Urban Investment Takes a Creative Turn
While business investment is often credited with most of the Urban Core's growth, charitable giving, public incentives and other non-traditional financing play an important, sometimes-critical role. The scenario is worth a look for those who can benefit by helping others while improving the city at large. It's also a good lesson in just how multi-layered the financing of a downtown revival can be.
The Greater Kansas City Community Foundation plays one of the most visible and significant roles. Laura McKnight, senior vice president of development there, noted that several programs promote charitable giving to help with real estate and specifically Urban Core real estate.
"The Community Foundation is supporting initiatives that will attract new businesses, new investment and new residents to the region in an effort to revitalize the urban core on both sides of the state line," she noted. "There are also certain activities that relate to blighted area development that the IRS considers as charitable. That allows charitably minded individuals to give in ways that benefit the urban core while they receive a tax benefit."
One of the foundation's most dramatic projects involves the new Kansas City Public Library. Nearing completion in the beautifully refurbished historic First National Bank building, the project almost certainly would not have succeeded without the Community Foun dation's assistance in establishing a tax-de-ductible fund to accept private contributions for the $46 million project.
Similar programs offer tax benefits for cash donations or gifts such as property. For the latter, the foun-dation established its Real Estate Charitable Foundation in 2001. Such organizations act as a clearinghouse to remove the headaches that donors traditionally face. The foundation's program has the additional benefit of its high credibility and experienced board with a successful, local track record.
Other examples have assisted lesser-known projects throughout the Urban Core. "There are some charitable opportunities that exist in redeveloping that are not available in suburban areas, provided you meet the IRS requirements," McKnight said. "The charitable benefits on some of these projects can really make them happen. It's often enough to push them over the edge to being viable projects."
One the Greater Kansas City Community Foundation’s most dramatic projects is the beautifully refurbished historic First National Bank building which will act as the new Downtown Kansas City Library.
Kansas City has made extensive use of Missouri's redevelopment program by establishing a number of redevelopment districts that can use various incentive programs. Missouri promotes urban redevelopment through its Chapter 353 tax incentive program that can bring benefits for up to 25 years. The city has made aggressive use of this and other incentive programs in its quest for redevelopment of the Urban Core. One of the earliest such success stories resulted in Crown Center.
A recent program takes another focus. The Parkway Redevelopment Plan will use an estimated $38 million to develop single- and multi-family housing through new construction and rehabilitation in Center City, Squire Park and Manheim Park neighborhoods. Located in the southeast sections of the Urban Core, the plan grew from development along Paseo Boulevard where 29 new single-family homes have been built in the past three years.
Another area involves the federal Community Reinvestment Act. The CRA dates back to 1977 and was intended to prevent redlining loan practices and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low-and moderate-income neighborhoods.
The CRA and its regulations require federal financial institution regulators to assess the record of each bank and thrift in helping to fulfill their obligations to the community and to consider that record in evaluating applications for charters or for approval of bank mergers, acquisitions, and branch openings.
For commercial projects, there are even more options. Literally dozens of federal, state and local programs provide incentives to reduce business costs—including several that reward businesses in urban areas. These can take the form of three-year state income tax reductions or employee tax credits.
Individual businesses may even qualify for portions of the Missouri Downtown Economic Stimulus Act, the large new program designed to provide incentives for major initiatives in the Urban Core. Known as MODESA, the stimulus act focuses primarily on major initiatives that promote initiatives such as tourism, cultural activities, multipurpose facilities, conventions or expansions creating new jobs.
Several city projects relate to this category. Though less controversial than more visible Tax Increment Financing, municipal redevelopment contracts generally involve several city organizations and businesses. The key is that the diverse agencies collaborate on construction of public improvements as part of a larger development that would otherwise fall short.
One example involved the River Market Loan Program. Essentially an arrangement of revolving loans, the effort involved the Economic Development Corporation in providing credit to existing and new businesses for fixed assets and working capital. A priority was placed on minority and women's businesses in the River Market area.
Another example in the River Market targeted efforts to extend business activity. Working with the Plan-ned Industrial Expansion Authority (PIEA), the city supported efforts to extend the farmer's market season. Some of the contracts addressed public improvement, removal of blight and the re-use of older facilities. Across town, an equally visible project was a city contract with a private developer renovating the 10-story Century Towers into market-rate apartments and office space.
All of these projects include a high level of collaboration. As with most such projects, the above River Market examples involved the city's Economic Development and Business Assistance division working with other city departments, redevelopment agencies and private business.
Several projects have involved combining one or more of these non-traditional approaches to put a project "over the top." While this difficult and often creative work is suitable for a small novel, the results such as the new library can be significant. Even on smaller projects, collaboration of this sort consistently brings greater results than any one of the entities could achieve individually.
Such projects are a good example of the cliché regarding a win-win situation. Addressing charitable giving, McKnight noted that such programs often spell the difference between success and failure for a business project. "These type of programs can make all the difference to a project's success and help people use assets that otherwise could not be used," she said. "In plain English, you get a lot more bang for your buck."