The Negative Impacts of Development Subsidies
The Kansas City Star’s Joe Robertson has written recently about the closure of the Kansas City office of the National Alliance on Mental Illness. Earlier in the month, Robertson had written about the support NAMI has provided KCPD’s Crisis Intervention Teams that often dealt with those afflicted with mental illness. But NAMI-KC has since closed its doors. Robertson writes:
The Kansas City office had been struggling with its finances, a difficult time made worse because key members of its small administrative staff were in ill physical health.
Nearly 30 percent of NAMI-KC’s revenue came from a share of the Jackson County Community Mental Health Fund tax levy.
Robertson does not mention that due to an extension of The Kansas City Star’s property tax abatement, the paper of record does not pay into the mental health fund levy. Nor does he mention that the Community Mental Health Fund did not receive over $891,000 in 2015 alone due to Tax Increment Financing (TIF) and tax abatements in Jackson County. (The Star’s 15-year extension is worth $245,000 alone!) Those funds are kept by property owners or diverted back to developers.
Defenders of Kansas City’s development policies respond that this money was never being collected in the first place, so it isn’t fair to say that it’s being taken away from schools, libraries, or the mental health fund. Once the TIF or abatement is ended, they say, those funds will be better off than before. But this ignores the specifics of the Star, which sought to extend a 10-year abatement for another 15 years.
Supporters of such subsidies also give too much credit to TIF policy for driving up property values. A study by the University of North Carolina at Chapel Hill looked at TIF policy in Chicago and found that
After controlling for potential selection bias in TIF assignment, this paper shows that TIF ultimately fails the “but-for” test and shows no evidence of increasing tangible economic development benefits for local residents.
Developers are reaping a windfall from development subsidies in Kansas City. That money is diverted from other worthy causes, notably schools and mental health services. When publicly funded organizations like NAMI-KC are forced to shut their doors, the blame lies largely at the feet of pro-development policymakers.
