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It works like this: Joe Developer buys a run-down lot and fixes it up. Normally, Joe has to pay taxes on the improvements he makes. But with the PIEA's blessing, the tax collector ignores the improvements and pretends that the property is as crummy as it was before Joe bought it.
Now imagine that our friend Joe built a gleaming, new $26 million office building where an old porn emporium used to be. As far as the city's tax collectors are concerned, old men in trench coats are still jacking off there.
The HOK tax break amounted to $383,870 in 2006, according to Jackson County records. The Kansas City School District took the biggest hit. The HOK building and garage produced only $1,196 for the schools last year. The building won't be taxed at regular rates until 2029, when today's schoolkids are enrolling their kids.
The state of Missouri also chipped in.
In 2004, HOK donated yep, donated $1.9 million to another city agency, the EDC Loan Corporation, and received state tax credits worth $950,000. The EDC Loan Corporation, in turn, used the $1.9 million that HOK donated to buy the land on which the headquarters was built. In 2005, HOK made a second donation of $1.1 million, which the loan corporation used to purchase equipment for the building. HOK received tax credits worth $550,000 and now leases the equipment that its "donation" purchased.
A garage. Abatement. Donations. Tax credits. I don't think it's an accident that there are a lot of moving parts here. The complexity of this deal and others that the city makes keeps true costs (the direct subsidies, the foregone tax revenue) a secret. There's seldom a single sheet of paper that lays out everything. I called the city's Finance Department in an effort to get something approaching a balance sheet on the HOK project. A guy there told me that he could produce something within a month. Ugh.
Getting good information about the city's economic-development initiatives is like feeling around in the dark. The unknowns make the programs difficult to comprehend and, therefore, to criticize.
And you know how Mayor Kay Barnes feels about being second-guessed, particularly when it comes to development efforts she has led. At a recent board meeting of the Economic Development Corporation (the Death Star of the city's incentive programs), the mayor said projects were not being approved in a "willy-nilly" manner. "The due diligence is really monumental," Barnes said.
I'd rewrite that sentence, replacing "monumental" with the phrase "done for appearances."
As a practical matter, it probably doesn't mean much that HOK's garage is public in name only. After all, the suggestion that the River Market needed parking was pretty bogus to begin with. Harrison, the Opus VP, says he thinks there might be a couple of civilians who have asked to park in the garage. "But, see, there isn't really a strong demand now," he says.
No. It's the dishonesty that's annoying. The city didn't come out and say, We really don't want to lose this company, so we're going to spread a buffet of tax incentives, including a lavish parking garage. It's not fair to residents and business owners who don't have any clout at City Hall. But, hey, that's the way things work around here.
Instead, the city acted as if it were doing us a favor. The parking garage was sold as a civic asset, like a park.