City voters only approve the ability/capacity of the city to issue certain levels of bonds-not on which infrastructure projects will be funded...Once they have approval they more or less use it for whatever projects they want (within the scope of the approval).


In any case TIF revenue is property taxes as well (the increment comes form the increase in property taxes from the improved district)- right?
This is why it is used in the same manner as GO bonds- for infrastructure development in areas that are blighted-though i will concede it is used for other things like parking garages....

I get that the city didn't budget for it (though i'm pretty sure they knew it would fall short) and so they are paying for it out of those GO issued bonds---which is what they are for. So we aren't "losing" money...its still being invested in the built infrastructure--which is what that money is supposed to be spent on.

Its fine if you don't see it that way. Its just how i see it.

But TIF bonds are not GO bonds unless the city specifically gives that authority. Regular TIF bonds would be similiar revenue bonds.

Granted, infrastructure is infrastructure according to you but there is a big difference in how it is paid for. Normally utilities like sewer and water are paid for via revenue bonds and those are approved by the voters. Garages are normally built using revenue bonds to be paid for out of garage revenues.

With regards to the P&L District if the revenue shortfall was in the range of $1 to $3 million I believe most couldn't care less. But when the project calls for a subsidy of $13+ million, year-after-year, and the revenues generated only cover about 1/3 of the bond cost then that raises all kinds of red flags about the district's finances.

i miss spoke...i didn't mean the GO bonds issued would pay for the TIF bonds, just that the source of what is paying of f the TIF bonds is the same as that of GO bonds- so its ok.



I guess thats my point. TIF is supposed to make it "free". directing $ from that project into paying the bonds. instead of having to do that they are having to redirect some of the property taxes collected into paying the TIF. In that sense P&L is under performing and can rightly be criticized of that (though as many have pointed out they projected for a much different economy at the time), but to say it is "losing money" isn't really accurate. Possibly diverting it from other infrastructure? maybe, but thats ok with me if its diverting it issuing/paying new GO bonds that would have been used to develop suburban areas of the city. Whereas I think most people actually believe the city is somehow literally losing money. its not-its just paying for the infrastructure it built.

Not much info here, but kinda of a downer on the district.

http://www.youtube.com/watch?v=TfBDayvAsD0

It isn't so much of a sour economy but it has more to do with the outlandish revenue projections used. The projected sales per sq ft would have been among the highest for retail in the nation, higher than any retail place in the KC area if memory is correct. So even if the economy was the same now as in 2003 there would still be a revenue shortfall.

The money used to pay for the P&L bonds has very little to do with infrastructure. True, some tax money comes from the infrastructure sales taxes but other comes from the taxes for transportation and for ATA. A big portion comes from the General Fund that pays for police, fire, trash collection, parks, and other general city services.

::last word::

I win!

This whole question of value can be determined based on what you view as the lifetime of the district. How long do you see the current district being functional? 20 years?, 40 years?, 60 years?, 100? And, how long until the bonds are paid off and the city is making pure revenue?

I do wonder. In the future...maybe it will all be split up and owned by separate people? Cant imagine that architecture staying there past 40-50 years. Who knows though...

This is the main thing. The city gave Cordish very special, very generous terms for the P&L TIF. If revenues for other TIF-funded projects come up short, the developer, not the city, is on the hook for remaining interest on the bonds. Because the city oh-so-extravagently decided to take Cordish off the hook for interest payments not covered by district tax revenue, Cordish had no incentive to come up with accurate revenue projections in the planning stages. It's no surprise that we got unicorns-and-rainbows revenue forecasts that have turned out to be off by a factor of between three and five every year since the P&L opened.

Additionally, with the city on the hook for revenue shortfalls, Cordish's leasing strategy is different than it would have been had it been liable for the deficit. Because its fixed costs are lower, Cordish has less incentive to fill the district by agreeing to prices tenants are willing to pay and more incentive to hold out for high-rent national brands. There is only an opportunity cost, not an opportunity cost plus the cost of bond payments, to sitting on empty storefronts.

Well, if the P&L District is maintained well, there is no reason it shouldn't be there 100 years from now. The Country Club Plaza opened in 1923--88 years ago, and is still maintained well and vibrant.

Many of the buildings along Delaware St. in the River Market were built between 1860-1890, and are over 120 years old. They are still useful buildings with businesses and apartments in them.

It's hard to predict ownership in 50 or 100 years. It's possible that the buildings in the District could be sold off in blocks to other, separate owners. It's also possible that the entire District will remain under a single ownership entity. The Plaza has had a single owner for more than 80 years.

If the Plaza is any guide in maintenance, then the argument would be for a single owner because it's in the interest of that owner to keep up the entire District to a high quality standard. Then you don't have individual building owners who don't maintain their building and bring down the value of the surrounding buildings.

That's a good comparison. Would you today spend 13M for the next 20? years ($260M total) for the sales tax and property tax revenue for 80 years of the Plaza?

All government spends come from the people, one way or another. Kansas spent 4 years worth of KC's payment on P&L's debt just to attract a single floundering company to a greenfield development.

Response to the WSJ piece by the Hilton GM

Kansas City Redevelopment Success

I like this guy. Reminds me to book a night out for the wife and I at the President.

Very weak rejoinder. A $20 million dollar increase in the tax base works out to an annual take of less than a million bucks for the city. That's less than a tenth of the P&L's annual deficit, and if you plug the city's borrowing costs into the present-value calculation it's clear that the return on investment will be negative over any time horizon.

The financial reality is likely much more dismal even than that because so much of the new downtown tax base has its own tax abatements. The city is probably collecting very, very little new revenue that can be attributed, however tenuously, to the P&L. And the paltry take will stretch far into the future, until the bulk of the abatements sunset in ten or fifteen years.

The P&L is a financial debacle for the city. It just is. Justify it by saying, "I'm happy to throw a bunch of money at Cordish so there's something going on downtown," if you must, and leave it at that. Or at least play the arch-optimist holding out hope for astronomic second-order effects. Because if you try to put a rosy gloss on the financial situation today, you just look like you have no fucking clue what you're talking about.

Dude, you need to go get laid.

Thank you.

I didn't know the SC was part of the P&L District. Next to - yes. Part of - no.




The tax base increase outside of the P&L was to be gravy, not used to pay for the bonds. Would like to see how he computed the $20M amount. And can all of that increase be the result of the P&L?

I'm doing just fine, but I'll suggest you go fuck yourself.

Couldn't disagree more. Maybe if KC now didn't have of the infrastructure (sewers, garages, H&R Block, P&L buildings) and was stuck with a $10M bill for the past few years...then yes. But it's now built infrastructure to use for decades and build around....

Not to mention the spin off business...go as convention sales how it's helped bring in new business...and sign business that will happen in the next 5 years....

I think it's shortsighted to simply dismiss it as a debacle at such a young age.