Schools Lose in Kansas City TIF Deal

Public schools in Kansas City, Missouri may soon lose out on $5 million, or 3.2 percent of all their local funding, if the city’s Tax Increment Financing Commission has its way. On Monday, the Kansas City TIF Board voted 8-2 to approve a $139 million TIF deal for a developer to build a downtown Hyatt convention center hotel.  

The TIF deal includes what the state calls a “Super TIF.” While the standard TIF will redirect only the sales tax revenue back to the developer, the Super TIF expands that to include all other forms of taxes. The effective difference of the Super TIF is to raise the value of the deal from $46.5 million to $139 million.

On top of this, the city has already pledged $35 million to help build the facility and will waive $4.5 million in property taxes. In total, the project will cost the city $179.5 million.

Not surprisingly, the two dissenting votes were the commission’s representatives from the school district and the public library system. They were put on the board to protect schools and libraries from harmful tax abatement projects, but their two votes and public opposition were not enough to force the board to add a provision to protect the schools and libraries in the final TIF deal.

The Kansas City Council is expected to vote to approve the deal on July 23rd. Despite the misgivings of the school board, the city council has already recommended moving forward with the project.

 

Deals such as this one forget that protecting schools is more important than subsidies in promoting economic development. Kansas City should follow the lead of some other jurisdictions in giving school districts veto power over subsidy deals.