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