The Urban Land Institute invited me to speak on a panel the other day to discuss Kansas City’s use of financial incentives to developers. I was grateful for the invitation, and I think all the attendees enjoyed the discussion.
Most of the arguments for and against incentives were familiar, with one exception. Bob Langenkamp, the President and CEO of the Economic Development Corporation (EDC) of Kansas City, said that taxpayer subsidies such as TIF were often used to compensate for such things as minimum wage requirements and women- and minority-owned business contracting policies. “They impact attractiveness,” said Langenkamp.
Although Kansas City did not raise its minimum wage, the Council wanted to. It’s easy to imagine a business considering a development in Kansas City seeking to have those additional costs defrayed by taxpayers. Less clear is the impact of the City’s requirements for hiring women- and minority-owned contractors. But whatever the issue, those requirements were significant enough for the head of the EDC to mention them.
Langenkamp’s general point seems that the City sometimes sets policy in ways that harm its attractiveness for development. This by itself is not problematic; governments often enact social justice or public safety laws despite their economic impact. But rather than accept the consequences of their decisions, Kansas City is using taxpayer subsidies to shift the costs from developers onto taxpayers and residents.
It's good that someone in Kansas City’s leadership recognizes there's a problem with the city’s policies. But if those problems need to be solved with taxpayer money, wouldn’t a more straightforward way be to simply ask taxpayers directly for the money (and explain why it was needed) rather than take the roundabout TIF approach?
