Kansas City officials are moving full speed ahead to bring streetcars downtown.
But some downtown property owners are waving a big, yellow caution flag, complaining that they're expected to pay a big chunk of the new system's cost -- without a say in the matter.
And some have even suggested they will campaign against the streetcar plan unless it changes before an upcoming vote.
"I'd be surprised if the downtown community could support it in this fashion, and I don't think active opposition is out of the question," said Thomas R. "Buzz" Willard, president of Tower Properties, which owns the Commerce Trust Building, the Commerce Bank Building, the 811 Main building and surface parking lots.
"We're very concerned," agreed Downtown Council President Bill Dietrich, whose group's support could be crucial to the project's success.
Mayor Sly James says he's heard the concerns about the proposed property and sales tax increases, and he's sympathetic to the major property owners. But he also says Kansas City is the last major city not to have some type of fixed-rail transit system, and he thinks it's time for this city to get off the dime.
"Are we going to be the last city to do things that make sense?" he asks. "While we have been sitting here doing nothing, other cities have been doing it for years."
The city plans to build a 4.4-mile round-trip starter streetcar route running from the River Market to Crown Center. It is estimated to cost $100 million, with money coming from city funds, the federal government, the local community, riders and advertisers.
To help pay the local share, the city has proposed creating a special taxing district involving about 1,600 downtown owners who would face a property tax increase plus a 1 percent sales tax increase.
Actual creation of that taxing district must be approved by voters, probably in June. But those eligible to go to the polls would be the 10,000 or so registered voters who live downtown, not the property owners, most of whom live elsewhere.
Many business owners could see their taxes go up by tens of thousands of dollars each year. Crown Center Redevelopment is facing a $500,000 increase. Downtown's biggest property owner, DST, is estimated to face an increase of $1 million annually. Even nonprofits, such as the Kauffman Center for the Performing Arts, could face a hefty new tax.
Dietrich, who speaks for the interests of downtown businesses, has been canvassing key members and hearing lots of angst about potentially driving away tenants, shoppers and hotel customers.
"Downtown's recovery to date is a very fragile thing, and we need to take a hard look throughout this process as to how this proposal would affect our competitive position," he said.
Bill Lucas, president of Crown Center Redevelopment, owner of the massive hotel, office and retail development that anchors the south end of Grand Boulevard, worries not just about the property tax but also about the sales tax increase.
"We would have the second-highest hotel room tax in the country at 18-plus percent, and that would catapult us to a different level of taxation," he said.
Many prominent downtown interests don't oppose streetcars, but they wonder why they don't get a vote on the proposed tax increases to pay for them.
"My biggest concern is taxation without representation," said Brad Nicholson, who owns about 40 parcels in the Crossroads Arts District including the historic TWA building at 18th and Main streets, and the 17-story Mainmark building at 1627 Main St.
"The people who vote on it live in the apartments and lofts," Nicholson said. "The people who pay don't have a say. I've always been a supporter of streetcars, but it's a community asset, and having business owners pay for it is problematic."
But city and transit officials say there's a good reason they're not going for a citywide vote.
"It won't work," says Mark McDowell, a member of the Regional Transit Alliance. He notes that because Kansas City is so sprawled out, any light-rail route large enough to attract citywide support is so huge that it's too expensive and unaffordable.
Since 1998, Kansas City voters have repeatedly rejected tax increases for billion-dollar light-rail plans -- including two different city-sponsored plans in 2001 and 2008.
City officials also argue that a special taxing district is appropriate because it taxes those property owners who will be closest to the streetcars and will benefit most from them.
Councilman Russ Johnson, the council's point person on streetcars, said the city realizes the taxes are a concern and is looking into a dozen possible funding sources to relieve that burden.
But those alternatives aren't yet certain, he said. In the meantime, he said, naysayers shouldn't derail the project.
Johnson also points out that this is how most elections work -- the voting is done by residents, not businesses. In school board elections, for example, residents vote on tax increases that affect many property owners who don't live in that school district.
But that doesn't satisfy some small-business owners like Sue Burke, president of Kansas City Air Filter at 415 Grand Blvd. She thinks the streetcars will be more of a hassle than a benefit for her River Market business.
Burke is concerned about the possible tax increase, which would cost her $415 per year, on top of the $669 she already pays annually for a downtown community improvement district that provides extra security, litter removal and other services.
"Kansas City doesn't need this," she said, arguing that the city should focus on broken water pipes and other crumbling infrastructure. "We can't afford this."
Open to persuasion
Other businesses, however, think streetcars could be beneficial.
J. Mariner Kemper, CEO of UMB Financial Corp., said the bank would be willing to support the current financing plan if the city can demonstrate the value of the streetcar proposal.
"I'd still have to understand the impact the streetcar would have so the tax dollars we'd pay would have the return that would be expected," said Kemper, who would not disclose the annual tax impact on his business.
The Kansas City Star, whose combined properties would be levied $78,000 annually under the current plan, is seeking more information about the project, said Publisher Mi-Ai Parrish.
"We wouldn't editorially and business-wise decide against something that makes sense for economic development just because it would cost us money," Parrish said. "We'll pay our fair share to make it happen if it does make sense and this is the right plan."
Consultants working with Kansas City say streetcars have been great catalysts for development in other cities, and will be in Kansas City as well, boosting property values for everyone downtown and improving their businesses.
Fixed rail, they note, is especially popular with the young professionals that Kansas City is trying to attract to live and work in downtown.
Seattle is one example of a city that recently opened a starter streetcar line funded with a special taxing district similar to Kansas City's, according to consultant Charlie Hales, senior vice president with HDR Engineering of Portland, Ore.
Hales said Seattle's streetcar line opened in December 2007, right before the economy tanked. Nonetheless, it has been a major impetus for new development, with Amazon and other big corporations choosing to locate near the line.
Why the rush?
Still, some business groups wonder why the city seems to be rushing the streetcar plan.
City officials acknowledge they are moving forward aggressively in hopes of qualifying this year for $25 million in federal funding. The city's application for that funding is due March 19, and the officials need to show a tax plan for how the local community will contribute.
They also argue this may be Kansas City's best chance to get that federal transit grant, as the national budget squeeze tightens.
Some downtown owners also are concerned that the local assessment would apply to nonprofits, which don't normally pay property taxes.
Lucas questioned the ability of nonprofits, including Union Station and the Kauffman Center for the Performing Arts, to pay the streetcar levy.
"To put Union Station, Liberty Memorial and Kauffman in a position to raise another $250,000 or $500,000 doesn't make a lot of sense," he said. "They'll have to go to donors they haven't identified or may not exist."
Leaders of the Kauffman Center and Union Station declined to comment, saying they didn't have enough information.
Warren Erdman, executive vice president of Kansas City Southern and a longtime civic leader, said the downtown business community doesn't support including nonprofits in the taxing mix.
"Like many people downtown who generally support a starter project, we're concerned about levying the not-for-profits, and we've asked for more work to be done," he said.
Johnson said the city is looking at ways to alleviate that concern but doesn't want to create a budget hole or a loophole that's vulnerable to abuse.
For now, some prominent business groups are trying to work with the city on funding changes, but they also warn they may be forced to campaign against the plan when it comes up for a vote on the tax district, most likely in June.
"I think it's becoming more vocal on a daily basis, the chance for organized opposition," said Sam Alpert, who advises two groups of apartment and commercial office owners.
But others say there's strong support, at least among downtown residents and some businesses. **
David Johnson, with the Downtown Neighborhood Association, has worked to organize downtown residents and is confident the streetcar plan will pass.
"Downtowners spoke with a consistent voice on keeping the route simple and locally funded to avoid waiting another decade," he told The Star. "A vibrant downtown is good for business and property values."
Dana Gibson of Mallin/Gibson Properties, a longtime developer of downtown residential and commercial projects, agrees.
Gibson said his business would see a tax increase of about $4,000 per year but believes it is worth it.
He said 40 percent of the businesses were originally against creation of a River Market Community Improvement District, which involved a tax increase, but they now believe it's been a great boon to their neighborhood. He thinks the same will be the case with the streetcars, which he says will benefit residents, employees and businesses.
"We're urbanists, and we understand we're way behind in getting things in place here," he said.
James thinks concerns can be overcome and says Kansas City needs to get on board with this plan.
"It's not going to get any cheaper. It may not be doable in five years," he said. "Now is the time."