Development

City Hall advances downtown office projects that could attract 1,800 jobs

Potential site of new major office tower in downtown Kansas City

An ordinance in Kansas City authorizes city manager Troy Schulte to work on a development agreement on Strata, a new office tower in the Power & Light District. It would be the first major new office development since 1991.
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An ordinance in Kansas City authorizes city manager Troy Schulte to work on a development agreement on Strata, a new office tower in the Power & Light District. It would be the first major new office development since 1991.

With the Kansas City Council’s endorsement Thursday, the city is moving steadily toward a deal on two major office projects in downtown and the River Market that could accommodate a combined 1,800 jobs.

Council members signed off on two ordinances allowing City Manager Troy Schulte to negotiate development agreements for the buildings. One would be at 3rd Street and Grand Boulevard and the other on the southwest corner of 13th and Main streets. Developers on both projects are pursuing tax incentives from Port KC.

The ordinances were expected to get a vote in December, but members asked for more time to review them. Both outline a potential deal in which the city would finance parking garages, and both projects will return to the city for approval later in the development process.

Members unanimously approved the ordinance allowing the city to start talks with Briarcliff Development Company, which is planning the River Market building it says could attract out-of-town tech jobs.

They debated seriously, however, what negotiations with developers Jon Copaken and Ron Jury should look like. They’re developing a downtown office tower, called Strata, without a tenant yet secured. The practice of building on a speculative basis is a risk few developers have been willing to make in Kansas City and one economic development officials say is essential to securing large new corporate employers.

While both ordinances ask that city financing for the garages be part of the negotiation, the proposal for Strata suggested the city guarantee the debt on the bonds that would be issued to build the garage. That means if the project didn’t generate enough money to pay off the debt, the city would be on the hook.

Councilwoman Katheryn Shields, who represents the 4th District at-large, pushed to send the ordinance back to committee or amend it over concern that the language would predetermine the outcome of the negotiations and that the city would guarantee the garage debt.

“I think it’s very important that when this comes back to us it comes back unencumbered by a commitment we’ve already made,” Shields said, although she said it was a “great project.”

Councilwoman Alissia Canady, 5th District, who is running for mayor, was hesitant about the city guaranteeing debt on an office tower that has not yet signed a tenant. The city would be relying on the proceeds from the project, including taxes from new employees and parking revenues, to pay off the bonds necessary to build the parking garage.

“We’ve seen this before,” Canady said. “We’re paying for it to the tune of $14 million a year as it relates to KC Live.”

The city agreed to backstop the bonds on the Power & Light District, promising that the entertainment district would generate enough revenue to pay off those bonds. It hasn’t, and the city has been on the hook for the debt it guaranteed.

Council members struck a compromise, suggested by Councilman Scott Wagner, who represents the 1st District at-large and is running for mayor, that removed language saying the city “desired” to help finance the project to ease the tone of the ordinance.

“I guess my position would be that we’ve had almost three weeks between the last time we spoke about this and today,” Wagner said, noting the project would have to come back for another vote.

Shields, Canady and Councilman Quinton Lucas, also a mayoral candidate, voted “no” on the Strata project.

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