Business Incentives in the Urban Market

Move downtown? Why on earth would I consider that? Contrary to the perception, Downtown Kansas City is enjoying a resurgence as a play to live, work, play. With the current residential development boom, many businesses are again looking to downtown as an office location.

So how can business owners benefit and take advantage of a revitalized downtown? Fundamentally there are only two ways to make more profits in your business; reduce costs and/or increase revenues. For the business owner willing to do some homework in opportunities downtown, the economic and social rewards can be phenomenal.

Lowering Cost To Do Business

There are over 60 different local, state and federal incentive programs that can directly lower businesses costs when a company is expanding or relocating. These incentives, which can be layered, range from ten years of 100% property tax abatement on new improvements to direct tax credits that can be sold and turned into cash.

There are also lesser-known programs designed to locate business in urban areas. One of these programs "Rebuilding Communities" can offset 40% of state income taxes for three years and also reward employees as well by directing 1.5% of the earnings tax back to the employee in state tax credits for three years. This program not only fully offsets the City's local earnings taxes, but also rewards employees by putting cash back into their hands.

Missouri also has a new tool for the redevelopment of downtowns, including Kansas City--the Missouri Downtown Economic Stimulus Act, (MODESA). This new incentive will provide new state redirected revenue for "major initiative" projects to revitalize urban cores of cities and towns throughout Missouri and provide an economic stimulus for Missouri's economy. This legislation is designed to provide new state and local revenue, at a time when an economic boost is sorely needed. The "major initiatives" would create new revenue generated in the form of Missouri sales tax of 1.5% (total of Missouri sales tax is 4.225%) and up to half of the Missouri income tax through withholding (can be as high as 6%), which would be used to improve public infrastructure, parking, land remediation, and land acquisition. While your venture might not be large enough to qualify as a major initiative under the legislation, projects that do qualify will be catalysts for surrounding development.

Increased Sales

In order to remain competitive in the business world, a business must investigate new emerging opportunities. Operating and being located downtown is one of those new opportunities for businesses. If you were told there was a neighborhood in Kansas City with a population of over 12,000 and yet there was not a single video rental store, would you believe it? It's true! That neighborhood is Downtown Kansas City. The exponential growth of Down-town housing is only now starting to draw retail and service businesses. These new residents also have tremendous buying power; the Downtown Council housing report shows that the multifamily pop- ulation in downtown Kansas City has a median income of over $55,000. The evidence of interest in urban housing demand has lately been seen again in another successful Downtown Homes Tour.

Other Reasons For Your Business To Reconsider A Downtown Business Location.

A downtown address also has a geographic advantage, its central location. At the hub of four major interstates and the center of the metropolitan area with the continued growth in the Northland, Downtown offers the ideal centralized location for distribution to new customers and the proximity to a large employment base.

Businesses can also take advantage of locating near the new public improvements within Downtown. Last November, the voters approved $35 million of general obligation bonds, 45% of which was directed to downtown in the form of enhanced streetscapes, new parking garages, and additional public improvements projects. With the newly formed and operating Community Improvement District (CID), the downtown loop is be- coming a cleaner, safer location to shop, work, eat and live.

Chris Sallyis Principal with Development Initiatives. He can be reached at 816.808.9848 or by his email at csally@di-kc.com