That's the Breaks

Ed Ford wanted things to make sense. In his eight years as a city councilman, Ford had heard a lot of griping about the way City Hall hands out tax breaks -- that is, with all the discretion of a drug dealer on a Saturday night. So he championed an idea that would curb City Hall's trafficking in tax breaks.

"Let me give you an example," Ford says. "Let's say we have a law firm that has merged and is looking for a new building, and you have people on the Plaza, people at Crown Center, people by Union Station and people in the downtown loop who would love to land that law firm as a major tenant. We ought to have a policy ... that [the city] would do more if you decide to locate within the downtown loop than if you decide to locate within the Plaza."

That concept, Ford says, arose from simple logic. The city wants to encourage development downtown. But it often awards tax breaks for projects on the Country Club Plaza or in the Northland -- tax breaks that equal those it gives to downtown projects. So what incentive is there for a business to put up a building downtown instead of on the Plaza, with its trendy restaurants and pretty steeples, or in the Northland, where the whole world's a potential parking lot?

Knowing that his second and final council term would end on April 10, and realizing that four other experienced council members would be leaving, too, Ford spent the past several weeks trying to get a sweeping tax-incentive policy to his colleagues for a last-minute vote.

But on March 26, after fifteen meetings and three drafts of the policy, Ford withdrew the idea from consideration, saying he had run out of time.

That may be true, but there's another reason for Ford's failure: The development community worked very hard to kill the policy.

Ford had recruited help from two agencies: the City Planning and Development Department, run by Vicki Noteis; and the Economic Development Corporation, headed by Andi Udris.

Noteis didn't start from scratch. A decade ago, with input from thousands of Kansas Citians, her department put together FOCUS, the city's multivolume development plan. Because citizens had declared downtown development a priority, she thought that the greatest tax-break packages should be granted in that area.

The EDC staff, which oversees most of the city's tax-incentive programs, then gave Noteis recommendations based on its experience working directly with developers.

On February 11, the two groups released the first draft of their Economic Development Incentive Policy. Weeks later, real estate lawyers, financial consultants and developers swarmed City Hall to bash the draft as the effort of a "lame-duck council."

Ford knew he had opposition from developers.

Less obvious, however, was a rift forming between Udris and Noteis.

"I don't want anybody to think we weren't communicating," Udris says. "We were working closely, but we were noticing that most of our changes weren't getting in the draft."

At a public hearing on March 19, Udris likened his agency's relationship with the Planning Department to that of quarrelling siblings. Then he presented several objections to the tax-incentive policy.

"Now I guess I understand why I spent my childhood with my brother beating me up," Noteis retorted.

The differences weren't insurmountable. Udris says the EDC's biggest complaint was that the definition of downtown didn't include the City Market or the Crossroads District. Other objections were minor. Surely Udris and Noteis could negotiate and deliver Ford his policy before the April 10 deadline.

Another force was at work, though. Udris, the EDC president, might have seen the reasoning behind a policy to guide the city on tax breaks. But his bosses on the EDC board of directors weren't so generous.

Like the agency it governs, the EDC board shares a strange relationship with the city. On the one hand, it's an extension of City Hall -- part of its funding comes directly from the city's budget. On the other hand, it's an independent, territorial body that doesn't like it when City Hall departments meddle in its business.

Voting members of the EDC, including members of the TIF Commission, openly derided the proposed policy in public hearings. Rather than offering suggestions, they berated city planners.

Udris says some members of the EDC board did not want a policy at all. "Some people felt that having everything written down precluded projects that nobody could anticipate, and that's absolutely true," he says.

But the EDC knows that the City Council will make exceptions for a project it likes. Last year, for example, the council approved a $14.5 million tax break for the President Hotel at 14th and Baltimore, despite Udris' warnings that the financing behind the deal was shaky, which turned out to be true ("No Tell Hotel," August 22, 2002).

Nonetheless, the EDC's aversion to the policy placed it in direct opposition with Ford and Noteis at City Hall.

Upon hearing Udris' list of objections at the March 19 hearing, a visibly perplexed Noteis told City Council members that, regardless of his statements, the EDC president "can't take back his authorship" of the policy.