“Super TIF” EATs Kansas City Alive!

September 25, 2008

The recent opening of a nine-story office building in Kansas City serves as a reminder of the intense controversy in that city over the abuse of tax-increment financing. The Briarcliff development was a major point of contention in last year’s mayoral race, when candidate Mark Funkhouser (who won the election) denounced the developer’s use of an extreme form of that financing tool known as Super TIF.

Whereas a regular TIF district takes a bite out of local tax revenues, a

Super TIF

project will swallow them whole. Super TIFs redirect 100 percent of the property tax increment and 100 percent of the

economic activity tax

(aptly, EAT) increment of the development district. Super TIF is a project specific designation given to development already occurring within a TIF district.

Included in the EAT increment are corporate and individual earnings taxes, sales tax for retail and utilities, use taxes, convention and tourism taxes on food and beverage sales, gross receipts taxes and franchise fees. Use of TIF and Super TIF in Kansas City continues to rise and is projected to result in a

27 percent growth rate

in tax increment payments made to the private sector next year. In the meantime, the city’s tax revenues have risen by only 7 percent.

Widespread abuse of TIF as a redevelopment tool for urban economic blight in Kansas City led to the creation of the Super TIF mechanism. Its original intent was to allow legitimately blighted areas compete with regular TIF districts in Kansas City’s suburban greenfields. However, if developments such as


are any indication of Super TIF’s future, it appears that it too is on its way to becoming perceived as entitlement by developers. The Briarcliff project, a hotel and office building development in an upscale area of Kansas City, received $26.7 million in TIF and Super TIF for a $91 million expansion in 2006. Regarding the project, Councilwoman Bonnie Sue Cooper, engineer of the gigantic incentive,

put it accurately

: “We’re kind of the cash cow.” No disagreement here.