In tough debate, council OKs paying for Three Light garage, gets affordable housing

Development incentives have played a part in Kansas City’s growth, but critics say the city tends to use them to promote development in well-established areas like downtown, while overlooking impoverished areas.
Development incentives have played a part in Kansas City’s growth, but critics say the city tends to use them to promote development in well-established areas like downtown, while overlooking impoverished areas.

After a debate that turned bitterly personal for a few minutes, the Kansas City Council voted Thursday to build a $17.5 million underground garage for the developer of a luxury downtown apartment high rise.

As part of the deal, however, the city extracted some concessions from Cordish Companies, including an agreement to convert the Midland office building to 100 apartments for low and moderate income tenants.

But they were not enough for opponents of the legislation, who argued that the new vibrancy of downtown, and unmet needs in other areas of the city, made paying for the garage impossible to justify.

"The situation has changed," said Councilwoman Katheryn Shields.

By an 8-3 margin, the council agreed to stand by the key provision of a 2004 accord with Cordish, developer of the Power & Light District, to build garages for each of its new apartment towers. Its third such project, Three Light, is scheduled to begin construction later this year.

While many council members were unhappy with the 14-year-old deal, they said the city was obligated to keep its word and build the garage.

"It may not be popular. It may not be fun.....but I happen to have been brought up in a legal system where your word is your bond.......It's time to vote," said Mayor Sly James.

In a statement, Power & Light District executive director Nick Benjamin said: “Today’s results were good for both the City of Kansas City and the Power & Light District, which is what you always hope for in a public-private partnership. We are looking forward to starting work on 3 Light and the Midland Apartments and to continuing to invest in our rapidly growing downtown.”

The measure appeared to be a done deal a until few weeks ago. But two council members, Shields and Alissia Canady, raised persistent questions about the rich package of tax breaks and subsidies provided to Cordish under the 2004 agreement, along with the absence of affordable apartments in Three Light.

The two members led a move to prod City Manager Troy Schulte to renegotiate parts of the agreement with Cordish, which was struck when downtown Kansas City was a moribund collection of aging office buildings. In exchange for taking a gamble on downtown revitalization, the company secured a rich package of subsidies and incentives, including the city's responsibility for the garages.

The company held fast on the question of low-income units in Three Light, contending that they would make project unworkable financially. Cordish agreed to convert Midland as part of building Three Light at the corner of Truman Road and Grand Boulevard.

The renegotiated deal also relieved the city of operations and routine maintenance of the two existing Cordish garages and the one to come with Three Light. The company and the city agreed to secure approval of a new 1 cent sales tax for the central business district and split revenues estimated at about $1 million a year.

City officials estimate that those two provisions, in addition to higher rental payments to the city from Cordish, will come close to covering the $1.4 million in annual debt service on the bonds that will finance the Three Light garage. The pact also cuts the 99-year term of the 2004 deal by half and caps the city's obligation to build garages when Cordish builds its sixth apartment tower downtown — if it ever does.

But Canady and Shields excoriated the deal, arguing that the city was still giving away the store. They pointed out that the city's future obligations to Cordish — three garages and additional money to support parking at Midland — could cost the city at least $80 million.

The two members also pointed out that the Midland deal is contingent on Cordish receiving an exemption from paying sales taxes on construction materials for rehabbing the 1920s-era building. Such exemptions are routinely granted, but Canady said it reflected a lack of good faith on the company's part.

"Cordish essentially said, give us $80 million and we'll build you 100 affordable units," said Canady.

The debate over Three Light took a nasty turn at the council business session that precedes the formal legislative meeting. Canady accused the mayor of negligence in supporting the agreement, and not acting in the best interests of the whole city.

"It's all about the financials," she said, not housing or code enforcement or other unmet needs.

"I always act in the best interests of the city," James retorted. "And I was acting in the best interests of the city before you got your law license."

Cordish is also seeking a 100 percent tax abatement for 25 years on Three Light because it is located in an area declared blighted. With a 25-year abatement, the Kansas City School District would receive $2.7 million in taxes from Three Light. Without the subsidy, KCPS would receive an estimated $14.7 million during the same period.

Other government jurisdictions dependent on tax revenues are contesting the abatement. "My position is based on the ethical premise that public funds should not be used to subsidize luxury housing," Bruce Eddy, executive director of the Jackson County Community Mental Health Board, said in a letter to a special advisory board that will meet next month to consider the proposal.

As part of its application for the tax abatement, Cordish described the amenities that will be available to Three Light tenants, including an eighth floor club room, management office, theater room, demonstration kitchen, outdoor pool, deck, conference room and fitness center.

"Each residential unit will include floor-to-ceiling glass, luxury finishes, materials and appliances, including quartz counter tops, stainless steel appliances, luxury vinyl flooring, washer-dryer in each unit, tile in bathrooms, and similar finishes and materials."