That result should raise alarms—but not eyebrows. Set-aside requirements like this often function less as solutions and more as stumbling blocks. Rather than spur construction, Kansas City’s policy has become something to work around. Developers have leaned on other incentive-granting agencies or opted for minimal in-lieu payments instead. Meanwhile, regulation continues to inflate costs and suppress supply. As I’ve written before, regulation can be a root cause of unaffordability.

The KCBJ analysis looked at 114 development incentive applications since 2021. None resulted in affordable units under the set-aside rule. Many projects qualified for exemptions—using low-income housing tax credits (LIHTCs), being historic rehabs, or receiving incentives from agencies outside the city’s economic development corporation (EDCKC).

Examples:

• Of six qualifying EDCKC projects since August 2022, just one plans to meet the 20% set-aside (16 of 78 units at 60% MFI).
• Larger developments often went through the Port Authority of Kansas City (Port KC) or other entities, thereby sidestepping the requirement entirely.

The result is a policy with good intentions but poor results—and plenty of incentive for developers to seek workarounds.

Two themes stand out.

First: Incentives, not mandates, are doing the real work. Port KC has become the go-to agency for developers. Since mid-2023, it’s reviewed 17 housing proposals totaling over 5,000 units and $2.6 billion in investment. Because Port KC isn’t bound by the set-aside ordinance, many developers simply pay a lower in-lieu fee and move forward. A city spokesperson even admitted that some of these workarounds were done “at the request or with the blessing of city leaders.”

Second: Regulation continues to push costs up. Developers cited permitting delays, costly energy codes, and other burdens as key barriers. As one put it, requiring reduced rent on top of high costs is a “double negative.”

This tracks with previous findings: When regulation increases costs, it restricts the market’s ability to deliver lower-priced housing. If the goal is more affordability, then cities must lower the baseline costs—not just impose mandates.

The post Shocker! Kansas City’s Affordable Housing Set-Asides Nets Zero Housing Units appeared first on Show-Me Institute.

Mr. Collins did not appreciate my conclusion. He called it “misleading and inflammatory,” and wrote that I was dealing in “political spin.”

I welcome the opportunity to respond. Collins wrote:

The claim that PortKC’s NDA signals secrecy is misleading and inflammatory. The NDA applies only during early negotiations, and thus, to protect complex deals before terms are finalized. That is standard in any serious public-private partnership. It doesn’t block legal disclosures, doesn’t hide information from taxing jurisdictions, and doesn’t erase public accountability. It protects taxpayers from leaks that can tank deals or drive-up costs.

PortKC literally—and I am not being figurative—requires in writing that applicants sign an NDA. I do not know what the justification is for requiring secrecy, but I do know that it is not “standard in any serious public-private partnership.” The Economic Development Corporation of Kansas City (EDCKC), which also provides a raft of public subsidies, requires no such NDA. As I wrote, I can understand why a developer would want such secrecy, but it is another thing completely to have the public body handing out taxpayer subsidies to be the one demanding discretion.

If you doubt that PortKC maintains a level of secrecy throughout its deals, search online for the terms Project Mica and Project Kestrel.

Collins continues:

PortKC’s process requires more upfront disclosure from developer’s ownership, litigation history, financials, job creation, wage data, and community impact than many.

If this is the justification, it doesn’t appear to be working. It was only three years ago that PortKC failed to discover that a developer to which it was prepared to issue subsidies, Lux Living, had a few Securities and Exchange Commission violations in its past. So much for “more upfront disclosure.”

Separately, in its most recent financial audit, PortKC was faulted for failing to demonstrate that it searched federal databases to determine if any vendors were “suspended and debarred entities” prior to payment. Again, PortKC is not demonstrating that it carefully vets applicants.

Collins continues:

Critics, like this guy [that’s me!], also ignore that PortKC posts its full fee schedule, limits its own ability to rack up costs without approval, and requires developers to follow workforce, equity, and wage policies from day one.

Yes, PortKC posts an impressive fee schedule. I can’t say that it’s complete, but it does make quite a buck from issuing taxpayer subsidies. That’s part of the problem.

Most organizations that grow as quickly as PortKC face similar growing pains, and PortKC has taken action.

Has it, though? The financial audits of 2021, 2022, 2023 and 2024 all point out that PortKC failed to provide “effective internal control” of finances. One such finding may be the result of growing pains, but four consecutive findings suggest an inability or an unwillingness to right the ship.

Mr. Collins concludes:

The idea that PortKC is “insisting on secrecy” is political spin. This is about protecting sensitive financial negotiations; not hiding public subsidy. If you’re serious about transparency, deal with the facts; not headlines.

Again, it’s very clear from the PortKC application that it insists on secrecy.

I understand that Mr. Collins and others in the “public-private real estate development” industry are either happy with things just as they are or are hesitant to be critical of a scheme from which they stand to gain. But the argument that taxpayers are also benefitted by “protecting sensitive financial negotiations” from taxpayer scrutiny is just silly.

Organizations like PortKC and the groups they fund want public funds dispersed in the dark. If PortKC were serious about serving the public, its leadership would remove its NDA requirement and heed the counsel of its financial auditors. Until then, it should be viewed skeptically.

The post Responding to PortKC’s Defenders 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.

It’s been said many times that there is nothing as permanent as a temporary government program. While it may be a partisan campaign remark, it contains a simple truth. Each new program generates its own newly entrenched bureaucracy and special interest groups that have an interest in expanding and perpetuating the program. We can see this with big, bold programs, but often that plan to maintain or expand power happens behind the scenes in ways the public never knows about. That is exactly what is happening now with the EEZ program before the Kansas City Economic Development Council, a city advisory committee that makes recommendations regarding tax subsidies.

Kansas City gives away enormous sums in tax subsidies—an estimated $175 million in 2018 alone. The development community and its allies in finance, law, and politics (hereafter the developer-subsidy complex) do not view these subsidies as a program to be used in occasional, necessary instances. Developers view them as their hereditary birthright, to be exploited with all the subtlety of King Henry “asking” if he could have another divorce.

Just as current Kansas City leadership is taking steps to place modest limits on tax subsidies—better known as corporate welfare—the developer community is taking steps to keep the spigot flowing. What steps has the city has taken? The city lowered the maximum property tax abatement developers can receive from 75% to 70% for 10 years, and from 37.5% to 30% for five more years. While this change is commendable, it is hardly a major decrease in subsidies. But try telling that to the developer-subsidy complex.

It’s latest maneuver regards EEZs, an all-too-common business incentive package that is tied to job creation aims. EEZ tax credits have always been focused on jobs and business activity—the explanatory language on Missouri’s website is clear on that—but the development community is now trying to argue that large apartment complexes should also quality for new tax subsidies through the EEZ program. While there is no evidence that EEZs work at growing the economy—the EEZ program was a major part of the failed Waddell and Reed downtown development—they do work (all too well) at shoveling tax dollars to influential developers.

It is important to note that major residential developments like apartment buildings already qualify for plenty of incentive programs: low-income housing tax credits, historic tax credits, the above-mentioned property tax abatements, tax-increment financing, and other programs. What they have not been able to access are EEZ tax subsidies. That, apparently, has to change.

Lawyers for housing developers have been quietly arguing with EDC officials for months that the tax credits and abatements previously reserved, as intended, for businesses that create jobs should also go to housing developments. The EDC officials have resisted, but the developers are now appealing to the city’s lawyers. If the lawyers change the interpretation of the law to include housing—which it has not previously been used for—then all of the progress, modest as it may have been, in reducing the use of tax subsidies in Kansas City will be undone.

No matter how the developer-subsidy complex tries to spin it, this is a naked attempt to take more money away from taxpayers and government bodies, like the school district, and put it into the private hands of developers and their advisors.

Hopefully, someone in Kansas City government will have the courage to say “No” to these demands by the developers. If that happens, we hope it works out better for them than it did for Thomas More.

The post Kansas City Needs a Patron Saint of Tax Subsidy Reform appeared first on Show-Me Institute.

The EDC’s primary job seems to be the promotion of economic development subsidies in Kansas City. It lobbies on behalf of such subsidies before the city council and is funded largely through fees collected on projects that are approved to receive taxpayer subsidies. Nothing is wrong with any of that, in a vacuum.

The problem is that the EDC is also funded out of the city’s general fund to provide staffing assistance to the city’s several economic development agencies, such as the Tax Increment Financing (TIF) Commission, the Planned Industrial Expansion Authority (PIEA), and the Land Clearance for Redevelopment Authority (LCRA). The EDC even assists PortKC, which many fear is facilitating and approving subsidies that elected leaders would oppose. It is important to note that the members of these commissions and authorities are not paid and are free to vote as they see fit. But the staff they depend upon for advice and council have a financial interest in every vote. The more subsidies these agencies hand out, the fatter the EDC’s bottom line—and the EDC’s budget has doubled since 2000.

In 2015, for example, $1 million of the EDC’s $5 million organizational budget was funded through the Kansas City general fund, but $3 million came from fees the EDC received from the TIFs it approved. So the EDC is getting three times more money from TIF projects than from the general fund.

Show-Me Institute analysts have published concerns about this before, and others—including those at the Kansas City Business Journal—have as well. Steve Vockrodt and Steve Roberts wrote this in the Business Journal back in 2010:

Among the options the EDC executive committee has explored are consolidating boards that deal with tax incentives—the Tax Increment Financing Commission, Land Clearance for Redevelopment Authority and others—and having the city finance the agency to remove the potential for conflict that exists because the EDC is partly financed by revenue and fees from development projects.

The manifestations of the EDC’s conflict of interest are numerous. Consider the following:

• Back in 2015 members of the TIF Commission were so frustrated with the lack of financial transparency and professional services that they threatened leaving the EDC. Mayor James and the city council intervened and changed the process. TIF recipients now pay fees to city hall instead of the EDC, and financial reporting and auditing of TIF projects is now contracted out, instead of being handled by the EDC.
• The EDC apparently adheres to no long-term vision of what is best for Kansas City. Instead, it merely acts to assess each developer request as they are submitted. The EDC’s online application form suggests no particular policy goals that subsidies are meant to achieve, only that “Applications will be reviewed by EDC staff to determine the best course of action.” The recent discovery that at least one hotel was seeking a subsidy to protect itself from the overdevelopment of hotels suggests that no one at the EDC is taking a long-term view.
• The recent Strata deal—in which developers claimed a downtown office tower project was infeasible without public subsidies—was reworked by the city council to dramatically reduce overall subsidies and remove them completely for the tower itself. One wonders whether the EDC is capable and willing  to substantively vet developer applications for subsidies.
• Back in 2017 when Kansas City was trying to measure the value of its economic development policies, the then-CEO of the EDC wrote to the city hall staffer overseeing the study:

We need a report that explains and supports the city’s economic development policy in the context of local and regional competition. Such a report would be helpful in dealing with the KCMO Library and citizen petitioners interfering with an orderly eco-devo policy.

Kansas City spends at least $175 million each year on economic development subsidies. The organization charged with helping city leaders discern good subsidies from bad has demonstrated it is not up to the task, not looking out for the interests of Kansas City, and possessing an attitude of self-preservation that creates significant conflicts of interest. The EDC’s role should be significantly reformed or discarded altogether.

The post Kansas City’s Economic Development Corporation Is in Need of Overhaul appeared first on Show-Me Institute.

The company is seeking a major property tax abatement to move into a new office tower in downtown Kansas City, according to economic development documents posted online . . . The agenda for Wednesday’s meeting of the Enhanced Enterprise Zone Board, which is under the umbrella of the Kansas City Economic Development Corporation, (EDC) shows Waddell & Reed plans to occupy a build-to-suit high-rise that will “add to the skyline in Kansas City.” The company plans to make a nearly $90 million capital investment, which includes about $80 million in lease and improvement costs and about $10 million in personal property investment.

Hardy’s piece goes on to detail the other subsidies sought by developers for downtown office space, such as the awful Strata proposal. The election of a supposedly incentive-skeptic mayor has not slowed down the demand for public money for private development. At a recent meeting of the Missouri Economic Development Financing Association, it was made clear that despite all the research showing incentives don’t deliver as promised and are viewed negatively by taxpayers, the organization sees no need to seek any changes or reforms.

City leaders need to do more than complain about incentives or say they “don’t pass the smell test.” They need to say no. Repeatedly. Only then will developers get the message.

The post Incentives Will Never End Unless City Leaders Say No appeared first on Show-Me Institute.

This is good news. If the company really is building the hotel on their own, without incentives or tax credits, it represents a real investment in Kansas City. Next time someone argues that without such taxpayer subsidies, “we may as well put up a sign that says Kansas City is once again closed for business,” be aware that they might just be shilling for wealthy developers.

The post Kansas City Hotel Privately Built? appeared first on Show-Me Institute.

The bill in question was SB 859, which was heard by the Senate Economic Development Committee on February 20. A copy of my own testimony is here. The bill is fairly straightforward; it would limit the circumstances under which TIF can be used and would require a third-party analysis of the need for a taxpayer subsidy.

Opponents of the bill included members of the Economic Development Corporation of Kansas City, whose budget is dependent upon fees generated by the TIF projects they oversee. In fact, EDC staff once received bonuses because the group received so much money from TIF fees. The two officials testifying for the EDC offered anecdotal evidence of TIF success, highlighting two or three projects. But there are at least as many projects in which TIF has been abused, including the world headquarters buildings of Burns & McDonnell and H&R Block, along with other failures such as the Power & Light District and the never-actually-built Citadel. In fact, I am confident that in a battle of anecdotes opponents of TIF would win handily.

Other opponents of reform at the hearing included representatives from a few businesses that have benefitted from these taxpayer subsidies. They urged legislators to “be careful” lest reform hinder Missouri’s ability to fight a subsidy border war with Kansas (a border war, incidentally, that is a “financial folly for taxpayers”). If only those same businesses urged local officials to be careful with the TIF subsidies they give out so easily.

But good public policy ought not be based on mere anecdotes. Even if you don’t care what the research indicates, good policymaking is dependent on good information. And the research on TIF is clear: It doesn’t work at spurring investment or creating jobs. If you don’t want to depend on Show-Me Institute research, you can look at a UNC-Chapel Hill study on Chicago, or to the Upjohn Institute for Employment Research for nationwide data analysis. You can even turn to a study conducted for the St. Louis Redevelopment Corporation on the TIF subsidies that the corporation itself recommends and administers! This is the testimony that should matter.

Legislators should be wary of testimony from people with a vested financial interest in a bill’s outcome, or of testimony that amounts to little more than cherry-picked anecdotes. They should seek out broad research from disinterested parties—which, in the case of TIF, tells us that these subsidies are a waste of taxpayer money.

The post What I Saw at the TIF Hearing appeared first on Show-Me Institute.

The potential for conflicts of interest here is obvious. The EDC doesn’t just have financial relationships with the organizations they regulate—they depend on those relationships for over half of their budget. Worse yet, the more subsidies that are awarded, the more money they collect in fees. While TIF Commissioners—who make the final determination on the awarding of subsidies—are appointed by the mayor and are themselves unpaid, they rely on recommendations from EDC staff.

Then we issued a press release bringing attention to the post. Rob Roberts of The Kansas City Business Journal received our release and wrote about it. But apparently neither he nor EDC CEO Bob Langenkamp, who was quoted in his piece, clicked on the link in the email or read the actual post to which the release referred. That’s a shame, because Langenkamp was made to look foolish. For example, Roberts wrote,

As EDC CEO Bob Langenkamp pointed out, the Tax Increment Financing Commission of Kansas City recommends approval of TIF projects to the City Council, which makes the final decisions.

This is exactly what we assert in our post, as cited above. Roberts also wrote,

Langenkamp also corrected Tuohey’s claim that the majority of the EDC’s funding comes from administrative fees associated with TIF projects.

“If you look at the current EDC budget, you’ll see we’re not receiving any administrative fees,” Langenkamp said. “They’re collected by the city.”

Yet in an August 23 email to me, Langenkamp wrote that $3 million of the EDC budget is from “the annual admin fee on active/approved TIF projects.” Langenkamp may respond that his email refers to previous years and not the current budget, but the distinction is largely meaningless. Due to the TIF Commission’s dissatisfaction with the quality of financial management by the EDC, the TIF fees now go to City Hall, which assesses a fee for outside bookkeeping and then channels the remaining funds back to the EDC. The City is merely a pass-through; the EDC still gets funds generated from TIF fees. If anything, this makes the process more questionable because now the city administration also gets a cut.

The Show-Me Institute is not the only one to question the nature of EDC funding. In 2010, one outlet published a piece that included this passage:

Among the options the EDC executive committee has explored are consolidating boards that deal with tax incentives—the Tax Increment Financing Commission, Land Clearance for Redevelopment Authority and others—and having the city finance the agency to remove the potential for conflict that exists because the EDC is partly financed by revenue and fees from development projects.

The author of that piece? Rob Roberts of The Kansas City Business Journal. The difference now is that the portion of the EDC funding generated by fees has grown immensely—even if it is filtered through City Hall along the way.

The post The EDC Gets It Wrong appeared first on Show-Me Institute.

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?

The post Is Kansas City Using TIF to Mask Policy Consequences? appeared first on Show-Me Institute.

But streetcar proponents rarely make the argument that streetcars improve mobility. Instead, they argue that streetcars, somehow, create “livable communities” and boost economic development. As what constitutes a “livable community” is unclear, streetcar proponents rest their arguments on streetcars enticing developers to Kansas City.

So the residents of Kansas City are subjected to report after report of just how much money the unfinished streetcar line is bringing the city. The only problem: Even the most rudimentary investigation of the “evidence” for streetcar development reveals serious flaws. In their zeal to prove the impact of the streetcar renaissance, city planners have included plans that predated the streetcar, businesses that are just relocating within the Transportation Development District (TDD), and even an unfunded Broadway Bridge rebuild. They’ve even dropped the ball on the basic arithmetic.

But for all the flaws in these reports, none has been as methodologically flawed as the most recent effort put forth by the Economic Development Corporation of Kansas City (EDC), the lobbying arm of six statutory KCMO redevelopment agencies. Its report claims that the streetcar has generated more than $600 million in economic development and created more than 1,000 jobs.

The EDC came to this conclusion based on the results of a voluntary survey (with less-than-objective response recovery tactics, as KCBJ reports) sent to downtown developers. While that survey had six questions, only one actually asked about the streetcar’s impact on development. It is as follows:

2. To what degree was your location decision influenced by the planned streetcar line?

5 – Major positive influence – The planned streetcar line was a primary factor.

4 – Positive influence – The planned streetcar line was one of the major factors.

3 – Somewhat positive – The streetcar was thought of as a positive amenity but not a major influence on your decision.

2 – Neutral – The streetcar was taken into consideration, but played no major role.

1 – Negative – The planned streetcar was seen as a negative factor.

Notice that the language of “Major positive influence” allows for the streetcar to be just one of multiple primary factors, so that we do not know if the streetcar was actually the deciding factor. What is really relevant, but left unasked, is whether these developments would have located downtown, or better yet, anywhere in the Kansas City metropolitan area without the streetcar. If the answer to that question is “yes,” the streetcar has not created anything but higher taxes and a traffic impediment.

The post Poorly Done EDC Survey Does Not Justify Massive Streetcar Expenditure appeared first on Show-Me Institute.