06, 2009 at 07:14 AM
Briarcliff is also a great example of one shopping center stealing the business away from another and not generating anything new - tax dollars or jobs. It IS an example of a project that was not "needed" but yes, nice payback to the Northlanders.
Posted by: MichelleD | July 06, 2009 at 05:51 PM
I agree that many retail TIFs do simply move the sales, jobs and tax revenues around. This is something that probably needs a legislative fix since it will always be in one municipality's interests to use TIF to move sales, jobs and tax revenues from another municipality to itself. Perhaps it shouldn't be allowed to capture revenues from a business that is relocating from within the same municipality or from another location within 10-miles of the new location?
Briarcliff is a little unique in that most of its businesses are locally-owned one-ofs, which means that they weren't generating sales, jobs and tax revenues in another municipality. Briarcliff does have the added benefit of having remediated some nasty blight.
Posted by: InsideBub | July 08, 2009 at 06:27 PM
ISB -- Thanks for the clarification on the Commercial vs Residential TIF differential. I didn't realize they were taxed differently. That said, at some point they need to realize that business and cities revolve first around people...and without them, retail doesn't matter.
I can't share the same sentiments that you share on Briarcliff. Seems like regardless of what it looked like, a vacant piece of land, 1 mile from downtown with great skyline views surrounded by Million dollar homes doesn't seem like it needed incentives to develop.
Posted by: Brent Toellner | July 09, 2009 at 03:29 PM
Brent,
Okay, lets change the location to Harlem, the area that is sandwiched between the Missouri River, the downtown airport and the City of North Kansas City. It is on the north bank of the Missouri River, less than 1/4-mile from downtown, has fabulous views of the downtown skyline, and is easily accessible from downtown via the Broadway bridge (if you know to exit to the left at the north end of the bridge and then turn to go under 169 and the railroad tracks). The infrastructure is incomplete and in poor condition, the access to 9 Hwy and North Kansas City is circuitous at best, there's illegal dumping, and the site is surrounded by the railroad yards and industries. Would you consider this area blighted? I know what my answer would be.
Posted by: InsideBub | July 10, 2009 at 06:38 AM
Yes. Of course the area is blighted. And while I know you are tying this back to Briarcliff, there is a huge difference. At the time when Briarcliff Village received TIF money it was surrounded by hundreds of homes that would be valued in the $500,000 - $1.5 million range. Seems like people would have been clamouring to get a piece of those dollars....not receive tax breaks for it.
Meanwhile, most of the problems you note with Harlem (infastructure, illegal dumping, etc) are things the city should be providing to all neighborhoods anyway...which is a completely different issue.
Posted by: Brent Toellner | July 10, 2009 at 08:47 AM
Brent,
A TIF doesn't come with TIF money; it creates its' own subsidy through the increased property taxes and economic activity taxes generated by the project itself. If there is no development, there are no TIF funds generated. If the project does extremely well, it generates more TIF funds and is able to pay back the eligible development costs faster. So, Briarcliff didn't receive TIF funds until the projects had created them. The developer did see a market, but couldn't make the project work financially with conventional financing because of the tremendous cost of remediating the blight. I can't think of a single developer who wouldn't prefer to do every project with conventtional financing instead of having to seek public assistance for the difficult projects; developers tend to have a low tolerance for hassle factor and if it's one thing public assistance programs have, it's a high hassle factor.
You're right about the City having a responsibility to provide the infrastructure and services that the Harlem area needs. I just don't see that happening since the City has much more pressing needs in more visible - and vocal - neighborhoods. Sounds like a future TIF project to me.
Posted by: InsideBub | July 10, 2009 at 08:02 PM
ISB,
Here's my problem with Briarcliff. I think it most likely would have been financially feasible without TIF help. It's a shopping district surrounded by million dollar homes, 5 minutes from downtown, and with beautiful skyline views. And by giving TIF breaks to places that don't need it, we end up shorting the city tax revenue that we would otherwise be getting that would go toward infastructure improvements in places like Harlem Neighborhood (and countless others).
Briarcliff isn't the worst case of TIF abuse (I29 corridor wins that IMO)but if the only way we can spur any development is through TIF, then we're going to continue to rely solely on residents -- through property tax, 1% income tax, and sales tax to afford infastructure improvements (or, deal with the complete disrepair that plagues many areas). Which is exactly what Wyco has done -- and now has the highest taxes on individuals in the entire metro.
Posted by: Brent Toellner | July 11, 2009 at 11:17 AM
Brent,
I've enjoyed our "coversation." It seems clear that we will continue to disagree about Briarcliff, but that's okay.
One of the underlying problems is that there are relatively few tools available to provide development assistance. TIF gets used -probably more than it should - because it is available. This is one of the reasons that I'm interested in the Mayor's New Tools effort, although I have my concerns. Cities do need to be able to provide assistance to worthy projects without bankrupting themselves or impacting the other taxing jurisdictions, so we've got to find a different way of doing it.
Posted by: InsideBub | July 11, 2009 at 01:39 PM
Citadel redevelopment would be a success, if a big grocer like Price Chopper or Hy-vees would become a anchor tenant. I live in the 4th district and take my money to Johnson County. Its ashame that our city leader and council members have a limited vision. Far as the Landing and Metro Plaza and empty office buildings on 63rd Street. They need to be torn down and let City Vision Redevelop the area, like they did in Rosedale area of Kansas City, Ks.
Posted by: Michael | November 22, 2009 at 06:53 PM