July 9, 2015
From Kansas City Business Journal

by Rob Roberts

Members of a City Council committee acted Wednesday to correct what some of its members perceived as an error by The Kansas City Star— not asking for a 25-year property tax abatement for its downtown printing and distribution plant to begin with.

The Planning, Zoning and Economic Development Committee voted 4-0 to recommend approval of the Star's request for a 15-year extension of the 10-year Chapter 353 abatement it sought and was granted for the plant in 2002. That sent the issue on toward a final vote on Thursday by the full City Council.

In recommending approval of the abatement extension, the committee went against a recommendation for denial by the Chapter 353 Advisory Board, an economic development agency that heard the Kansas City Star Media Co.'s request on June 24.

"We have a right and a responsibility to come to a different conclusion," said Councilman John Sharp, a member of the PZED Committee who said he'd subscribed to the metro daily for 45 years.

Councilman Jim Glover added that "a mistake was made. Not enough (abatement) was requested or approved at the beginning."

In 2002, the Star was granted a 10-year, 100 percent property tax abatement for the $200 million green glass and metal printing plant that opened in 2006 on Oak Street, near the Star's headquarters at 18th Street and Grand Boulevard.

The abatement limited the Star's annual property tax payments for the plant property to $79,000, said Roxsen Koch, a Polsinelli attorney representing the newspaper. But with the abatement winding down last year, she said, the Star discovered that the amount would leap to $1.3 million this year based on the county's fair-market valuation of the printing plant at $42 million.

The Star was able to work out a two-year agreement with the county assessor's office calling for the valuation to be set at $22 million, which will require the Star to pay $700,000 in property taxes on the plant this year and next. But it asked the Chapter 353 Advisory Board to advance a 100 percent abatement extension plus payments in lieu of taxes that would limit its annual property tax payments for the plant to $337,000 for the next 15 years.

Koch said that's the amount the Star would pay, without any abatement, based on a $10.6 million valuation recently placed on the printing plant by its consultant, BKD LLP. Michael Duffy, chairman of the Chapter 353 Advisory Board, made the June 24 recommendation to deny the Star's request for two reasons. For one, he said, Chapter 353 abatements are intended to spur blight-removing redevelopment, "not as a bailout provision for a troubled business." Secondly, he said, the Star's request appears to be "an end run around an adverse county determination of fair market valuation."

Addressing a concern shared by the Chapter 353 Advisory Board and the PZED Committee, Koch said approving the abatement would be unlikely to set a precedent, spurring other businesses to seek extensions of Chapter 353 abatements to avoid soaring property tax bills. In fact, few businesses are likely to find themselves in that unique situation now faced by the Star, she said. Koch also addressed the concern that the extension might not be legal, given that the blight the original abatement was granted to eradicate has already been removed and that the extension will spur no further redevelopment.

Koch argued that the Missouri statute authorizing Chapter 353 abatements allows for plan amendments and that "nothing in the statute requires additional blight findings or additional development."
Councilman Sharp said "the real thrust of 353 is eliminating blight — and not temporarily just to see it come back."

That could happen, he said, if the printing plant's property tax bill forces closure of the downtown plant, leaving vacant a building that would be hard to retrofit for another use.

Koch agreed, saying failure to address the property tax issue would put the Star in a position to evaluate the facility and whether to relocate to a green field and build a Butler building with rail access instead of staying in the urban core, where it's much more expensive to operate."

The other two PZED Committee members who voted to recommend approval of the Star's request were Ed Ford, the committee chairman, and Scott Taylor.

Taylor said one reason for his support was the fact that the taxing jurisdictions that would forgo revenue as a result of the abatement extension have not opposed it, perhaps because they will be receiving four times more revenue than they are now.

According to Koch, the Star has agreed to make annual payments in lieu of taxes of $337,000 for each of the next 15 years. After subtracting the amount that will cover the Star's annual assessments as part of the new streetcar transportation development district, she said, the PILOTS will yield more than $303,000 a year to be split among the taxing jurisdictions.