Thursday, May 8, 2014

Kansas City Council passes $3 million in incentives for DST data center that doesn't yield new jobs

Posted By on Thu, May 8, 2014 at 4:02 PM

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DST Systems, the downtown Kansas City-based software and data processing firm, spun $100 million in net income during the first three months of 2014 alone. But that favorable bottom line won't keep the company from receiving a public incentive to expand their data center near Swope Park.

The Kansas City Council on Thursday approved incentives for DST, which in this case gives the company a pass on certain taxes to help the firm expand its data center. DST wants to add new space to the existing building (which was originally built in the early 1990s with the help of tax increment financing, a tool that plows taxes back into a development project). DST has been a prominent property owner in downtown Kansas City, much of which over the years has received other forms of taxpayer assistance. 

The DST expansion won't produce any new jobs to add to the 124 people who already work at the data center.

The incentive exempts DST from paying sales taxes on construction-related expenses when they add to their building, as well as an abatement on personal property (equipment, etc.) purchased over the next six years. DST could have sought more incentives than what was approved. Nevertheless, add it all up and DST gets a roughly $3 million local tax benefit. The company plans to buy $70 million of equipment to store in its $40 million expansion.

Kansas City Councilman Jim Glover, vice chair of the Kansas City Planning, Zoning & Economic Development Committee, said the incentives were meant to keep the existing jobs in Kansas City. 

Does that mean DST contemplated moving elsewhere, like Kansas?

"That's what we were told," Glover says.

The incentives were passed unanimously by all members of the council who were present on Thursday; Jermaine Reed and Michael Brooks did not show up to the weekly council meeting.

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