Cordish agrees to affordable housing, but not at Three Light

Power & Light District developer Cordish offered Wednesday to cut by half its 99-year deal with the city for luxury apartment construction and commit to setting aside 10 percent of future units for low and moderate income tenants.

The measure falls short of a resolution introduced earlier this week by two City Council critics of subsidies to the Baltimore company. But Nick Benjamin, the Cordish executive in charge of the downtown entertainment district, all but called it the firm's best and final offer.

"We don't have more room to move," he told the council's finance and governance committee.

Barring negotiation of a compromise, it means the issue is headed for a reckoning on the KC Council floor later this month.

At the core of the debate is how heavily the city should continue to underwrite Cordish, which has built two highly successful luxury apartment high rises with tens of millions in government incentives and no obligation to set aside affordable units.

Under a 2004 agreement, and subsequent amendments approved by the City Council, the city committed to build underground parking garages for each new Cordish high-rise.

As currently written, the agreement is virtually open-ended, obligating the city to build underground garages as long as Cordish develops downtown apartment projects, through the year 2104.

With plans in place for Three Light, the firm is asking the council for another amendment appropriating $17.5 million for a third garage.

On Monday, the Council's ethics and legal review committee approved a resolution sponsored by Councilwomen Alissia Canady and Katheryn Shields directing City Manager Troy Schulte to renegotiate the proposed amendment to provide for affordable apartments in 15 percent of Three Light and future apartment developments.

It also sought to make Cordish responsible for expensive capital repairs to the garages, easing pressure on the city's general fund. The measure also provides for the agreement to end in 2035.

Cordish officials said the financing structure for Three Light is "tight," meaning that it can't secure an adequate return on investment (which it considers about six percent) if affordable units are included.

After meeting with Cordish Tuesday, Schulte came to the finance and governance committee on Wednesday with a revised proposal. It relieved the company of any obligation to provide affordable housing in Three Light and required that only 10 percent of apartments in Four Light, if and when it is built, be affordable.

Moreover, the measure gives Cordish the option of creating those low and moderately priced units anywhere in the city, "either congregated or dispersed," associate city attorney Brian Rabineau told the committee.

The new plan would end the city's parking garage subsidies in 2045, or after the sixth Cordish high-rise, which ever comes first. The city would retain responsibility for capital maintenance of the garages but use a new 1 one percent percent sales tax in and around the Power and Light District to offset costs.

Schulte praised the proposal as a fair compromise on Cordish's part. He also pushed back against the argument that the city is not legally obligated to build a third garage because the 2004 agreement said any future construction was subject to appropriations.

"While we may not have a legal obligation, as manager I think we have a moral and ethical obligation to honor our contracts, good bad or ugly, when the city enters into them," Schulte said.

Canady said she regarded the revised package as no more than a "good start" for continuing negotiations.

Benjamin responded: "To say that this is the beginning of a negotiation, that's not our perspective on this. We believe we've made very significant moves in the direction of the city...We don't have more room to move."

The committee could have voted to advance the proposal with a recommendation for passage by full council Thursday, rendering the Canady-Shields proposal moot, Instead, it voted out the ordinance with no recommendation. With no council meeting March 15, it leaves two weeks for the sides to move closer together. Or not.

This story was originally published March 7, 2018 at 5:03 PM with the headline "Cordish agrees to affordable housing, but not at Three Light."