Thursday, September 15, 2011

AMC Not to Blame in KC Metro State Line Battle

Today we diverge a bit from the usual branding and marketing commentary to discuss economic development and civic engagement:

AMC Theatres is the latest in a long line of Kansas City area companies to use the state line that runs down the middle of our metropolitan area to their financial advantage. In May, it was Applebee's jumping to Missouri to take advantage of incentives. Now it is AMC, fleeing downtown Kansas City after 91 years, and taking over 400 employees to Leawood, Kansas. They have every right to choose the location of their company. They are not a public trust and owe the citizens and taxpayers nothing. In fact, the Park Place development they are moving to is a very nice location. AMC has a clear goal of minimizing corporate expenses and maximizing corporate revenue. They are owned by a multi-national investment company, the Carlyle Group, that according to their own media info, "seeks to deliver attractive returns for our fund investors." Pretty clear what AMC CEO Gerry Lopez has been tasked with delivering back to the parent company.  

AMC Theatres current HQ
 Much as they cannot be blamed for their decision, they also cannot be considered good civic citizens. In taking the tax incentive package, worth anywhere between $60-67 million they are certainly returning an attractive return to their investors. However, for the Kansas City metro area, those are tax dollars lost for core investments in our community. The economic development experts are not only shifting tax revenue from one state to the other, and from one municipality to the other, they are taking dollars out of the coffers of the entire metro. Does anyone believe that the Carlyle Group, or AMC for that matter, will invest those dollars back in our city? Will they be generating a bevy of new jobs? Will they create a multi-million dollar education fund? No, that is not the corporate mission of AMC.

Park Place development
The public relations spin placed on this decision is simple. AMC could have moved to any number of cities and taken all of those jobs out of our metro. In fact, by their own words they point out that Kansas City is only the 28th largest AMC market. Thereby hinting at the fact that there were 27 other possibly more attractive markets that they could have taken their headquarters to. I am sure that this is true. Many cities would have loved to have lured a Fortune 1000 company headquarters. So the Kansas City area may have avoided the disaster of losing another large employer. But what have we gained? Nothing.

So if AMC is not to blame for the metro area losing $60 plus million in tax revenue while gaining zilch, who is? The economic development officials on both sides of the state line are to blame. These men and women have done nothing to benefit the citizens of our area with this type of deal. They are fighting for bragging rights at the behest of the narrow geography they represent. They seem to forget that this is a complex metro area that does not exist within any one border. Hundreds of thousands of people cross dozens of political boundaries every day. Their lives are only improved when all of the areas they visit are improved. They don't care whose road it is, they just want it to be nice when they drive on it. Our economic development officials do not seem to get that. They are a myopic bunch at best.

So what can be done to improve our entire city? The Greater Kansas City Chamber of Commerce recently launched their Five Big Ideas plan. It is an ambitious and worthy roadmap for our future. How does corporate poaching improve entrepreneurship? Translational technology transfer? When was the last time any of the economic development teams in Kansas City lured a Fortune 1000 headquarters from another city to anywhere in the metro area? If we are going to give away $60 million in tax incentives, shouldn't the return on investment be completely new dollars to the area? 

As citizens we musty demand better from all of our elected officials and the people they hire. The civic leaders of our city also need to stand up and work to grow our region, not just one small areas. The Greater Kansas City economy grew at only 1.52% in 2010, according to a report in the Kansas City Business Journal. That is good for 222nd among all metro areas. This does not even take into account our success globally. We are losing the fight, and we are losing it because we continue to let it be lost by fighting among ourselves. This is not unique to Kansas City, but we seem to do it better than most other metro areas. 

We need to understand and accept that businesses will act in their best interest every time. We should leverage that motivation and focus our energy as a metro area and a region on new business creation, employment expansion and new employment recruitment. Continuing to shift headquarters a few miles at the expense of millions in needed tax revenue is a fools game. Consider that the next time your municipality raises your property tax rate, fees and sales tax after granting millions to lure a new business across a street.     

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