Now that the champagne corks have popped at Crown Center over the plans to build a ballpark there, it’s worth considering what comes next for Missouri and Kansas.

On the Missouri side, Kansas City ordinance 260339, passed on April 9, instructs the city manager to move ahead on all sorts of things regarding the deal. Section 7 provides for up to $250,000 for, among other things, “professional services, including but not limited to economic advisory services, financial advisory services, bond advisory services, legal services . . .”

That means the city is going to seek professional opinions on the deal’s feasibility. Who the city hires will tell us a lot about how committed it is to protecting taxpayers. As one person told me, “if they hire an architectural firm, we’ll know they’re not serious.”

The city has a history of relying on conflicted organizations to conduct studies, as it recently did with the World Cup. In 2016, the city paid CDFA—a trade group formed “to promote the common interest of Development Finance Agencies with respect to public policies and programs”—to measure the effectiveness of Kansas City’s subsidy culture. The laughable conclusion was “each incentive dollar invested generated $3.83 in additional tax revenue.”

In Kansas, taxpayers are still waiting on two things. First, they don’t know how big the STAR bond district will be. Previous reporting was a 293-square-mile district encompassing Wyandotte County and the western half of Johnson County. But it could be much, much bigger to make the deal pencil out. Once the district is set, the secretary of commerce is empowered to make it larger whenever he would like (see page 1) to capture more tax revenue.

Second, taxpayers are also waiting on Kansas to determine the base year, which is the year in which the state sales tax revenue is fixed, diverting every additional dollar within the district to the Chiefs’ developments. You might expect the base year to be 2026, when the legislature endorsed the measure, or whenever the project breaks ground. Or perhaps 2025, when the deal was agreed to.

But the deal actually allows the secretary of commerce to set the base year whenever he wants (see page 22). It could be set at 2015, meaning every state sales tax dollar generated over the amount collected in 2015 would go to the Chiefs.

In a deal this expensive for Kansas, the size of the district and the base year are likely to reignite howls of protest from all quarters.

As elected leaders in Topeka and Kansas City throw themselves self-congratulatory parties, the rest of us are faced with the bar tab. And the hangover.

The post Next Up on Chiefs and Royals Stadium Saga appeared first on Show-Me Institute.

At the time of the subsidy application in late 2014, Cerner claimed it had just over 10,000 employees in Kansas City alone. In Exhibit 4B of its application for tax-increment financing (TIF) it promised to create 15,659 “permanent jobs to be CREATED IN Kansas City” as a result of the new headquarters building [emphasis in original]. And Cerner claimed it would accomplish this in 10 years.

One of the unmet challenges with economic development incentives is that it is difficult to know whether any economic growth is due to the subsidies themselves. Growth, if there is any, may have happened for reasons other than incentives, such as an improving economy overall. As we have noted time and again, the economic literature makes clear that there is little evidence that economic development incentives themselves actually drive any growth.

Five years in, it seems the company is struggling to keep the promise about jobs. Just this week, The Kansas City Star reported that Cerner had 14,000 employees in the Kansas City region (presumably including its Wyandotte County, Kansas location). This is 4,000 more employees than what it reported in 2014. That’s pretty good growth for any company in just a few short years. But it’s nowhere near the 26,000 (a baseline of 10,000 jobs plus the 16,000 additional promised) it should have by 2024.

Maybe Cerner will make a lot of new hires in the next five years, but it needs to bring on at least 12,000 people in Kansas City to make good on its commitment.

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.

The post Where Are Those Jobs, Cerner? appeared first on Show-Me Institute.

The one-year extension came together after O’Fallon in October 2018 terminated the Rascals’ lease at CarShield Field and barred the team from the facility, saying at the time that the team’s ownership was “repeatedly behind on rent.” O’Fallon later let the Rascals back into the facility as it worked through negotiations with the team for new lease. O’Fallon said Monday that the Rascals still owe the city a balance of $36,600 on a debt of $60,000 from several years ago, and plans to discuss the debt with the team as it winds down operations.

Let’s not mince words: The city of O’Fallon was spending taxpayer money on a private enterprise exactly because the people of O’Fallon and the surrounding areas decided not to spend their own money on it. How was this ever a good idea? This comes on the heels of a similar situation in Wyandotte County, Kansas that we discussed and wrote about previously: A city spending limited taxpayer resources on a faltering private enterprise that only postposed the inevitable.

Incredibly, the larger cities on both sides of Missouri are contemplating even bigger versions of the same mistake, either by building a baseball stadium in downtown Kansas City or a Major League Soccer stadium in downtown St. Louis. The owners may be different, but the policy remains the same: City leaders using taxpayer dollars to shift the risk (but not the reward) from private investors to public taxpayers.

The post The Entirely Predictable Failure of Sports Teams Subsidies appeared first on Show-Me Institute.

The post Patrick Tuohey on KCPT’s Ruckus appeared first on Show-Me Institute.

There are innumerable instances where a city’s expenditures far exceed the tax revenues brought in by a publicly funded stadium (the Edwards Jones Dome in St Louis and Yankee Stadium in New York to name a few). It makes no sense (or cents) to promote the financing of a stadium for tax revenues when spending exceeds income.

Not only does public funding of a stadium severely hamstring city government, but a quick analysis reveals that the gains promised to the city’s economy rarely materialize. According to a 2008 study conducted by professors at Holy Cross, professional sports facilities, and even teams themselves “have little or no significant positive impacts, or even negative impacts on the local economy.” Why? Because the vast majority of fans who attend these stadium events are area residents who would likely be spending their money in the city regardless of the existence or location of the stadium. The same idea holds true for job creation. The thousands of jobs required to build a stadium are only temporary and often just taken from other projects occurring around the city.

This is not to say that professional sports franchises and their stadiums offer no benefit to cities. Sports teams promote civic pride and can unify city residents. If the Royals want to build a downtown stadium with their own resources, that’s fine. But the idea that a publicly-financed stadium will pay for itself by catalyzing economic growth is a tired, disproven argument.

In fact, Kansas City should have already learned this lesson. Almost two years ago, Patrick Tuohey detailed concerns about Wyandotte County funding a similar project for the semi-professional Kansas City T-Bones. Taxpayer subsidies could not overcome a lack of demand. The T-Bones’ failure continued and the owners are looking to sell. When it comes to subsidizing stadiums, policymakers should heed Breaking Bad’s Gustavo Fring and never make the same mistake twice.

The post New Downtown Royals Stadium Would Cost City a King’s Ransom appeared first on Show-Me Institute.

Nine key organizations, including the St. Louis Economic Development Partnership, St. Louis Regional Chamber and St. Louis Development Corp., claim a role in economic development. They collect and spend some $78 million annually, mostly from businesses and taxpayers.

…Kansas City counts roughly 10 key entities focused on development, and spends $21 million, according to the review. Its organizations include the Unified Government of Wyandotte County/Kansas City, Kansas and Kansas City Area Development Council. Kansas City’s rankings for job growth (91st), wage growth (83rd), and high-tech gross domestic product growth (96th) were better than those of St. Louis.

Note that the combined $99 million spent in Kansas City and St. Louis is just on the staff and overhead of the organizations that offer economic incentives—it does not include the additional hundreds of millions of dollars for the incentives themselves! While Kansas City’s growth barely places us in the top half of the 200 cities studied, St. Louis fares much worse. The Lou ranks 152nd in job growth, 142nd in wage growth, and 99th in high tech GDP growth.

Despite faring slightly better than St. Louis, it appears Kansas City proper isn’t getting much for its efforts. If you look at the news release webpage of the Kansas City Area Development Council—the same folks that put together the still-secret regional bid for Amazon’s second headquarters—you’ll find ten press releases for 2018. Several of them talk about positive developments in the Kansas City “region,” but only one, TrialCard, is actually about new jobs within the borders of Kansas City, Missouri. The announcement projected 225 new jobs.

Well, maybe. A Kansas City Business Journal story at the time suggested those numbers are temporary:

The Kansas City center will get up to the 200-225 employee mark beginning around November, including temporary workers, and drop to between 100 to 150 after about February, (TrialCard VP Scott) Dulitz said. Over time, he said, activity—and the employee count—could increase.

As if to underscore the St. Louis Business Journal’s point about the money spent, the release included:

KCADC was proud to work with a number of regional partners in attracting TrialCard to the region including the State of Missouri, Missouri Partnership, City of Kansas City, Missouri, Economic Development Corporation of Kansas City, Missouri, Clay County Economic Development Council, KCP&L, Spire Energy, Cushman & Wakefield and CBRE.

The problems with Kansas City and St. Louis won’t be solved by lavish economic development incentives. Instead, city leaders need to focus on the basics: infrastructure, public safety, education and the like. There is no shortcut to success—no matter how much you spend.

The post Missouri’s Biggest Cities Spend $100 Million Annually Just to Give Away Money! appeared first on Show-Me Institute.

The 25-million-visitor claim comes from the 2016 Tourism Economics report prepared for VisitKC by Longwoods International and the U.S. Travel Association. A copy of the report is available at the link at the bottom of this post. The study defines Kansas City as “a five county region in Kansas and Missouri—Johnson and Wyandotte in Kansas; Clay, Jackson, and Platte in Missouri.”

This means the 25 million visitors visited not only Kansas City, Missouri, but Kansas City, Kansas; Overland Park; Olathe; and Independence. It includes the Cabela’s at the Legends Outlet, which for a while was the number one tourism attraction in the entire state of Kansas, and since then has only added attractions such as Sporting KC’s stadium.

The report divides visitor spending by the five different counties, with Jackson County, the home of Kansas City (and Independence) receiving just under half. It is reasonable to conclude that only half of the 25 million visitors are coming to Jackson County—and even fewer may be visiting Kansas City proper. After all, the five-county area has a population of 1.8 million, while Kansas City has only 480,000.

For an administration that talks about dealing only in facts, the 25 million visitors claim is misleading at best. People are right to be skeptical of such big claims, and city leaders should do a better job of ensuring their accuracy.

The post Tourism: When Kansas City Is Not Kansas City appeared first on Show-Me Institute.

For now, though, downtown baseball is and should be off the to-do list. The region must deal with more urgent priorities first.

Subsidizing sports stadiums is a bad idea regardless of the timing. Recently, Saint Louis has spent an inordinate amount of time and money trying to force taxpayers to do exactly this. First, there was an effort to build a new riverfront stadium for the Rams. When that plan failed, there was a sprint to build a soccer stadium in hopes of luring an Major League Soccer team to town. Stadiums are said to generate jobs in their construction (they don’t), and drive economic development once they are built (they don’t). At best, they divert people’s disposable income from one activity to another. Stadiums only create wealth for the team owners—who don’t have to share their profits with the taxpayers underwriting their team’s overhead. (In Wyandotte County, Kansas, taxpayer subsidies likely just postpone the inevitable closing of a baseball park.)

These aren’t just the musings of free-market, small-government cranks, either. There is a robust body of research from organizations left and right and in-between that shows stadium handouts are a waste of public resources. Nor do we need to rely on academic studies. The dome formerly known as Edward Jones failed to attract the economic development or population density its boosters promised. Anyone who doubts this should just look at aerial photos of Truman Sports Complex. Much of the land around two stadiums lays un- or under-developed.

Subsidizing sports stadiums, wherever they are built, is bad public policy. Not because of timing, or because there are other more pressing matters in Kansas City, which is true. It’s bad because diverting tax dollars to help big businesses build their own buildings is wasteful of limited public resources intended to provide basic services.

The post Subsidized Downtown Stadiums, Forever and Always, a Bad Idea appeared first on Show-Me Institute.

According to the Wyandotte Daily, the T-Bones aren’t faring well lately.

Jon Stephens, UG interim director of economic development, said the direct and indirect economic impact of the T-Bones is $4.2 million a year. However, attendance at the T-Bones games has declined in recent years.

“We view it as an integral part of the Village West development, as part of the No. 1 tourist attraction in the state of Kansas,” Stephens said.

Stephens’ remarks are odd. The team is seen as integral and successful by government officials, but apparently not by sports fans, whose attendance is declining—down 25% since 2010. Also, the team has failed to pay its utility bills and owes $314,000 for electricity and water. Jeff Bryant, vice president of the Board of Public Utilities, which denied the T-Bones’ request to simply waive $172,000 of their utility bill debt, testified against the UG action:

“We enjoy the baseball game,” he said. “Like any other business, it needs to stand on its own.”

He doubted if the UG would help out many other businesses that may be having trouble.

The new agreement shows the UG is paying 55 percent of the utility bill. “The UG is not paying 55 percent, the residents of Wyandotte County are paying 55 percent,” he said.

Taxes already are high, and this helps support a for-profit business, he said.

“I don’t believe that is fair to all the citizens of our county,” Bryant said. Many license plates in their parking lot are not from Wyandotte County; therefore, Wyandotte County is subsidizing the entertainment for other counties, he added.

Unfortunately, this is not the first time government has stepped in to help. Back in 2013, the UG gave the team $174,000 so they could pay their mortgage. The same year the UG purchased the ballpark itself of $8 million. (Note that in 2013 the team was said to generate $5.5 million per year for the local economy; now the number is $4.2 million.) But the franchise is still failing.

Subsidies for sports teams are a bad idea even in good times—but using taxpayer funds to subsidize and then purchase a failing sports team is even worse. 

The post Stadium Subsidies: Not Just for the Big Leagues Anymore appeared first on Show-Me Institute.

Kansas’ $80 million contribution to the project is about double what American Royal was publicly trying to get out of Kansas City, Mo., officials just two years ago to keep the Royal in the city’s West Bottoms.

But did Kansas even have to “build it” with taxpayer money to entice the American Royal to move?

Read more at: http://www.kansas.com/opinion/opn-columns-blogs/article112668553.html#storylink=cpy

The post American Royal Crosses the Line appeared first on Show-Me Institute.

The Royal is a Kansas City institution, one whose fall catalog of rodeos, barbeque, and livestock competitions herald the start of winter and the region’s holiday season. Thanks to tens of millions in sales tax revenue STAR Bonds, those traditions will soon move away from the Royal’s current digs in Kansas City, Missouri, to nearby Kansas City, Kansas. Kansas’s $80 million contribution to the project is about double what American Royal was publicly trying to get out of Kansas City, Missouri, officials just two years ago to keep the Royal in the city’s West Bottoms.

But did Kansas even have to “build it” with taxpayer money to entice the American Royal to move? The Royal’s brand is defined by its history in the Kansas City area—even Kansas City’s baseball team is named after the organization—so it’s safe to say that American Royal wasn’t going to move its operations to Texas or Florida.

But setting aside for now the important question of whether this is an appropriate role of government (it isn’t), Wyandotte County has been seeing significant economic growth that would have made it an attractive landing spot for the Royal anyway. More families are moving there today than were coming 10 years ago. In 2004, 1,871 tax filers—bringing more than $57.6 million dollars of income—moved to Wyandotte; fast-forward to 2014, and tax filers were pouring in 25% faster, bringing in around $74 million with them.

Wyandotte County was “building it”—a functioning economy that has, in contrast to its basket-case reputation, attracted investments from Google, Amazon and others in recent years—before Kansas’s $80 million incentive was ever put on the table.

But Wyandotte’s recent successes don’t justify Kansas’s decision to subsidize the American Royal move. Indeed, the state’s $80 million giveaway has all the hallmarks of bad policy and poor judgement from Kansas’s political class. The American Royal was already getting cheaper land and a prime location close to its support bases in Johnson County, Kansas, and Kansas City, Missouri. The tens of millions in taxpayer support is just the KC Strip on top of this gravy train sundae.

Kansas? Sure, it gets a talking point in the battle for the economic soul of the region, but it’s a point that is likely to be eclipsed by the next round of billion-dollar business-poaching that’s certain to come.

While the Royal’s decision could be seen as a slap in the face of its historical roots, Kansas City, Missouri isn’t exactly a victim in the matter, either. The city has a terrible track record of poaching Kansas businesses in precisely the same way and is an equally bad actor in the billion-dollar tax-incentive border war that has bedeviled the region, creating no strategic advantages on either side of the border.

To put it delicately, the bull manure is blowing onto taxpayers from both sides of State Line Road. It’s time to end this tax incentive rodeo and finally pursue a mature economic development policy—one that doesn’t force taxpayers to build the fields of their politicians’ dreams.

The post Creating a Field of Dreams for the American Royal appeared first on Show-Me Institute.

There will be lots of analysis on the impact of the Royal project on Kansas from folks who follow their issues more closely. I'll punt those analyses to them, except to say that we continue to oppose the development culture, no matter the state, that treats taxpayers as cows to be milked for every big government idea that comes down the pike. Indeed, Kansas City's border war has cost both sides hundreds of millions of dollars over the past few years—money that won't be going to necessary public services in the region.

Meanwhile in Missouri, the rush appears to be on to dream up new ways to compensate for the Royal's departure from the West Bottoms, no doubt to be driven by more government largesse. Kemper Arena seems set to receive massive tax subsidies as it's turned into a youth recreation complex. What, if anything else, gets built around that remains anyone's guess, though chances are good that those projects will be subsidized by taxpayers, too. We continue to oppose such a development plan. Of the things the City could and should do in the West Bottoms, not letting the City's own sewage treatment plant continue to stink up the area and its surrounding neighborhoods would be a good start. We'll see what actually happens.

To many of us, the Royal represented one of the signature cultural events that made Kansas City unique. In a time where municipal me-tooism is all the rage, the Royal stood out as a sign that Kansas City, though changing, is still connected to her past. Its departure is a loss for Kansas City, Mo., and serves as a sad commentary on a tax-incentivized development culture run amuck in this region. 

The post Regarding the American Royal’s Move to Kansas appeared first on Show-Me Institute.

For instance, if we go back to 1990, Jackson County, which contains the Kansas City core, contained more than half of all employment in the Kansas City area’s most populous counties (Jackson, Johnson, Clay, and Wyandotte). Johnson County (KS) was a distant second, with about a quarter of the region’s employment. Johnson County could even have been considered a bedroom community, with more people commuting out of than commuting into the county.

Flash forward to 2013 and the situation had changed radically. While Jackson County still housed about the same number of workers as it did in 1990, Johnson County added nearly 120,000 jobs. More workers still commute from Johnson County to Jackson County than vice versa, but the gap narrowed significantly. Johnson County is also now a net importer of workers. Jackson County’s share of employment among Kansas City’s largest counties dropped from 52% to 44% in the period, while Johnson County’s share reached 36%.

Residents in the Kansas City region are more likely than ever to work in, and not just live in, the suburbs. Unfortunately, Kansas City officials still have a tendency to channel investment to the downtown area to a degree that is disproportionate to its actual economic importance and promote transportation plans (public and otherwise) that would be more appropriate to 1920 than to 2020. The region would be better off planning for the city it has rather than an outdated image of the past. 

The post Working in Kansas City: The Rise of Johnson County appeared first on Show-Me Institute.

So where does bad policymaking come from? Sometimes it comes from getting so caught up in the debate that we don’t examine the facts we’re dealing with. Today’s example comes from the December 10 Kansas City Council’s business session. The topic was the airport. And as he seems to do every time he talks about the airport, the Mayor offered up statements he must know are not true. At least three times he made the same mistake:

[2:28:55] “The cost is in the airport, the region has nothing to do with it. All of the costs are in the airport and come from the airport. There’s not tax money that comes from Johnson County or Wyandotte County or Clay or Platte or Cass. Its all airport money. It’s in the airport; stays in the airport; and gets recycled.”

[2:30:29] “Airport revenue can only be used for airports. Money that is generated in the airport stays in the airport.”

[2:30:58] “You can’t take any money from the airport and use it for sewers or sinks or anything else.”

This is not the first time the Mayor has made this claim. He’s done it in interviews and in his state of the city speech.

We know this is not true because we have a city ordinance that authorized the city to move funds from the Aviation Department to the Finance Department. We know because while James was mayor the city renegotiated the debt to give them more time to pay it off. We know because the Mayor’s own submitted budget for 2015-16 includes it as a line item.

Perhaps most strikingly, we know because earlier at the very same December 10 business meeting, aviation consultant Sheri Ernico said:

[35:47] “There was an instance, which is very unusual for airports in this country, where the [Kansas City] general fund borrowed some money from the airport in 2008, but it had to be repaid with interest.”

What makes the Mayor’s stubborn memory lapse most worrying is that the loan was made to cover losses the city incurred in bad tax increment financing deals for things such as the Power & Light District.

What hope can we have for good public policy when mistakes are papered over with denied consequences?

The post How Bad Policy Survives appeared first on Show-Me Institute.

Kansas City Mayor Sly James argued that hosting the convention is a once-in-a-lifetime opportunity, and he may be correct. Certainly, we all are proud of Kansas City and eager to show off on the 40th anniversary of the last time we hosted. Those are arguments for spending the money — they are not arguments for not telling taxpayers how the money is being spent. If the mayor is so confident about his choices, there is no reason to hide who is getting the money and for what. Furthermore, taxpayers ought to know what additional commitments the city is making to the convention committee. Remember, the $165,000 spent so far is just for the bid to host. Hosting itself will cost millions.

The city claims that the convention will have a large economic impact. We previously have written that those estimates are largely useless as they assume that without the convention there would be no economic activity — which is just silly. The city’s “fact sheet” suggests the economic impact to Kansas City would be similar to Tampa’s in 2012: $214 million. The city likely is getting that from a Tampa Tribune story in which they cited a University of Tampa analysis:

The total impact takes in $214 million in direct spending by the groups that put on the convention, including the Tampa Bay Host Committee, the City of Tampa, the convention’s Committee on Arrangements and corporate sponsors.

Note that in addition to ignoring any economic activity that would have happened without the convention, this impact includes spending from Tampa’s taxpayers.

Lastly, it was gratifying to read in their “fact sheet” that the city thinks we have sufficient hotel rooms and bus service to accommodate the convention, and that our airport has more than 50 direct flights. Let’s hope city officials remember this the next time they advocate committing public funds to convention hotels, streetcars, and new airport terminals.

The post Tell Taxpayers Where Their Money Is Going appeared first on Show-Me Institute.

However, in February 2011, Wyandotte County and a wrecking company destroyed the property. Munoz is suing for damages.

The story seems like a shocking outlier. But, just months ago, there was a similar demolition east across the state line, in Missouri.

Show-Me Daily readers may already be familiar with the Jackson County Land Trust, the government entity that deals with vacant land in Kansas City. State legislators have criticized the Land Trust for not selling much property. But, in at least one case, the Land Trust sold a property to a buyer, only to have to deal with the consequences when Kansas City accidentally demolished the property.

During its January 2012 meeting, the Land Trust noted that:

. . . an elderly non-English speaking gentleman purchased 3914 E. 46^th Street from Land Trust. Unbeknownst to the buyer, about 30 days subsequent to his purchase, the city demolished the structure on the property. . . . the buyer is interested in 3227 Garfield as a potential alternative and that the buyer may be approaching Land Trust for resolution.

Sadly, when local government gets enthusiastic about demolishing properties in an attempt to mitigate “blight,” property owners can lose their homes. An example in Montgomery, Ala., provides another cautionary tale. There, homes were bulldozed for ordinance violations. To add insult to injury, property owners were then billed for the cost of the demolition.

Is it too much to ask for local government to do a little more due diligence before knocking down someone’s property?

The post Oops! Sorry About Demolishing Your Property appeared first on Show-Me Institute.

That Missouri is so reluctant to raise taxes puts added anti-tax pressure on Kansas. Convenience stores in Wyandotte and Johnson counties fear losing even more business to Missouri stores if Kansas boosts the tax again.

When you tax something, you get less of it, after all. When a state increases the tax rate on goods like alcoholic beverages, cigarettes, and gasoline, individuals will consume less of them. After a certain point, the total tax revenue generated from these products is reduced, as well.

By keeping its tax rate low relative to its neighboring states, Missouri can maximize the amount of revenue that it generates. This would help ensure that not only Missouri residents shop in-state, but that individuals located near the border in neighboring states will also shop here.

Tax increases are not cost-free for states. In addition to the cost of reduced sales tax revenue, they have a cost in terms of lost competitiveness. Fewer people and businesses will locate to high-tax states because the costs of living and doing business are higher.

The post “Should Five Per Cent Appear Too Small, Be Thankful I Don’t Take It All” appeared first on Show-Me Institute.