Righting the Wrongs of the Power & Light District
One of the reasons Kansas City is on the hook financially for so much on the Power & Light District is its low assessment value. Back in 2009, Cordish, the project developer argued that the project’s value should be $12.3 million. Jackson County disagreed, and Cordish sued. According to Steve Vockrodt, then of the Kansas City Business Journal:
That [Cordish] valuation, which equates to an average of about $24 a square foot, is a far cry from Jackson County’s appraised value of $160 million, roughly $270 a square foot, which is what county officials say the district is worth for 2009, including Cosentino’s Downtown Gourmet Market.
“They said that $12 million was their number for 500,000 square feet when everything is completed,” said Jeph BurroughsScanlon, a Jackson County spokesman.
“We want to make sure we’re right on it,” said Curtis Koons, director of the county’s assessment department. “We just don’t feel $24 on a brand-new commercial venture is realistic.”
Vockrodt’s story went on to include a this statement on the City’s exposure to debt:
Kansas City Councilman Ed Ford said he was told by city attorneys that the Power & Light District’s dispute would not put the city on the hook financially.
“It looks like the city is not going to have a dog in the hunt on that,” Ford said.
Ford may have been talking about the lawsuit, but of course the city did have a dog in the hunt on the valuation. A low property tax assessment meant there would be less money required of Cordish (as taxes are not voluntary) to keep and apply toward their bond payments. And while, in a normal world, any bond shortfalls would be made up by the people making money off the project, Cordish is not a normal company and Kansas City is not a normal world.
In May 2015, Jackson County will again assess the value of the Power & Light District. Now that the facilities have been improved, will their value jump? After all, according to The Kansas City Star, things are booming:
[Cordish’s executive director of the Power & Light District Nick] Benjamin thinks district revenues are likely to continue growing, as the district has finally reached 94 percent occupancy. More than 50 tenants, including 22 locally owned tenants, have 450,000 square feet of retail space leased.
If Jackson County argued in 2009 that the Power & Light District should be valued at $160 million, the valuation should be much higher now, given the high occupancy rates. A higher assessment will mean more taxes paid by Cordish. And while Cordish will get to keep these taxes, they will in effect be paying more toward their own bond debt, meaning a lower taxpayer subsidy from City Hall. Even a large increase in the valuation for Power & Light won’t result in a big savings for Kansas City, but it would be something.
It’s too late for city planners, political leaders or their attorneys to be considered geniuses for the disastrous Power & Light deal. But an aggressive effort to make sure Cordish is paying it’s fair share of property taxes to Jackson County would at least suggest that Kansas City leaders truly have learned a lesson.