In just about every Industry Outlook or regional assembly Ingram’s has convened over the last 15 months, inevitably the conversation turns to problems associated with Kansas City, Mo, and its negative impact on the metro area. Just as inevitably, regardless of the focus of the forum, several people will cite the Kansas City School District as the most significant impediment to economic development not only in the city, but also in the region.

This month’s assembly of the commercial real estate brokers was no exception. This subject is explored in depth on page 65 of this issue. Among the topics discussed was KC’s urban core and the challenges associated with the loss of a growing number of businesses. The exodus from Downtown, for that matter from Missouri itself, appears more than a trend. It seems to be a movement of some duration. And unless things change, the exodus will continue.

What is most troubling about the exodus is that the city government seems almost to encourage it. A case in point is the planned relocation of Blackwell Sanders Peper Martin to Highwood Properties proposed office project on the Plaza. Blackwell Sanders has outgrown its space near Crown Center and is willing to pay a premium to remain in Kansas City, Mo. This project, however, does not happen “but for” TIF financing. Space limitations on the Plaza require the construction of a parking garage, one that would not have to be built in almost any other office location.

To show its resolve, the city council will most likely circumvent the normal approval process to STOP this project in its tracks. This was at least my read at the time of this writing. Interestingly, the Plaza itself is a master TIF District, and from what I recall this particular site had been approved in the past for use as a hotel. The city’s stance makes one wonder whether the rules have changed in qualifying for public financing assistance or if there is somewhat of a political storm brewing between the entities involved. I would tend to doubt that if a large firm were to relocate to KC they would face the political opposition from the city that the established firm of Blackwell Sanders does today. Interestingly, within a 3 wood shot to the south, Copaken White & Blitt is well in route to construct the TIF supported 350,000 sq. ft. Colonnade at 49th & Main. Perhaps the fact that the Kansas City Public Library is a first floor tenant of this building substantiates why this one qualifies for TIF. A few blocks to the west on 47th street sits Valencia Place, another recent TIF-supported project.

This trend towards obstructionism is more serious still. Downtown’s rapidly-growing Midland Loan Services couldn’t recruit the city’s support to construct a much needed parking structure to facilitate its move to the Stuart Hall building in the Freighthouse District. This facility would have provided parking relief for the entire neighborhood. As a result, Johnson County’s door opened for the deal to occur—despite the firm’s desire to remain in KC’s urban core. Another unfortunate loss was that of CBIZ’s consolidation of its Plaza and Crown Center offices that will soon be Kansas-bound.

What’s most disturbing is that several of the commercial real estate power-brokers with whom we speak this month suggest that a number of their clients intend to exit Downtown and the urban core once their present leases have lapsed. This is clearly far more substantial of an issue than most people, certainly the city officials of KCMO might realize. Several brokers report that it requires only a few weeks to qualify a real estate deal on the Kansas side and months, if not years, to structure a comparable deal on the Missouri side—and usually its with strings attached.

Interestingly, Ingram’s participating commercial Realtors include the interests of perhaps 75% of the commercial property in Kansas City, Mo. (from the Missouri River to the Plaza). Also of interest, despite healthy development conditions on the fringes of the Metro, these Realtors believe that a strong urban core is vital for the health and well being of the metro as a whole. Needless to say their concerns are legitimate, and if there was one coalition of industry pros who could cause positive change, I would have to believe it would be the commercial brokers and property owners.

If I were to make a recommendation, it would be for the creation of an Urban Core Enterprise Zone from say the Riverfront to the Plaza and from Oak or Troost on the east to the I-35/SW Trafficway corridor, perhaps even State Line to the west. If these problems are as bad as they appear, KCMO, Jackson County and the state of Missouri should take immediate action to stop the bleeding.

I pray to God they don’t wait years while other cities beckon, and other major employers move out.

Time will tell.