A redevelopment plan for the historic Power & Light building cleared its first hurdle Wednesday when a city agency unanimously endorsed its request for $6.2 million in tax increment financing assistance.
The $62 million residential conversion project calls for renovating the 83-year-old art deco skyscraper at 14th Street and Baltimore Avenue and building a 475-space parking garage wrapped with additional apartments, creating a total of 270 units.
Mark Pomerenke of NorthPoint Development, the firm pursuing the project, told the Kansas City Tax Increment Financing Commission his firm is seeking the minimum incentives necessary to make the project work financially.
“There are a lot of challenges with this project and staggering costs associated with restoring this historic structure,” Pomerenke said. “We tried to come up with the lowest incentive proposal we could to get this building built.”
NorthPoint, which has become an active developer in the Kansas City area, also negotiated agreements with several taxing jurisdictions involved, including the Kansas City Public Schools district, Kansas City Public Library and Metropolitan Community College, so the TIF assistance used to help build the garage for the development would not reduce their revenues.
“We’re very appreciative that the developer is willing to help mitigate the costs for jurisdictions that rely on property taxes,” said Debbie Siragusa, the TIF commissioner who represents the library.
In addition to the TIF assistance, NorthPoint is seeking a 25-year, 100 percent property tax abatement from the Planned Industrial Expansion Authority.
The developer also has negotiated agreements to reduce the impact on several taxing jurisdictions, reimbursing about 70 percent of the abatement as payments in lieu of taxes, making the effective abatement about 30 percent.
Under both the tax increment financing and property tax abatement proposals, the city of Kansas City and Jackson County would provide the bulk of the incentives.
The Kansas City Council is expected to review the TIF request next month. The Planned Industrial Expansion Authority recommendation on the abatement request is not expected to reach the council until August.
If the council approves the incentives, work on the project will begin immediately, with completion expected in late 2015. It would bring an estimated 360 new residents downtown and restore a landmark 36-story building that has been mostly vacant for more than 20 years.
The $6.2 million in TIF assistance would come from revenues now being generated by the TIF plan established to help renovate the historic Hilton President Hotel directly across Baltimore from the Power & Light Building.
The hotel has performed well financially and at the current rate, its bond would be repaid by 2024, four years ahead of schedule.
Under the revised TIF plan, the surplus revenues will be used to help build the garage, and the bond will be repaid as originally scheduled in 2028. As part of the plan, the President Hotel will have access to 100 of the spaces; the remainder will be reserved for apartment residents.
A cost-benefit analysis prepared by Springsted Inc., an independent consultant, estimated that over the 25-year life of the TIF and the property tax abatement incentive package, Kansas City would experience a $14.5 million net loss and the Kansas City school district an $11.6 million net loss.
The state of Missouri would have a $16.3 million net gain, according to the projects.
Chase Simmons, the attorney representing NorthPoint, described those revenue projections as “ultraconservative.”
Pomerenke said the target market for the apartment project is young professionals. Among the amenities planned is a 32nd floor club room with access to an outdoor terrace in the historic tower, and a saltwater pool and fitness club on the garage roof.
“We see this as a great turning point to restore an iconic building and having the Power & Light Building part of the long-term future of downtown Kansas City,” Pomerenke said.
“We’re here because we want to develop the best project this site can support.”