Kansas City’s new Bus Riders Union says city hall and the Kansas City Area Transportation Authority (KCATA) need to listen to riders.

On that point, it is right.

For years, KCATA has made major policy decisions without clearly anchoring them to what riders consistently say they value most. The most consequential example was the move to eliminate fares.

In late 2019, the Kansas City Council voted to subsidize fare-free bus trips tied to city service. In March 2020, as a COVID-era public health measure, fares were suspended regionally across RideKC partners. The pandemic decision effectively made the fare-free policy far broader than the original city-centered framing.

But fare-free did not make bus operations cheaper.

Before 2020, several Missouri-side municipal contracts operated under a net operating cost model: KCATA calculated operating costs, subtracted passenger revenue, and allocated the remaining loss among funding partners. In the year before fares were suspended, passenger revenue covered roughly $9 million of operating costs.

The fare-free policy eliminated that recurring revenue stream, but it did not eliminate operating costs. Fare-collection expenses declined modestly, but those savings were far smaller than the forgone revenue, and additional pressures—including ADA complementary paratransit demand—complicated the balance sheet.

During the pandemic, federal funds offset the lost fare revenue. But as one-time COVID-era funding dwindled, the structural question reemerged: who permanently pays for free fares and full service?

Multiple forces drove the budget stress that followed—expiring federal relief, post-pandemic inflation, and negotiated cost-sharing changes. Fare-free was not the only cause of rising costs, but it was a significant one.

Removing a revenue stream embedded in cost-allocation formulas increased the amount that had to be covered by subsidies. Without a dedicated replacement source, the system became more financially fragile. That coincided with contract disputes, service cut threats, and regional withdrawals—all of which riders experience as instability.

Just as important, fare-free did little to address passenger concerns. It did not fix whether the bus shows up on time or is clean and safe. It may have worsened these issues.

Research across major transit systems shows a similar pattern: riders tend to rank frequency, reliability, and safety above fare reductions as the changes most likely to increase their use.

Kansas City has tested fare-free transit. It proved impossible to sustain without stable, dedicated funding, making the service less attractive to other neighboring municipalities.

If the Bus Riders Union wants to ensure riders are heard, the focus now should be on what riders consistently say they need: buses that run frequently, arrive on time, and feel safe.

Unfortunately, KCATA’s past policy missteps have made this more difficult.

The post Kansas City’s Bus Riders Union Is Right about One Thing appeared first on Show-Me Institute.

The piece featured a quote from the mayor bemoaning the passage of Amendment 4 in Missouri, which required the city to up its spending on the police from 20% to 25%. The author begins with a quote from the mayor:

“The current system doesn’t work. We need more accountability, not less . . . We need more innovations in policing, not less.” Lucas explained that he doesn’t believe an increase in funding for the KCPD will be useful in countering rising violent crime.

This is interesting because in his latest budget, Mayor Lucas was eager for the Kansas City Police Department to significantly increase salaries for existing officers as well as new hires. Why would he want that if he didn’t think it would be useful?

The Pitch, perhaps to back up the mayor’s reaction to Amendment 4, offers the following:

A body of evidence shows that increasing police funding has no major impact on reducing local crime rates. One of the tropes used during the campaign for Amendment 4 was the need to fund the KCPD while skewing the increase in homicide rates in Kansas City to present the Lucas administration and the Kansas City Council as far-left partisans who care not for the safety of their constituents.

The first link (“body”) is to a page of Human Rights Watch. It doesn’t expressly conclude that police funding doesn’t reduce crime. Instead, it provides a two-stage yet still heavily qualified claim:

Studies show that investing in health care, housing, universal basic income, child care, universal pre-K, and public safety programs outside the criminal legal system infrastructure would reduce poverty and inequality, and research suggests, is likely to improve community safety. [emphasis added]

All of that may be true. But plenty—in fact most—people living in poverty and suffering inequality do not commit crime. Policing is about getting criminals off the street and deterring crime. And we know that the most common victims of crime are exactly those same poor people.

The second two links (“evidence shows” and “Increasing police funding has no major impact”) are about a single study of the 20 largest cities in Canada. Those may be compelling. But I suspect the dynamics of crime and policing between the United States and our neighbor to the north are sufficiently different to be unhelpful for Kansas City.

The last link (“reducing local crime rates”) has nothing to do with the relationship between crime and police funding. The article merely makes the argument that many places accused of defunding the police have actually increased police funding.

Instead, consider the conclusion of a 2018 study conducted by Princeton University, titled, “More COPS, Less Crime.” The author examined the impact that federal COPS funding (Community Oriented Policing Services) had on crime and concluded, without qualification, “one officer-year was added for every $95,000 spent by the federal government and that the social benefit associated with the ensuing crime reduction [was] on the order of $350,000.”

Another paper published by the National Bureau of Economic Research in 2020 concludes, without qualification, “Each additional police officer abates approximately 0.1 homicides.”

Issues surrounding crime and law enforcement are not easily settled. They are made even more complicated by partisan politics. I suspect Mayor Lucas knows better than what he claimed, and The Pitch should be a little more thorough with its facts and research.

The post The Pitch’s Half-hearted Crime Research appeared first on Show-Me Institute.

If Cerner fails to live up to the promises that made it Missouri’s top recipient of taxpayer subsidies according to Good Jobs First, what are the consequences? Did the issuing agencies insist on clawbacks? Were subsidies issued on a performance basis? Or did taxpayers’ representatives just believe what they were told and not insist that Cerner actually deliver on its promises? If experience is any indication, it’s likely the latter.

Now we have an answer. According to a story in the Kansas City Business Journal, the Kansas City Council requested a report from the Tax Increment Financing Commission on the status of the Cerner development, now owned by Oracle. According to the author:

Cerner pledged 15,000 new jobs ahead of its TIF plan’s 2013 approval, and 16,000 with revisions through 2018. A Bloomberg report in April found Oracle Health had 40% of that count, or 6,400 employees, designated in Missouri, where the Innovations Campus is its lone metro location. However, the commission’s report did not discuss the campus’ job creation or retention, as its redevelopment terms do not have binding job thresholds.

The job creation promises were not binding. Our representatives, including members of the city council and the mayor, just took the company at its word. And what’s more, they didn’t even ask for any guaranty. We apparently just handed Cerner the money. Kansas City leaders should have set up measurable markers and demanded Cerner meet them lest it lose the subsidies and potentially face additional penalties.

As my colleagues here can attest, researching public policy will make you a skeptic. Often, one needs to resist becoming a cynic. But rarely—though maybe not as rare as we’d hope—you find out the truth is as bad or worse than you feared. This is one such occasion.

The post Apparently, Failing to Meet Promises Is Not a Violation of K.C. Subsidies Regime appeared first on Show-Me Institute.

I think of that again because a new report by the American Enterprise Institute’s Scott Winship, “Understanding Trends in Worker Pay over the Past 50 Years,” addresses the fallacy of that chart and the broader claim that productivity and wages have not grown apace. Contrary to claims from some on both the political left and right, who argue that pay has stagnated despite economic growth, Winship presents evidence that overall compensation has grown in line with productivity when correctly measured.

The analysis begins by correcting misconceptions about wage stagnation. Winship shows that median worker pay, though not rising as dramatically as some top earners, has increased significantly when considering total compensation rather than just hourly wages.

Winship also addresses the discrepancy in pay growth between different groups. He notes that women’s pay has increased more rapidly than men’s over the past several decades.

Winship suggests that instead of accepting a gloomy narrative of failing capitalism or deteriorating worker conditions, policymakers should focus on boosting productivity and enhancing skills among middle- and working-class Americans.

The report paints a more optimistic picture of American workers’ pay trends relative to productivity over the past fifty years. While there are opportunities to enact policies that could improve workers’ economic mobility, they must be built on the solid understanding of wages that Winship advances.

The post New AEI Report Challenges Gloomy Views of Worker Pay appeared first on Show-Me Institute.

Two Clay County Commissioners, Jason Withington and Scott Wagner, as well as Jackson County Executive Frank White, stated publicly that Kansas City—which sits in Jackson County—made a significant offer over and above the Jackson County sales tax that changed the course of those negotiations.

What was that offer?

We don’t know. Similar open records requests to Kansas City were denied citing ongoing negotiations. Clay County leaders initially denied requests as well. However, the Clay County Commission was made aware of the records request and the dubious claims made to keep those records closed. On February 22, the commission agreed to release the documents.

The Kansas City Council should follow suit. As I wrote to all the members of the Council on April 15:

The City denied my records request (R012348-030124) relying on an understanding of Missouri statutes that allows for sealed bids to be closed. But the negotiations with the Royals were not the result of any bid responding to a city-issued RFP or RFQ. They were more likely similar to any negotiations for incentives that go through the EDC—which are all public documents. Even if they were sealed initially, the vote itself is a clear sign that those negotiations are ended. The documents are public.

Please exercise your legislative authority by directing the city to release these term sheets, any related documents and their various iterations over time. The April 2 campaign was dogged by a lack of transparency—the measure’s defeat is a clear signal that Kansas Citians should know more, not less, about these negotiations.

I’ve received no responses to that email. There is no indication that the city is in any ongoing negotiations. And even if it were, there is no reason to keep the prior negotiations secret.

The post Release Those Records, Kansas City! appeared first on Show-Me Institute.

The post Kansas City Ordinance 231019 and Housing Vouchers appeared first on Show-Me Institute.

The post Community Improvement Districts in Kansas City appeared first on Show-Me Institute.

But the developers of the Hotel Bravo plan are back requesting subsidies from the council. They have not amended the plan, and because of the TIF commission’s 2019 rejection, the developers will need a supermajority of the Kansas City City Council to approve (9 votes out of 13) for it to pass. One would hope that there are five members of the council, including the mayor, who are opposed to a $47 million tax subsidy for another hotel in downtown Kansas City. Even the region’s tourism agency, Visit KC, has opposed new tax subsidies for more hotels because its own analysis concluded there were too many already.

Our former colleague, Patrick Tuohey, covered the issue of Kansas City hotel subsidies with gusto during his time here. I highly recommend reading or watching his work on the topic.

This should not be complicated. $47 million in tax subsidies for a high-end hotel in a saturated market (according to Visit KC) is insane. Vast evidence on the subject indicates that subsidy-based economic development doesn’t work. Local economic development officials can’t predict the future and are influenced by politics in their choices.

The TIF commission made the right decisions when it rejected the proposal in 2019. The city council should once again decisively say November Oscar to Hotel Bravo.

The post Kansas City Council Should Say November Oscar to Hotel Bravo appeared first on Show-Me Institute.

Ulysses S. Grant was known to say that in war, anything was better than inaction or indecision. Doing something was always necessary to make sure that the enemy was responding to you, not dictating to you. Even doing the wrong thing was preferable to inaction, as you could realize it was wrong, stop what you were doing, and do something else. General Grant may have saved our Union and helped free millions from bondage with those beliefs, but clearly he never served on a TIF commission.

That key part about realizing that what you are doing is not working and doing something else could be a vital lesson to the members of the various Kansas City tax incentive boards. Kansas City, like many other American urban areas, has been generously handing out tax incentives like candy on Halloween for decades now. These subsidies include tax-increment financing (TIF), enhanced enterprise zones (EEZ), subsidies offered through the Land Clearance for Redevelopment Authority (LCRA), and several property tax abatement programs authorized under Chapters 100 and 353 of Missouri law. Over the past decades, Kansas City has given out billions of dollars in total incentives to attract and retain business and development. In 2018 alone, the total tax abatements in Kansas City were worth $175 million in foregone taxes.

Do these incentives work? If by “work,” you mean giving economic development officials and politicians the appearance of “doing something” for the voters, then I guess they do work. But if you’re asking whether the incentives grow the economy in a way that both exceeds the cost of the incentives and extends beyond the growth that would have happened without them, the answer is decisively no.

In 2018 the Kansas City Council requested a study of the impacts of economic development programs such as the subsidies described above on Kansas City. The council wanted an independent, comprehensive review of the costs, benefits, and risks of the use of these subsidies. That is not what the council received. The report presented to the city council by the Council of Development Finance Agencies (CDFA) was biased propaganda with indefensible and wildly exaggerated claims of huge fiscal benefits from subsidies. The CDFA study stands in stark contrast with the overwhelming majority of economic studies about the benefits of local tax subsidy programs. The independent academic research into local economic tax subsidies has been consistent in finding that such programs produce either no benefit or very limited benefits that in no way justify the expenses.

Ordinance No. 200497, now before the city council, would tighten limits on the amount of tax subsidies included in the many types of economic development incentives used by Kansas City. The proposal would cap the maximum subsidy at 70 percent of the tax otherwise owed. This would guarantee that, at a minimum, the person or entity who received the incentive would pay at least 30 percent of their taxes. Maintaining a wide tax base to support public services is important in order to avoid high tax rates, and these reforms will help to accomplish that. The ordinance would guarantee that future economic growth would support local taxing districts with at least 30 percent of future tax revenues. This would lessen the consistent demand to increase taxes on the many people and businesses that do not have a tax subsidy. While these reforms would still allow for generous incentives and subsidies, the tighter limits on them would be a worthwhile change.

It is long past time for Kansas City to adopt significant revisions of the use of tax subsidies within the city. Tax subsidies such as those that would be limited by this ordinance do not grow the economy. Instead, they reduce the tax base and they favor politically connected entities over the majority of citizens. They are part of a failed race to the bottom. Ordinance 200497 would be beneficial to the overall Kansas City community. With it, the various boards that oversee tax subsidies could at least slow down the harm they are doing and start walking the right direction. Ulysses S. Grant would approve.

The post Tax Incentive Reforms Would Benefit Kansas City appeared first on Show-Me Institute.

The post Limiting the Use of Real Property Tax Abatement in Kansas City appeared first on Show-Me Institute.

• Ordinance 200376 refers to the temporary expansion of sidewalk cafés, parklets and street cafés.
• Ordinance 200377 temporarily suspends parking requirements for restaurants and bars.
• Ordinance 200378 temporarily suspends the prohibition against delivering alcoholic beverages to or by vehicles.

Kansas City, like municipalities across the country, is going to take a significant hit to the bottom line as a result of efforts to curtail the spread of COVID-19. City leaders have an opportunity to demonstrate that they are willing—even eager—partners with the men and women whose entrepreneurship drives the city economy. The regulations being waived likely caused more heartache than they were worth even in good economic times.

The permitting process should not be used to show favor to certain businesses or parts of the city—but favoritism that has marked more than a decade of city spending and regulation. If sidewalk cafes are good for downtown, they are good for midtown and the northland. Treat everyone equally. And if these policies are good temporarily, they are likely good permanently.

The city’s 10-10-10 plan was a debacle, not least of which is because it demonstrated that regulators had not talked to the businesses they were regulating. These ordinances are more promising. The council should be congratulated for setting aside rules and regulations that hamper growth and drive up costs without improving public safety, and should be encouraged to do so permanently. There is much more to do along these lines, but this is a good start. Slainte!

The post Three Cheers for the Kansas City Council appeared first on Show-Me Institute.

Almost three years after voters approved the levy, conditions in the targeted district — 9th Street to Gregory Boulevard, The Paseo to Indiana Avenue — remain largely unchanged, and unacceptable. The initial promise of revitalization and renewal in those neighborhoods remains just that, a promise.

They point out that much of the funds collected from the sales tax remain unspent and urge the new oversight board to get to work improving the lives of citizens. Unsurprisingly, the editorial board endorsed the tax increase at the time of its creation. Writing skeptically of this and other ballot questions at the time, I suggested in a Star guest column:

While supporters of Question 4 are to be congratulated for wanting to address economic injustice, one more tax-funded subsidy will not solve the problem. In fact, one more increase to an already-high sales tax likely will do more harm.

. . . Without substantive long-term solutions to the problems that got us here, voters risk spending more to get the same outcome we have in the past.

Policymakers and observers are united in wanting the best for Kansas City, but that does not mean every proposal is a good one. This sales tax is not alone in failing to deliver on promises—nor does the proposal even articulate a policy for making people’s lives better. We are just now learning that the convention hotel was costlier than we thought—likely because city leaders didn’t do the work of vetting the proposal and questioning its assumptions.

The Kansas City Council is considering enacting free bus fare in the city, something else the Star’s editorial board has endorsed. But none of the important legwork work has been done to assess the viability of such a program, including even a survey of Kansas City’s transit riders. (If you assume that transit riders think fares are a priority, read this.)

City leaders need to do their homework so we can avoid this cycle of adopting new policies, including raising taxes, before we define success.

The post Tax First, Provide Detail Later appeared first on Show-Me Institute.

To review, there were two offerings to get the USDA to relocate to Kansas City, Missouri. The first was a state subsidy that allowed half of the withholdings tax paid to the state to be used to offset the costs of preparing the new site. Under the statutes relevant to the particular incentive package being used, 20 percent, amounting to $6 million, was to be paid to PortKC in administrative fees.

The second subsidy (unrelated to the first) redirected local Kansas City taxes to the project. This amount also happened to total to about $6 million. So rather than have local taxpayers give up all that money, the city council simply directed PortKC to forgo some of its administrative fee so that Kansas City taxpayers didn’t have to cough up as much. The amount given to the USDA is the same, but PortKC’s windfall is dramatically reduced.

Monday, Steve Vockrodt reported in The Kansas City Star that PortKC followed suit, albeit begrudgingly:

Last month the Kansas City Council passed an ordinance that reduced by about $4 million what the city would contribute to the USDA incentive package. In turn, the Port Authority felt compelled to cut the $6 million it had counted on from the AIM Zone by $4 million to make up the difference and keep the USDA interested in relocating to Kansas City.

This is a victory for Kansas City taxpayers and a necessary limitation placed on PortKC. Back in August I called for further restrictions to be placed on PortKC’s authority and jurisdiction. This is a good start, but more should be forthcoming.

The post Show-Me Gets Results? PortKC to Refund Taxpayers appeared first on Show-Me Institute.

The USDA office is moving into 805 Pennsylvania, a piece of land designated an Advanced Industrial Manufacturing (AIM) Zone by Port KC. According to state statute, this designation allows 50 percent of the state withholding tax collected from the new jobs to be redirected to the USDA, totaling just over $26 million dollars, per The Kansas City Star. To offset the cost of developing the site for a new employer, Port KC is allowed to charge an administrative fee of 20%, which comes to $6 million dollars in this case.

But wait, there is another subsidy for the project, this time coming from Kansas City taxpayers. From the Star:

On top of that, Kansas City could offer up to $6 million through the redirection of 75% of city taxes, according to a document outlining the local and Port KC incentives obtained by The Star. The Kansas City Council would have to vote to approve the redirection of local taxes for the USDA relocation; an ordinance is expected within weeks.

“City taxes” and “local taxes” are euphemisms for the earnings tax, as there will be precious little other tax generated at the USDA site. Kansas City leaders, who argue breathlessly that the earnings tax is such a vital source of income for things like public safety, are willing to forgo $6 million of earnings tax revenue for the USDA.

There is a better way. If city leadership wanted to protect Kansas City taxpayers from losing vital tax dollars, council members would demand—and Port KC would agree—to waive its administrative fee, which is coincidentally the same amount that city taxpayers are being asked to give up. Without such a demand by the city council, however, this deal includes a transfer of millions of dollars from Kansas City taxpayers into Port KC’s pocket.

The post USDA Deal Is Great for Port KC, Less Great for KC Taxpayers appeared first on Show-Me Institute.

First, let’s make clear that the hotel market in Kansas City is already crowded. The Kansas City Star made this point just a few months ago, and it’s something developers themselves admit. It’s so bad that the city’s tourism board is asking for more public funding to help sell rooms to address the fear that too many hotels will reduce hotel rates (as hotels compete for guests). In short, problems created by subsidizing hotel construction resulting in foregone tax revenue are to be solved by directing even more of the remaining tax dollars toward subsidizing hotel sales departments. If you think this is crazy, it gets worse.

Despite all this, some Kansas City Councilmembers want to offer more tax breaks to build two hotels near Country Club Plaza. (Regarding a crowded hotel market, the immediate area around the plaza area is already served by 12 hotels.) Specifically, the plan this time around is to have taxpayers underwrite $80 million in bond debt. With Chapter 100 bonds, the property taxes may end up being abated as long as the bonds are outstanding. This means that for up to 20 years, there may be no property taxes paid on the projects—taxes that might otherwise be used for police, public safety, and roads.

Twenty years is a long time to abate property taxes. Back in 2004, the council passed an ordinance in which it agreed, “Bonds will be issued for a term not to exceed 10 years. Bonds issued for personal property shall have a term limited to the life of the personal property, but not to exceed 10 years.” This new effort, however, just waives that 10-year limit. Laissez les bons temps rouler!

Mayor Quinton Lucas told KCTV5 News,

There is no money coming from taxpayer sources to directly fund this. The question on the bond obligation is to what extent is the city pledging its full faith in credit in connection with the lending?

The first claim is misleading at the very least. The project doesn’t use existing taxpayer sources, but it may abate or redirect the taxes that would have been paid but for this ordinance. It’s a distinction without a difference. As for the second part, that is a whole other consideration: If the project goes belly up and no taxes are being redirected to bond payments, will bondholders come after the City of Kansas City, the folks who issued the bonds? This is not an easily resolved question.

If hoteliers want to invest their own resources in Kansas City—and themselves reap the rewards—that is welcome. If they agree with VisitKC that the market is already saturated and choose not to invest, that is understandable. But taxpayers should not be asked to go without so that one more developer, one more well-heeled lobbyist or one more connected attorney can earn a few bucks selling Kansas City what we may already have too much of.

The post More Hotels; Fewer Taxes appeared first on Show-Me Institute.

The proposal, which is being considered by the Kansas City Council, seeks funding to help build an office tower and parking garage combination (requiring $27 million and $36 million in subsidies respectively). The building site is at the corner of 13^th and Main, right in the heart of downtown. Supporters of the project argue that the subsidies would help provide needed office space.

As ludicrous as the idea of government subsidizing private development in a popular area already is, it gets better—there are no tenants lined up to occupy the space. In other words, economic development officials want the government to spend $63 million on office space . . . just in case.

Jon Stephens, CEO of Port KC (which is currently an active participant in this proposal), attempted to explain this reasoning: “The demand for ready-to-occupy space has been proven in other markets. The demand appears to be present here.”

The editorial board is asking the correct questions in response to Stephens’ comment. If the demand is there, why are taxpayer dollars needed? If the demand isn’t, why would you ask taxpayers and government to take on that risk?

If downtown Kansas City is attractive to a company, then the company should pay for building its own office space. Private developers should be building based on market forces, without being cushioned from risk by taxpayer subsidies.

The Star’s editorial board is right: “It’s time for downtown projects in Kansas City to stand on their own merits, not on public dollars subsidizing private development.”

The post Kansas City Star Editorial Gets It Right on Tax Subsidies appeared first on Show-Me Institute.

Contrary to what proponents of economic development subsidies are claiming, the incentives aren’t really driving companies’ decision-making. The Upjohn Institute for Employment Research released a study in February which concludes in part that, “for at least 75 percent of incented firms, the firm would have made a similar location/expansion/retention decision without the incentive.” Amazon’s choice to move its new headquarters to New York City and a suburb outside Washington, DC, illustrates the point: companies do what is best for them, and tax incentives are rarely enough to outweigh other factors (like quality of workforce, for example) that influence decisions about where to set up operations.

Cities are starting to reevaluate their incentive programs. Nashville recently suspended the use of tax-increment financing (TIF) pending a study. St. Louis completed a broader study of economic development incentives in 2016 and is now considering reforms.

Kansas City undertook an effort to study its incentive regime, but the process seems intended to obfuscate. In a July 2016 story in The Kansas City Star, Mayor Sly James seemed to appreciate exactly how important a well-done study of incentives could be in improving policy. He said,

Such an analysis, if done correctly, will take some time to complete; however, we will be working to complete it as soon as possible. The report will provide the sort of data and facts that can lead to reasonable and responsible improvements to our economic development policy.

By October 2016, the mayor appeared to be backpedaling. In a speech to city employees he said, “City Hall doesn’t do a good enough job of promoting how economic development benefits the city.” That suggested a shift in purpose from a serious analysis of city policy to merely a public relations effort to promote existing policy.

Kansas City received eight bids—ranging from $174,000 to $287,000—on the proposed study, including from the PFM Group, an asset management company that had conducted the above-mentioned study in St. Louis. The highest bid came from the Council of Development Finance Agencies (CDFA), which according to its website is “a national association dedicated to the advancement of development finance concerns and interests.” It is not an accounting or economic evaluation firm, but a trade group seemingly placed in a conflict of interest.

Kansas City contracted with CDFA and paid the firm $350,000—more than what CDFA bid on the project, and approximately twice as much as St. Louis paid PFM for their 2016 study. There was now more reason to suspect this was not going to be a serious or rigorous analysis.

CDFA presented its report to the Kansas City Council on August 16, 2018—16 months past the original contract deadline. The report was a disappointment, but not a surprise. Rather than undertake the rigorous work of measuring the real impact of subsidies, CDFA simply assumed that subsidies had a positive economic effect. For example, it appears that the authors tallied up the value of a given economic development incentive and then divided it into the jobs or tax revenue that project generated. As a result, the CDFA report concluded, incredibly, that “each incentive dollar invested generated $3.83 in additional tax revenue.”

Importantly for policymakers, the report made no attempt to determine how or if a given incentive caused the subsequent development. It made no effort to determine if some projects generated more and better returns on incentives invested than others. During the presentation, council members continually questioned the consultants assembled about how the report could help them make better decisions in the future, or when incentives in a particular part of town met with diminishing returns. The consultants could not answer, because the study avoided such important questions.

Some organizations with an interest in promoting economic development incentives, such as the Greater Kansas City Chamber of Commerce and the Downtown Council, have uncritically parroted the $3.83-per-dollar-invested return rate on incentives. They should have known better. The editor of the Kansas City Business Journal called the report a “hot box of poo” and wondered, “did Kansas City blow a couple hundred thousand dollars on a completely useless study?”

While other cities are taking this issue more seriously, it appears that in Kansas City the answer is yes.

The post How Not to Study Economic Development Incentives appeared first on Show-Me Institute.

A lot of us who looked at that [cost] issue closely at the time that voters approved [it] fully expected this. We expected it was going to be a bigger project than was approved at the time, so in that sense it is not a surprise.

When Ruckus host Mike Shanin pointed out that no one in the pro-airport campaign made this point at the time of the vote, Heeter added [start at 21:21],

I think the city needs to step forward and talk candidly with the public about these kinds of issues because there is a growing perceptional issue; that’s really important.

Heeter is no ordinary pundit. He is a former member of the Kansas City Council and a former president of the Greater Kansas City Chamber of Commerce. In 2017, Heeter consulted for Jones Lang LaSalle, one of the four finalists to build the new KCI terminal. Heeter is the embodiment of the city establishment. He has held high-level positions both as a public official and with private sector entities at the heart of plans for the new terminal. If he “fully expected” that costs would increase, it strains credulity to think he was the only one.

Yet days before the 2017 election, Heeter appeared on Ruckus and toasted the “fact-based campaign“ for a new KCI terminal. Heeter then cited the Kansas City Star editorial board’s call to “give the voters the facts they need to give an informed decision.”

The voters were not given the facts in 2017. The Show-Me Institute and others made this very clear at the time. The Star, heralded by Heeter as wanting the facts, themselves misreported the facts in their editorial endorsements. And Heeter himself, who then said that voters had been given all the facts, concedes now that he and others knew the numbers were, in fact, not factual.

The costs associated with a new terminal have been suspect since 2014, when Airport Terminal Advisory Group co-chairman David Fowler said, “Any dollar amount placed on any alternative is almost pretty random.“ It remains “pretty random” four years later. The people of Kansas City are right to be skeptical of their civic and political leaders on this issue; the latter have forfeited their credibility.

The post Were the #NewKCI Construction Cost Numbers Ever Real? appeared first on Show-Me Institute.

Four years ago, in our first post on the matter, we detailed the first arguments in favor of such an expense and concluded,

If the Aviation Department and their chorus on the City Council want to tear down a much-loved and nationally recognized airport, the public deserves transparent processes and substantive answers to serious questions regarding the endeavor’s necessity.

We’re not sure either obligation has been met satisfactorily. In fact, the past four years may have only decreased confidence among voters in their elected officials. Telling voters they bear no risk in the scheme is different from telling them the scheme is necessary or even worthwhile. Kansas Citians have seen too many so-called genius ideas become fools errands. The rallying cry for new terminal supporters, “build it and they will come,” is more wishful thinking than sound economic planning.

However the full Council votes on the Airport Subcommittee recommendation, voters will be asked to sign off on the project on November 7. We’ll hear a lot about public opinion polling in the meantime. I hope there will be just as much talk about what ought to be done, the likely benefits, and the most cost-effective way to do it. 

The post Cleared for Landing – KCI and the Billion Dollar Terminal appeared first on Show-Me Institute.

What’s really fascinating, though, is that while the vote that created the district is rarely, if ever, criticized by streetcar supporters for the weakness of its mandate, many of those same supporters had already dismissed the larger and more recent vote just hours after the counts were completed. Local blogger Kevin Collison gave some voice to the frustrations of streetcar backers, tweeting that “#KC should do whatever it takes to challenge this anti-streetcar petition, pivotal moment for future of urban core.” He may be referring to the Council’s option to override the public vote’s results. Other supporters, like Jon Stephens of T-Bones handout fame, bemoaned turnout as a symptom of a broken petition system, even though the streetcar owes its existence to the calculatedly miniscule turnout in an election brought about . . . by a petition!

Streetcar supporters say they want Kansas City “left alone” by the state and others so that locals can control the city’s fate. But if that’s the case, I have a few questions for them:

1. Why were 460 votes enough to launch the streetcar project?
2. Why weren’t 30,000 votes enough to circumscribe it?
3. Why should the 13 votes of the Kansas City Council be enough to override those 30,000?

Streetcar supporters would do well for themselves to stop playing games with the public as they pursue this project.

The post Running the Numbers on the KC Streetcar appeared first on Show-Me Institute.