KC not obligated to pay developer for Three Light garage, city attorney says

The One LIght apartment building developed by Cordish Companies received large subsidies from the city.
The One LIght apartment building developed by Cordish Companies received large subsidies from the city. File photo

Kansas City is under no legal obligation to build a $17.5 million parking garage underneath the proposed Three Light apartments as part of its 2004 agreement with Power & Light developer Cordish, a municipal attorney said Wednesday.

Associate city attorney Brian Rabineau told a City Council committee that any commitments made in 2004 were contingent on future lawmakers voting to appropriate the money. An ordinance approving the payment is under consideration by the current council, but at least two members are questioning the wisdom of subsidies for high-end apartments when there is an acute shortage of affordable housing downtown.

"There's nothing that requires or mandates the City Council to take action or to take action by a certain date," Rabineau told the council's finance and governance committee. He said that the council was within its rights to seek amendments to the deal that would create more low and moderately priced housing.

But Rabineau and Mayor Pro Tem Scott Wagner, the committee chair, both cautioned that withdrawing from the deal could give prospective development partners pause about working with the city.

"What is the message that is sent to those who may do business with the city in the future?" Wagner asked.

The 2004 deal, and a series of subsequent amendments, created a package of subsidies and incentives for Cordish to build the successful One Light and Two Light apartment high-rises. They included the city's sale of special obligation bonds to build garages. This was over and above the $294 million in general obligation bonds the city sold to pay for infrastructure and other improvements to support the downtown entertainment district.

Until a couple of weeks ago, the latest amendment to the 2004 accord seemed to be sailing toward approval. In exchange for a 450-space garage, Cordish would assume responsibility for operating and maintaining all three Power & Light garages, saving the city about $500,000 a year, according to City Manager Troy Schulte. He said the money would be used to reduce the debt service on bonds sold for the the new garage, an estimated $1.4 million a year.

Councilwomen Alissia Canady and Katheryn Shields argued that the success of One Light and Two Light, combined with the need for affordable housing and other city programs, makes the deal as written unjustifiable. It also comes on top of the city's heavy investment in the Power & Light District, which has yet to generate sufficient revenues to pay annual debt service, estimated at $14 million this year.

"We took the risk and it's eating away at our general fund now," Canady said. "It's why I'm looking very closely at this transaction to make sure we don't repeat the same mistakes we made in the first go around." Canady and Shields have sponsored a resolution calling for the council to defer the latest garage deal until there is a fuller discussion of housing needs.

While there is language in the 2004 agreement calling on Cordish to provide affordable housing in its apartment developments, Rabineau said it fell short of a legal requirement. He called it "a non-binding policy statement."

Cordish representatives have lobbied the city intensively behind the scenes for passage of the garage agreement as written. They told council members at Wednesday's that in their view they have provided lower-cost housing.

Nick Benjamin, Power & Light District executive director, said that 40 percent of the apartments in One Light and Two Light were within reach of residents making 115 percent of the area's median household income, or about $50,000. One-bedroom apartments are available for $1,600. Three Light, he said, "will provide units with a variety of price points affordable by people within a broad range of incomes."

Canady said after the hearing that would not suffice, and that income thresholds needed to be close to 80 percent of median income to begin meeting affordable housing needs.

Benjamin said there was no way to charge less for rents without requiring more subsidies from the city. He did say that Cordish was ready to work with the city on other possible projects downtown with affordable units.

The committee took no action on the garage ordinance. Wagner said it would hold for a week while the council's ethics panel, chaired by Councilman Dan Fowler, considered legal questions surrounding the city not funding construction of the garage.