Kansas City's risky offer to AA


In yesterday's Kansas City Star, E. Thomas McLanahan reviews Kansas City's bid to hang on to its American Airlines maintenance base (emphasis added):

In a bid to prevent American Airlines from closing its jetliner overhaul base at Kansas City International Airport, Mayor Kay Barnes has offered an eye-popping package of enticements.

Saving the 2,300 jobs at the facility is a laudable goal. But Barnes' proposal borders on recklessness.

What leaps out is the mayor's offer to provide American with money from the city's general fund to help the airline make payments on revenue bonds, which would be issued to finance upgrades at the overhaul base. The city already owns the overhaul base and leases it to the airline....

The point is not the specific amount of general-fund money to be placed at risk, but the validity of reaching for it to begin with. Directly paying shaky corporations to do business in Kansas City is a short-run tactic of desperation, not a path to long-term prosperity.

Sage was also murky about the so-called "credit enhancement" feature of Barnes' bond offer. Here, the issue is whether -- or to what extent -- Kansas City taxpayers could be forced to pay off the bonds if American goes belly-up....

If the city loses the jobs at the overhaul base, that would be a significant setback for the local economy and a debacle for the workers involved.

But the benefits of retaining those jobs must be balanced by the costs of the effort -- and the risk of sliding deeper into the loser's game of trying to "buy" development.

When the city's economic-development shop begins reaching directly into the general fund -- and doing it on behalf of a shaky player in an unstable industry -- it's time for a fresh look at where all this is heading.

Read the whole article for details.

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This page contains a single entry by Michael Bates published on July 16, 2003 12:51 PM.

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