Karbank Blog

What is the worst economic development policy ever?  Perhaps it is the one that incentivizes tax-paying businesses to move off the tax rolls, permanently.  Regrettably, that is the current policy of the City of Kansas City, MO (“KCMO”).  

This Karbank letter to Kansas City's Mayor James explains the corrosive impact of the City’s “tax-abatement-forever” policy.  In summary, the policy drives down private property values, decreases the tax base, deprives resources from the school districts, libraries and essential civic services, and drives away tax-paying development.  

This is not rocket science, it is Economics 101.

When bureaucrats don’t understand how the private sector economy works, bad policy is made.  By the time the policy is overturned, and inevitably it will be if rationality is indeed a hallmark of the human species, the question is how bad the damage will be to the City’s economy and image.

An article from yesterday's Kansas City Star doesn’t adequately explain the consequences of the policy.  However, the last sentence of that article is enormously telling about how KCMO City Council’s hyper-sensitivity to development in rival Johnson County, Kansas has led to KCMO’s monumentally misguided “tax-abatement-forever” policy.  The City Councilman is quoted as saying: “…I don’t mind competing unfairly with Johnson County [Kansas]”.  Astonishingly, he doesn’t seem to realize that the City is also competing unfairly with the dutiful taxpayers of KCMO…using the taxpayer’s money to do so.

The reality is that KCMO suffers all the collateral damage from the tax-abatement-forever policy; it accelerates development in Johnson County, as it is no longer desirable to develop in KCMO.  Investors and developers will work where their efforts and capital are, to put it broadly, respected.  Right now in KCMO, they are not.  

This is not rocket science, it is Psychology 101.

Kansas City’s leaders need to go back to school to take Economics 101 and Psychology 101.

Steven Karbank

Like the Bloch Building addition to the Nelson Atkins Art Museum a few years ago, the Kauffman Center will be an instant architectural and cultural icon.  As extraordinary a venue the Bloch building is for the visual arts, the Kauffman Center will be for the performing arts.  They are reflections of the depth, quality, vibrancy and joy of Kansas City’s arts and music scene.  

Kansas Citians have a penchant for pondering how our city stacks up against bigger communities elsewhere. With our Midwestern modesty, perhaps we under-appreciate just how lucky we are to have such marvelous civic assets like the Nelson Atkins, the Kauffman Center, and the Country Club Plaza, and benefactor families like the Kauffmans, Helzbergs, Blochs, Kempers and Halls.  

But when out-of-towners visit our city and marvel with surprise and raised eyebrows, Kansas Citians smile with satisfaction (and perhaps a bit of relief) and think to ourselves, indeed, “There’s no place like home…”.    

Enjoy this fascinating time-lapse video which shows the construction progress from summer 2008 to the present (via The Pitch and architecture firm, BNIM).  And once again, welcome, the Kauffman Center.

Steven Karbank