SECOND COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 200497, AS AMENDED

Establishing new policy limitations on the use of real property tax abatement, exemption, and redirection as an economic development tax incentive by amending Ordinance 160383 by repealing Sections 3, 4, 5, 6, 9, and 17 and enacting new Sections 3, 4, 5, 6, 9, 17, 18, and 19; establishing a timeframe for review of applications for incentives; and directing the City Manager to annually revise and publish maps related to continuously distressed census tracts; and establishing an effective date.

WHEREAS, on August 8, 2006, the voters of Kansas City adopted a new City Charter for the City of Kansas City, Missouri; and

WHEREAS, Section 807 of the City Charter requires that the Council enact by ordinance policies which reflect best practices for the prudent use of economic incentives and Council always intends to act as good stewards of public funds when considering tax abatements; and

WHEREAS, Council, acknowledging that tax abatements impact other taxing jurisdictions and recognizing the value that all taxing jurisdictions have on the City’s prosperity, believes involving other taxing jurisdictions early in the process of evaluating requests for tax abatements is critical to selecting projects deserving these types of economic development incentives; and

WHEREAS, Council desires to maintain and grow a vibrant economy in the City; and

WHEREAS, Council believes providing economic development incentives allows the City to increase its industrial, commercial, housing and office space markets, which results in ensuring regional and national competitiveness, a stronger economy, and improved livability for its residents; and

WHEREAS, one of the economic development tax incentives often requested is the abatement redirection, or exemption of ad valorem property taxes; and

WHEREAS, these requests for the abatement, redirection or exemption of ad valorem property taxes are presented either directly to the City or through one or more of the economic development entities authorized by Missouri stature and created by an ordinance of the City Council; and

WHEREAS, pursuant to the Land Clearance for Redevelopment Authority Law, Sections 99.300 to 99.660 of the Revised Statutes of Missouri, as amended, the City Council of Kansas City, Missouri by Ordinance No. 16120 passed on November 21, 1952, created the Land Clearance for Redevelopment Authority of Kansas City, Missouri (the “LCRA”); and

WHEREAS, pursuant to the Planned Industrial Expansion Law, Sections 100.300 to 100.620 of the Revised Statutes of Missouri, as amended, the City Council of Kansas City, Missouri by Ordinance No. 34677 passed on February 9, 1968, created the Planned Industrial Expansion Authority of Kansas City, Missouri (the “PIEA”); and

WHEREAS, pursuant to the provisions of Chapter 68 of the Revised Statutes of Missouri, as amended, the City Council of Kansas City, Missouri by Resolution No. 47523 adopted on February 11, 1977, created the Kansas City, Missouri Port Authority (“Port KC”); and

WHEREAS, pursuant to the provisions of Sections 135.950 to 135.973 of the Revised Statutes of Missouri, as amended, and the provisions of Resolution No. 050844 adopted by the City Council on July 28, 2005, Enhanced Enterprise Zones (EEZ) have been authorized and established in Kansas City; and

WHEREAS, pursuant to the Real Property Tax Increment Allocation Redevelopment Act, Sections 99.800 to 99.865 of the Revised Statutes of Missouri, as amended, the City Council of Kansas City, Missouri by Ordinance No. 54556 passed on November 24, 1982, and thereafter amended in certain respects by Committee Substitute for Ordinance No. 911076, As Amended, passed on August 29, 1991, Ordinance No. 100089, As Amended, passed on January 28, 2010, Ordinance No. 130986, passed on December 19, 2013, and Committee Substitute for Ordinance No. 140823, As Amended, passed on June 18, 2015, created the Tax Increment Financing Commission of Kansas City, Missouri (the "TIF Commission"); and

WHEREAS, pursuant to the provisions of Sections 100.010 to 100.200 of the Revised Statutes of Missouri, as amended, and the provisions of Committee Substitute for Resolution No. 041033 adopted on September 16, 2004, the City Council of Kansas City, Missouri is authorized to approve the issuance of revenue bonds for the purpose of promoting industrial development through, among other things, the abatement of real property taxes; and

WHEREAS, pursuant to Committee Substitute for Resolution No. 121013 adopted on December 20, 2012 and Committee Substitute for Resolution No. 130297 adopted on April 25, 2013, the City Council of Kansas City, Missouri expressed its support for and authorized the use of sale-leasebacks by certain economic development entities as a mechanism for abating, among other things, real property taxes; and

WHEREAS, pursuant to Urban Redevelopment Corporations Law, Sections 353.010 to 353.190 of the Revised Statutes of Missouri, as amended, the City Council of Kansas City, Missouri is authorized to promote urban renewal through the abatement of real property taxes and has, by Committee Substitute for Ordinance No. 140306, passed on May 1, 2014, created the Kansas City Chapter 353 Advisory Board and vested it with certain powers in furtherance of such urban renewal efforts; and

WHEREAS, on July 18, 2019, the City Council passed Ordinance No. 190563 which established a two-year program authorizing twenty (20) years of 100% real property tax abatement for qualified Enhanced Enterprise Zone (“EEZ”) development projects to be located within designated Opportunity Zones and the East Side Investment Zone; and

WHEREAS, the City is empowered, directly or through one or more of the aforementioned agencies, to offer public incentives for economic development projects in the form of, among other things, a capture of payments in lieu of taxes or abatement or exemption, in whole or in part, of real property taxes; and

WHEREAS, on October 6, 2016, the City Council passed the Second Committee Substitute for Ordinance No. 160383, As Amended, to enact guidelines on the use of abated and exempted real property taxes in funding economic development projects; and

WHEREAS, Ordinance No. 160383 also established the Shared Success Fund to further economic development in severely distressed census tracts within the City; and

WHEREAS, the Council desires now to amend the portions of Ordinance No. 160383 which establish the guidelines on the use of abated and exempted real property taxes; NOW, THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

Section A. That Section 3 of Ordinance No. 160383, As Amended, is hereby repealed and replaced with the following Section 3:

Section 3. TIF Commission. That, in the absence of Extraordinary Qualifications, as hereinafter defined, the City Council shall not approve any redevelopment plan providing for, with respect to payments in lieu of taxes (“PILOTS”) pursuant to Section 99.845.1(2)(a), RSMo, the redirection of such sums in an amount that would exceed seventy percent (70%) of the PILOTS captured by the special allocation fund for a term of up to ten (10) years and thirty percent (30%) for up to five (5) additional years. The City Council shall accomplish the same by excluding from any pledge of funds in and to be deposited in the special allocation fund an amount equal to thirty percent (30%) of the PILOTS for years one through ten and seventy (70%) for years eleven through fifteen, and shall, to the extent permitted by law, annually surplus such sums for distribution by the applicable county collector in accordance with Section 99.850.1, RSMo.

Section B. That Section 4 of Ordinance No. 160383, As Amended, is hereby repealed and replaced with the following Section 4:

Section 4. PIEA. That, in the absence of Extraordinary Qualifications, as hereinafter defined, the City Council shall not grant its approval to any plan, or substantial modification thereto, recommended by the PIEA unless such plan shall provide for not greater than a seventy percent (70%) abatement of real property taxes for up to ten (10) years and thirty percent (30%) for up to five (5) additional years, and which taxes shall, for the entire term, be measured by the assessed valuation thereof, inclusive of any improvements, as assessed by the applicable county assessor. The inclusion of such a term shall be regarded as a substantial element of any plan so approved and shall be incorporated as a material term of any applicable contract.

Section C. That Section 5 of Ordinance No. 160383, As Amended, is hereby repealed and replaced with the following Section 5:

Section 5. LCRA. That, in the absence of Extraordinary Qualifications, as hereinafter defined, the City Council shall not grant its approval to any redevelopment plan, urban renewal plan, or substantial modification thereto, recommended by the LCRA unless such plan shall provide for not greater than a seventy percent (70%) abatement of real or personal property taxes for the duration of the public incentives, and which taxes shall, for the entire term, be measured by the assessed valuation thereof, inclusive of any improvements, as assessed by the applicable county assessor. The inclusion of such a term shall be regarded as a substantial element of any plan so approved and shall be incorporated as a material term of any applicable contract.

Section D. That Section 6 of Ordinance No. 160383, As Amended, is hereby repealed and replaced with the following Section 6:

Section 6. Chapter 353. That, in the absence of Extraordinary Qualifications, as hereinafter defined, the City Council shall not its approval to any development plan or substantial modification thereto recommended by the Kansas City Chapter 353 Advisory Board, unless such plan shall provide for not greater than a seventy percent (70%) abatement of real or personal property taxes for up to ten years and thirty percent (30%) for up to five additional years, and which taxes shall, for the entire term, be measured by the assessed valuation thereof, inclusive of any improvements, as assessed by the applicable county assessor. The inclusion of such a term shall be regarded as a substantial element of any plan so approved and shall be incorporated as a material term of any applicable contract.

Section E. That Section 9 of Ordinance No. 160383, As Amended, is hereby repealed and replaced with the following Section 9:

Section 9. That notwithstanding the foregoing provisions of this ordinance, the City Council and any economic development agency created by the City shall retain the discretion to authorize the abatement, redirection or exemption, in whole or in part, of ad valorem real property taxes to the full extent authorized by any provision of law. The City Council shall give particular consideration to the following exception to the above policies (“Extraordinary Qualifications”) in determining whether to authorize any abatement/exemption structure, or approve any development plan providing for incentives to be conveyed on a project-specific basis at any level other than what has been provided for herein:

a. Projects located in a severely distressed census tract that has continuously maintained such status for not less than ten (10) years immediately prior to the effective date of the request; or

b. Projects that support affordable housing and extremely affordable housing by meeting the requirements of Committee Substitute for Ordinance No. 201038, as Amended, for such housing.

c. Projects that connect residents living in continuously distressed census tracts to new employment opportunities by:

(i) providing at least 100 new entry-level jobs to Kansas City with an annual salary of at least $32,000, or $42,000 inclusive of wages and benefits; and

(ii) incorporating options for mass public transportation or locating in an established high-frequency transit corridor.

d. Projects that involve the renovation or rehabilitation of a building has been designated by a government entity as a local or national historic landmark or contribute to a historic district, or projects that have filed an application with the National Park Service to be placed on the National Register of Historic Places, in which case the exclusion would be subject to such designation being approved.

e. Projects that are industrial in nature and support manufacturing or serve as a distribution center.

Determination of eligibility for Extraordinary Qualifications shall be made upon receipt by the City or any economic development agency created by the City including Port KC of an application or request for ad valorem real and personal property tax abatement, exemption or redirection.

Section F. That Section 17 of Ordinance No. 160383, As Amended, is hereby repealed and replaced with the following Section 17:

Section 17. That this ordinance shall apply only to projects that have not yet submitted an application for the abatement, redirection or exemption of taxes and shall not be construed in a manner as to apply to any tax abatement or any transaction authorized by the City or any other public entity prior to the effective date thereof. Notwithstanding the foregoing, the requirements of this ordinance shall be imposed on any project that has submitted an application for the abatement, redirection or exemption of taxes prior to its effective date but has not received final approval from the relevant authorizing body within three years of the effective date.

Section G. That Ordinance No. 160383, As Amended, is hereby amended by adding a new Section 18 to read as follows:

Section 18. EEZ. That, in the absence of Extraordinary Qualifications, as hereinafter defined, the City Council shall not grant its approval to any plan, or substantial modification thereto, recommended by an Enhanced Enterprise Zone board unless such plan shall provide for not greater than a seventy percent (70%) abatement of the value of improvements for up to ten (10) years and thirty percent (30%) for up to five additional years. The inclusion of such a term shall be regarded as a substantial element of any plan so approved and shall be incorporated as a material term of any applicable contract.

Section H. That Ordinance No. 160383, As Amended, is hereby amended by adding a new Section 19 to read as follows:

Section 19. For any new development plan, or substantial modification to an existing plan, that is not required to have approval of the City Council and that seeks ad valorem real and personal property tax abatement, exemption or redirection, the City Council recommends that any economic development agency created by the City, including Port KC, shall only approve such abatements, exemptions or redirections as the Council has authorized for itself in Sections 3, 4, 5, 6, 7, and 9 of this Ordinance

Section I. That all other sections and conditions of Ordinance No. 160383 not repealed shall remain in effect.

Section J. That this ordinance is not intended, nor should it be construed, to repeal Ordinance No. 190563, in whole or in part.

Section K. That the City and any economic development agency created by the City shall complete the initial review of any application for economic development tax incentives within eight weeks of receipt of a completed application and necessary supporting documentation.

Section L. That the City Manager is directed to annually update and publish maps indicating the locations of continuously distressed census tracts utilizing comparisons of American Community Standards 5-Year Estimates for the most recently published 5-Year range and the two prior but non-overlapping 5-Year ranges.

Section M. That this ordinance shall be effective the earlier of 120 days or the adoption of a revised AdvanceKC scorecard by the City Council.

______________________________________________

Approved as to form and legality:

____________________________________

Katherine Chandler

Senior Associate City Attorney