A Kansas City marketing company has moved four blocks, and the city will become a little poorer as a result.
Global Prairie has changed addresses in the Crossroads District. The company recently left its location at 1619 Walnut for the Vitagraph Film Exchange Building, at 17th Street and Wyandotte. Though its zip code remains the same, half of Global Prairie's workforce will fall off the city's tax rolls because of an agreement with philanthropist Shirley Helzberg, who restored the Vitagraph Building.
Built in 1930, Vitagraph stored film reels that Warner Bros. distributed. Helzberg purchased the property in 2008 with the idea of creating a new office for the Kansas City Symphony. The Vitagraph Building is a short walk from the Kauffman Center for the Performing Arts, which opens in September.
Taxpayers will reimburse Helzberg a portion of the $22 million she spent to restore the Vitagraph Building. Three years ago, the City Council approved her request for tax-increment financing (TIF). She's eligible to receive up to $6.7 million in TIF funds.
The city's decision to assist Helzberg was somewhat controversial. Global Prairie's relocation revives the debate.
TIF is an economic-development tool that has been used to remake all corners of Kansas City. It's a complicated device, in both design and administration. At its essence, TIF allows developers to capture the new taxes that their projects generate.
Helzberg's proposal was met with skepticism. Staff members in the city's Finance Department questioned the original plan's budget for a $2.3 million parking garage that would have created only 20 new spaces. In a memo, the staff also expressed frustration with the uncertainty of the project. The symphony, it was known, would use only a portion of the building. Who would use the rest, a company that relocated from Des Moines or from the Plaza? The Vitagraph Building would need to lure a new business -- not merely relocate an existing one -- in order to foster meaningful economic development.
Representatives from Jackson County and the Kansas City, Missouri, School District had reservations as well. TIF deprives the county, the schools and other taxing jurisdictions of property taxes they would receive if the project went ahead without assistance. Calvin Williford, an aide to County Executive Mike Sanders, complained at a meeting of the TIF Commission that the public was being dragooned into one of Helzberg's charitable efforts. "Let's not confuse philanthropy with tax subsidies," he said.
In 2008, the TIF Commission, which makes recommendations to the City Council, was split on the decision to approve subsidies for the Vitagraph Building. After the 5-5 vote, the TIF plan arrived at City Hall. Dismissing the concerns, the City Council said "yes" to Helzberg, agreeing to supplement the $3.4 million in state and federal tax credits that the Vitagraph Building was scheduled to receive for its historic status.
As a result of the council's decision, next year's city budget will appear as though a company that employed 15 people went out of business. TIF captures 50 percent of the earnings taxes that the city collects from workers. Global Prairie has 30 workers in Kansas City, according to a Kansas City Business Journal report. The city staff's fears that the Vitagraph Building would merely rearrange jobs -- not land new ones -- appear to have been justified.
Global Prairie's move into the Vitagraph Building also leaves a landlord with a vacancy to fill. Brad Nicholson owns the building that Global Praire left. (Note: The Pitch leases office space from Nicholson.) Nicholson says he isn't bitter, though. TIF or no TIF, he was bound to lose Global Prairie as a tenant. "We just didn't have anything in our portfolio that fit them," he says.
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Ironically Global Prairie's website says that one of their founding principals is corporate and individual social responsibility and that they have a "give back philosophy". Well, it's easy to give back after you've taken away (earnings tax) first. And, isnt the etax the same tax that the city begged taxpayers to renew because they wouldn't be able to deliver critical services - to corporate interests I guess...
People are living in 3rd world conditions in this city and generations of kids are not being educated and the priority seems to be giving tax breaks to rich folks?! Typical "philanthropy" in KC - you give money with one hand and take it back with the other.
Sounds like a lot of assumptions: 1) we're not just talking about any developer here. Reread the County's quote. 2) these arent two NEW tenants. They both moved a few blocks, taking thier earnings tax with them. TIF has become a tax shelter for the connected in this town and it is robbing the city, county, school districts and library of needed revenue to pay for services that benefit the entire city. 3) So the Vitagraph gets restored at the cost of another building which will now be less valuable because it has lost a major tenant. How is this a net gain?! 4) if the city and it's supposed civic leaders truly were committed to economic development they would spend more time further east than the crossroads - but that would require a lot more effort and understanding of what constitutes real economic development - not corporate subsidizations and wealth distribution to the well connected.
So, as a result of the TIF and significant investment from an individual investor, the historic Vitagraph is restored and has 2 new tenants, an adjacent city block is upgraded, and hopefully a new tenant in Global Prairie's former location (were they growing and needing a new space to grow anyway?... this article doesn't say.) Sounds like a potential net gain in the LONG TERM for Kansas City and the Crossroads in general. Glad they looked to the future and invested in growth!
(The alternative: a decaying building and fewer centrally located locations for businesses to grow and develop. Now THAT would be short-sighted.)
Business as usual in KC. Shortsighted politicians and high-minded local executives like to lecture everyone about what needs to be done to correct the incentives driven race to the bottom but continue to allow it to go on when it suits them or their friends - and everyone else gets stuck with the bill. Maybe Hall and Hesse and all their local corporate chums should have addressed their recent letter to themselves instead of Nixon and Brownback.
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