A prominent but half-vacant downtown office tower will be redeveloped as high-end apartments, after a key Kansas City economic development agency on Thursday granted tax breaks to the project.
Despite school district objections, the Planned Industrial Expansion Authority voted unanimously to grant property tax abatement to convert the 21-story Traders on Grand building at 1125 Grand Blvd. into 203 residential units.
The deal involves 100 percent property tax abatement on the building improvements for 10 years and 50 percent for the next 15 years.
This is the last regulatory approval needed for the project. Construction is expected to begin this summer and be completed in the first quarter of 2018. Downtown Council Vice President Sean O’Byrne said it’s a welcome investment as downtown tries to grow its residential population from 21,000 to 40,000 in the coming years.
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Attorney Roxsen Koch, representing Sunflower Development Group, said the building, dating from 1962, is only 40 percent occupied and cannot be affordably redeveloped for modern commercial use.
She said the $67 million conversion will be a complete historic renovation and a great addition to the downtown residential scene, but it cannot happen without the taxpayer incentive.
“It will be a sustainable project for many years to come,” she said.
The building today generates $102,000 in annual property taxes to the school district, Jackson County and other taxing jurisdictions.
Mark Moberly, Sunflower development director, said the renovated building, plus purchase of an adjacent city-owned parking lot that currently pays no taxes, will generate $7.2 million in property taxes and special assessments over the next 25 years, while the building in its current state would generate no more than $4.2 million in taxes and special assessments over that time.
Koch also predicted that without renovation, the building would continue to deteriorate, with corresponding lower tax payments.
But representatives of Jackson County and the Kansas City school district objected, saying the building already pays just half the normal property tax bill because of a 50-percent abatement granted in 1998. So even if this new project generates more taxes, that’s from a lower base tax rate than it should be.
They complained that this deal, like others in the past, takes too much future tax money away from the school district.
Some expansion authority members said they were sympathetic to the school district’s concerns, but they thought the project’s benefits outweighed the forgone taxes and said the alternative was continued decline.
This financing approval is final and does not go back to the City Council. So despite taxing jurisdiction opposition, this deal cannot be subjected to a referendum challenge like the one that derailed a proposed tax-increment-financing project in the Crossroads District at 1640 Baltimore Ave.
Co-developers are Sunflower and Block Real Estate Services. The architect is Helix, and the general contractor is Rau Construction.
The project has a retail/office option for the first two floors and calls for a rooftop pool, outdoor dog run, fitness center and other amenities.
The project involves about $5 million in investor cash equity plus $22 million in federal and state historic tax credits and $40 million traditional bank financing.
Two other projects were approved Thursday:
▪ MAC Properties’ reconstruction of four vacant historic multifamily properties at 100-118 W. Armour into 34 apartment units. The agency granted 95 percent abatement over 16 years, to supplement an $840,000 contribution from the Midtown Business Interruption Fund. The Old Hyde Park neighborhood fully supports the project, and construction could begin this fall.
▪ Wichitawest Hospitality’s plans for a $10 million, 95-unit Marriott extended stay hotel on 39th Terrace in Westport. The agency granted a 90 percent property tax abatement for five years and 75 percent abatement for 15 years, with payments in lieu of taxes of $1.4 million over those 20 years. The taxing jurisdictions did not object.
Supporters of the taxing jurisdictions continue to argue that Kansas City’s economic development agencies are too generous with their tax breaks. Jan Parks, speaking for civil rights and social justice groups that want economic development reform, told the expansion authority on Thursday that they have serious concerns.
“When is enough, enough?” she asked. “What we don’t understand is why the city isn’t being more forceful in ensuring these incentives and abatements are being used as they were originally intended, to develop truly underdeveloped and blighted areas of our city.”