Johnson County needs more affordable housing. Is converting these hotels an answer?
Developers in Johnson County have long said the costs of land and construction are too high for them to make much of a profit off more affordable apartments — a housing market the area sorely needs.
But now a Utah-based firm has a solution, using existing buildings that are very similar to apartment buildings.
The developer plans to convert two Overland Park hotels into apartments — with rental prices more attainable for middle-income workers who can’t afford most Johnson County housing. It’s not a new idea, but it is one that has grown in popularity across the country in recent years, especially during the COVID-19 pandemic as more hotels closed amid a damaged tourism industry.
Utah-based PEG Companies already gained city approval to convert the Hawthorn Suites off of College Boulevard and Quivira Road into a 108-unit complex, to be called Aria Apartments. And now it’s proposing a similar redevelopment at the Cloverleaf Suites extended-stay hotel at 110th Street and Lamar Avenue, off of Interstate 435.
The planning commission earlier this month approved rezoning to transform that nearly 40-year-old hotel into 112 studio and one-bedroom apartments. The City Council will consider the request on March 1, spokesman Sean Reilly said.
Monthly rents would be $775 to $1,000 per month — helping to fill the city’s need for more units under $1,000. Rent at the College Boulevard complex would be slightly higher. While apartments at that price range are not considered affordable housing, they are more attainable for working families and the middle class, according to a housing study released this year by United Community Services of Johnson County.
While the city has seen a recent boom in new apartments, many are at the high-end price point. That’s caused tension on the City Council, which has approved tax incentives for several private developers building luxury apartment complexes.
And some leaders argued that it’s time for the city to do more to attract affordable housing projects rather than wait for developers to propose them.
Overland Park must grow its housing stock at a variety of price points, according to the housing study, but some on the planning commission were relieved to see a developer helping to fill one of the most significant needs. The development team told the planning commission they hope to offer affordable housing for middle income earners, like teachers and nurses, who make around $40,000 a year or less.
“It’s important for the city to try to find some affordable housing options. They just don’t exist, especially south of I-435,” said Planning Commission Chair Rob Krewson, who voted to approve rezoning for the project despite concerns about limited parking spaces. The commission voted 7-3 to approve the rezoning, with some commissioners concerned that the lack of adequate parking spaces per apartment would create too many problems.
Roughly 37% of renters in Overland Park are burdened by the cost of housing, meaning they spend more than 30% of their income on rent.
“Households making under $50,000 who rent have more difficulty finding attainable options than those that can purchase because of fewer options and rents increasing faster than incomes,” the housing study states.
As Overland Park’s population is expected to continue to rapidly grow over the next decade, the study estimates the city will need to add more than 2,700 units with rents below $1,000 per month to meet the demand. And more than 4,600 homes priced below $250,000 will need to become available.
How to address the city’s affordable housing gap is already a major talking point for mayoral and City Council candidates running in the November election. Councilman Faris Farassati has largely focused his mayoral campaign on the need to curb the city’s use of incentives, and he is especially opposed to subsidies going to luxury apartments, when the demand for more affordable options is so high.
Councilman Curt Skoog, who is also seeking to succeed retiring mayor Carl Gerlach, also acknowledges that addressing the city’s affordable housing gap is a top priority. But he is typically more favorable toward providing tax incentives for luxury apartments and other private projects.
Developers often argue that they can’t build more affordable housing because of the high costs of land, construction materials and fees, as well as stringent zoning laws in Johnson County.
For PEG, converting hotels into apartment complexes solves many of those problems. Spokeswoman Ali Monsen said cutting back on development costs allows the company to offer lower lease rates and meet a growing need.
The company has been acquiring and renovating hotels across the country for the past few years, in markets where there is usually an oversupply of hotels and lack of middle-income housing. The ones in Overland Park are the first in the Kansas City market.
The extended-stay hotels are already built similar to apartment complexes, often with kitchens, private exterior doors, swimming pools, clubhouses and other amenities.
But the projects are only one drop in the bucket. Councilman Logan Heley, who is running for reelection this year, said that the city and county need to do more to help developers build affordable housing.
“The private sector alone is not going to solve this issue for us,” Heley said. “We do need to have a public sector role in housing affordability, whether that’s incentives to build in certain areas or build certain types of housing, or something else. It could be a faster permitting process, it could be lowering some of those soft costs for developers. It might also be looking for nonprofit developers to enter spaces where it’s too financially risky for private developers.”
In addition to cheaper apartments, Heley said the city needs to find a way to increase its stock of affordable starter homes, plus housing in what developers call the “missing middle.” That means duplexes, four-plexes, cottage communities and homes with shared driveways — essentially anything other than big houses and big apartment complexes.
“I’m a renter right now and I’m looking to buy. There’s nothing. I looked online today and there are no homes for sale in Ward 1 of Overland Park that are under $250,000,” he said.
The housing study recommends that the city prioritize public funding and tax incentives toward housing projects with a portion of rents below $1,000 and homes under $250,000.
Many acknowledge that NIMBY, short for “not in my backyard,” battles that take over many city meetings pose one of the biggest challenges. Many residents often push back against multifamily development projects, arguing that they could bring crime or change the character of their neighborhoods.
How the city approaches its affordable housing crisis in the years to come will be at least partly determined by who wins election in November. Until then, some city leaders said they were grateful to see a new developer enter Overland Park’s market to immediately build more affordable apartments.
Monsen said PEG hopes to have the College Boulevard apartment complex completed by the end of summer. The company is in the process of acquiring the hotel on 110th Street.
This story was originally published February 22, 2021 at 5:00 AM.
