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Along with Thompson, Gates is standing with Black Chamber of Commerce Executive Director A. Marie Young and others who have worked on the proposal to eliminate sales taxes on the East Side. Almost half the City Council is here, too.
Before Funkhouser speaks, his staff circulates a resolution stating the city's intent to take "any and all" measures to make the Black Heritage District a duty-free zone. Funkhouser says he was won over by a presentation made by the Intra Urban Economic Council at City Hall. Young calls the council, which meets every Tuesday, "the reality team."
Funkhouser then introduces Gates, who thanks the mayor for his leadership. As police sirens wail in the distance, Gates describes the merits of the proposal.
He calls the duty-free concept "an inverted TIF." Tax-increment financing is a widely used development tool in Kansas City. It allowed public money to help with the construction of the Power & Light District, the Plaza Library and a Wal-Mart on the site of the old Blue Ridge Mall, among many other projects. Gates' TIF comparison is appropriate. A portion of sales taxes collected in TIF areas is returned to developers. The Black Heritage District essentially cuts out the middle man and puts the money in the consumer's pocket.
Evoking TIF also serves as a reminder of how ineffective it has been at improving disadvantaged parts of Kansas City. Pliant city officials have allowed developers to use TIF around the Plaza and in the Northland, but backing projects in prosperous areas has removed the incentive to invest in truly needy parts of town.
In addition to taking TIF back to its original, blight-fighting intent, the duty-free zone is elegant in its simplicity. The proposal isn't something that takes "a double-headed Philadelphia lawyer to conceive how it's going to work," Gates tells The Pitch.
"What we're asking for is an inverted TIF, but without all the uglies that go with the TIF. We're not asking for a developer's fee. We're not asking for bonds. We're not asking for bond fees. We're not asking for a lawyer's fee. We're not asking for any of that. We're only asking to eliminate the sales-tax portion for the people who're going to shop there."
The proposal doesn't look like much of a financial gamble.
According to the reality team, businesses within the Black Heritage District produced a mere $608,137 in city sales-tax revenue in 2006. Over the years, the 1,000-acre area has lost people as well as merchants; a population of more than 25,000 in 1960 is now closer to 5,000.
Gates believes that lost sales-tax revenues can be recovered with increases in property and income taxes that will follow the change. "Everything will go up. So it will probably be a wash between what you think you're going to lose and what you gain, and it will probably be some advantage."
At the press conference, Gates says the Black Heritage District will give opportunity to people who can't afford the expenses involved in securing the aid of the city's development agencies. "You can come in with $150 and open up a store across the street," he says.
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