September, 2016 Competitive Pressures on Kansas City, Missouri...
Transcript of September, 2016 Competitive Pressures on Kansas City, Missouri...
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September, 2016
Competitive Pressures on Kansas City,
Missouri and the Role of TIF Incentives
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What is Tax Increment Financing
(TIF)
• Missouri’s most significant redevelopment tool; net new taxes only; proven results.
• Strict policies and procedures enforced by ordinance in Kansas City, Missouri. Projects funded with new, redirected revenues.
• Allows recovery of eligible development/construction costs through capture of a portion of the “increment”- increased real property and economic activity (earnings, sales, utility) taxes.
• 100% of property taxes and 50% of economic activity taxes captured for up to 23 years for a standard TIF.
• TIF allows taxing jurisdictions to avoid decline in real property taxes and all new personal property taxes are captured by taxing jurisdictions.
• “Super TIF” (other 50% of EATS) and “State Supplemental” (up to 50% of new State sales or withholding taxes) may be available and requires City TIF by state statute.
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Use of TIF Tax Dollars
Local TaxesToday
Local TaxBase
Tax Increment Available to Developer ViaPILOTS & EATS
Tax Increment to Taxing Jurisdictions toKCMO via EATS
Local Tax Base Frozen - Elilminates Declines& No Redirection of New Personal Prop. Taxes
Local Taxes Today
}
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Total New Increment of Additional Taxes
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• # of Active KCMO TIF Plans: 61
• # of TIF Plans Approved: 78
• Jobs Created & Retained: 44,328
• Public Investment $542 Million
• Private Investment $5.9 Billion
• Public Infrastructure $719.5 Million
• Total PILOTS $211.8 Million
• Total EATS $385.8 Million
What Impact Have TIF Projects Had on
Kansas City, MO?
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Note: Information from Worldox #182740
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The Use of TIF in Kansas City
•TIF Projects in KC area primarily for Redevelopment Purposes
• 26 of 61 active TIFs are focused solely on blighted areas
•Non Blighted TIFs (conservation & economic development) are primarily
used for public infrastructure
•Plan Preparations and Review Includes Representatives of Taxing
Jurisdictions
• School Districts
• Counties
• Other
5 IRS Service Center
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Examples of Projects With
Major Impact on Downtown
•Power & Light District
•Freighthouse
•IRS
•H&R Block
•Trozzolo
•Civic Mall
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Impacts on Downtown:
• Spurs Residential & Office
Development
• Positive Momentum & Image
for Downtown Development
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Power & Light District
•Jobs Created/Retained 1,003
•Total Investment $12 Million
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West side of Walnut, between 13th & 14th Streets
14th Street looking west Original Assessed Value: $1.4 Million
Current Assessed Value: $16.3 Million
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22nd & Main TIF Freight House
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•Jobs Created/Retained 213
•Total Investment $22.6 Million
Original Assessed Value: $318,440
Current Assessed Value: $2.6 Million
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Pershing Road TIF IRS Service Center
•Jobs Created/Retained 5,590
•Total Investment $388.4 Million
•Public Infrastructure $14.1 Million
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Original Assessed Value: $908,640
Current Assessed Value: $55.1 Million
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1200 Main TIF H&R Block Headquarters
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•Jobs Created/Retained 2,211
•Total Investment $137.3 Million
Original Assessed Value: $1.7 Million
Current Assessed Value: $20.1 Million
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Baltimore Place TIF Trozzolo (8th & Wyandotte)
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•Jobs Created/Retained 45
•Total Investment $6.3 Million
Original Assessed Value: $216,000
Current Assessed Value: $554,000
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Civic Mall TIF Federal Courthouse
•Jobs Created/Retained 551
•Total Investment $37.3 Million
•Public Infrastructure $13.5 Million
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Original Assessed Value: $2.1 Million
Current Assessed Value: $40.5 Million
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Non-Downtown Projects Midtown:
• Linwood & Main
• Plaza Library
South:
• Burns & McDonnell
• Cerner
East:
• Aldi (39th & Prospect)
• Blue Parkway Town Center
• Blue Ridge Crossing
North:
• Briarcliff West
• Shoal Creek
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Midtown TIF
Linwood & Main
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•Jobs Created/Retained 915
•Total Investment $86.3 Million
Original Assessed Value: $1.1 Million
Current Assessed Value: $8.5 Million
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Brush Creek Corridor TIF Plaza Library
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•Jobs Created/Retained 1,412
•Total Investment $69.1 Million
Original Assessed Value: $0
Current Assessed Value: $18 Million
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Bannister & Wornall TIF Burns & McDonnell
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• Projected Jobs Created/Retained 2,100
•Total Investment $75.4 Million
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Bannister & I-435 TIF Cerner
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•Projected Jobs Created/Retained 16,000
•Projected Total Investment $4.45 Billion
•Projected Public Infrastructure $186 Million
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39th & Prospect TIF Aldi
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•Jobs Created/Retained 61
•Total Investment $3.3 Million
Original Assessed Value: $0
Current Assessed Value: $507,222
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Brush Creek Corridor TIF Shoppes at Blue Parkway
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•Jobs Created/Retained 1,902
•Total Investment $69.5 Million
•Public Infrastructure $11.7 Million
Original Assessed Value: $184,442
Current Assessed Value: $5.1 Million
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Blue Ridge Mall TIF Blue Ridge Crossing
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•Jobs Created/Retained 128
•Total Investment $76.2 Million
•Public Infrastructure $1.8 Million
Original Assessed Value: $1.1 Million
Current Assessed Value: $7.7 Million
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Briarcliff West TIF
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•Jobs Created/Retained 1,345
•Total Investment $85.6 Million
•Public Infrastructure $85.6 Million
Original Assessed Value: $636,200
Current Assessed Value: $47.6 Million
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Shoal Creek Parkway TIF
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•Jobs Created/Retained 386
•Total Investment $73 Million
•Public Infrastructure $73 Million
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TIF Housing Programs
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•Units Completed 1,228
•TIF Funds Used $9 Million
•Owner Match $3.3 Million
Tax Increment Financing funded housing programs were put into place:
• To help reduce blight in the housing stock in a benefit area
surrounding a TIF development.
• TIF Plans with Housing components: Midtown (active); Chouteau / I-
35 (active); North Oak (active); Winchester (active); Southtown/31st &
Baltimore (in place, but not active); 43rd & Main (terminated); Union
Hill (in place, but not active); Bannister & I-435 (new, no projects to
date)
• Exterior improvements are the main focus, along with safety and
health.
• Improving home exteriors help stabilize neighborhoods and improves
housing conditions, which stabilizes the tax base.
• TIF housing programs are layered with City & other improvement
programs to address issues in target areas in collaboration with
neighborhoods and residents to provide the greatest impact.
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TIF Housing – Before & After
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814 E. 33rd Street
• Roofing was replaced.
• Porch railing was dangerous and was repaired.
• Some rotten and broken siding and exterior trim was replaced.
• Much needed exterior paint was applied to protect the exterior surfaces.
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TIF Housing – Before & After
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3828 Paseo
• Exterior wood rot was replaced.
• Much needed exterior paint job to preserve the exterior wood.
• The window spring balances were adjusted to work properly and broken glass replaced.
• Positive drainage was installed to protect the foundation.
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TIF Housing – Before & After
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• Front windows were replaced back to historic sizes.
• Soffit, fascia and gutters were replaced.
• A new front entry door unit was installed and a
• Much needed exterior paint.
• Cobble stone steps were reset and stair railings were replaced.
3640 Virginia
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• Interstate Highway Development & Federal Housing Subsidies Provides Public Support for Suburbs
• Suburban Competition – Post WWII Phenomena
• Higher Income Families Moving to Suburbs
• Urban areas are Generally Inherently More Complicated & Expensive to Develop and Redevelop
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Causes of Urban Decline
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Examples of Urban Decline
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The Adjacent Competition
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Where Does KC Missouri Stand
vs Its Regional Competition?
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Johnson County, KS
Kansas City, MO
Jackson County, MO
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31 Source: U.S. Census
Median Household Income Comparison by Population
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
1980 1990 2000 2010
Yearl
y I
nc
om
e
Census Year
Kansas City, MO
Jackson County, MO
Johnson County, KS
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32
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1980 1990 2000 2010
Po
pu
lati
on
Census Year
Kansas City, MO
Jackson County, MO
Johnson County, KS
Source: U.S. Census
Population Growth Trends Comparison by Population
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Median Value Owner-Occupied Housing
33
$-
$50,000
$100,000
$150,000
$200,000
$250,000
1980 1990 2000 2010
Ho
me V
alu
e
Census Year
Kansas City, MO
Jackson Co., MO
Johnson Co., KS
Source: U.S. Census
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34
Class A Office Space Comparison Inventory by Number of Buildings
40
50
60
70
80
90
100
Num
be
r o
f B
uild
ings
Year
Kansas City, MO Jackson Co., MO Johnson Co., KS
Source: Colliers via CoStar
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35
Class A Office Space Comparison Inventory by Vacant Sq. Ft.
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Vacan
t S
q.
Ft
Year
Kansas City, MO Jackson Co., MO Johnson Co., KS
Source: Colliers via CoStar
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36
Employment Trends Longitudinal Employer-Household Dynamics
Source: MARC
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1990 2000 2010
Po
pu
lati
on
Census Year
Kansas City, MO
Jackson Co., MO
Johnson Co., KS
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Urban Development vs. Greenfield Development
1. Direct Factors
• Land Cost - $2/sf. Greenfield vs up to $60/sf. Downtown
• Relocation – No existing residents or structures vs. multiple
• Environmental contamination – Minimal in suburban areas
• Physical Infrastructure - New versus aging or decaying
• Acquisition & Assembly – Less cost & time in suburban
• Likely Clearance & Demolition costs for downtown
• Surface Parking $4,000/space vs structured parking
$20,000/space.
2. Indirect Factors
• Schools – Suburbs vs. Urban Achievement Levels
• Crime – Lower perception in suburbs
• Growth demographics in suburbs vs. flat or declining
demographics in central city
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What Are the
Consequences for Kansas City,
Missouri Not Competing Well?
Tax Revenue Lost From:
• Drops in Urban Population
• Personal & Corporate Income Taxes Declining
• Higher Income Residents Leaving for Suburbs/KS
• Sales Taxes Captured by Kansas
• Declines in Property Taxes
• Decline in Image for Kansas City Metro
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Conclusions
• Most TIF plans are “pay as you go”— risk of
nonperformance is on private developer.
• “But For”--TIF Incentive requires
demonstration of financial need-- sets a high
standard for public funds.
• Developers are only reimbursed after
demonstrating proper use of funds in
accordance with TIF budget.
• Benefits of Improved Public Infrastructure
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Conclusions
• No decrease in existing public revenues.
Freezes existing taxes and generates new
personal property taxes for all public taxing
jurisdictions.
• Proven results
o 44,328 Jobs
o $1.2 Billion Investment
o Blight Remediation & Public Improvements
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Conclusions • TIF generates
secondary
development.
41 Putto Sculpture, 12th Street TIF (Art)
Briarcliff West TIF (Retail)
Brush Creek TIF (Public Improvements)
Shoal Creek TIF (Residential)
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Final Conclusions • TIF has been Instrumental in
Addressing Blight and Transforming
KCMOs Physical Infrastructure.
42