Kansas City board OKs millions in incentives for ‘historic’ AT&T tower rehab downtown
Developers planning an $82 million renovation of a former AT&T building in downtown Kansas City were awarded millions in incentives on Tuesday.
Kansas City’s Land Clearance for Redevelopment Authority board approved a 10-year property tax break on the empty office building, which will be converted into 250 apartments. The developer, Washington, D.C.-based Bernstein Companies, is also seeking more than $20 million in state and federal historic tax credits.
The AT&T building is in the heart of downtown’s East Village, widely speculated as a prime spot for a potential downtown baseball stadium. It sits across the street from the Old St. Patrick’s Oratory and is near three condominium buildings: The View, The Manhattan and The Metropolitan.
Several opposed the tax subsidies, saying a new Royals stadium would deliver a windfall to the developer.
But the developer and members of the Downtown Council pushed for approval, characterizing the building as blighted and a hotbed of criminal activity.
“We’re going to continue to see break-ins and things happen until we stabilize the building,” said Phil Aftuck, director of real estate investments at Bernstein Companies.
Kansas City Public Schools and the Kansas City Public Library raised concerns about the incentives being requested. Tax abatements for developers can cost those taxing jurisdictions to lose out on future property tax revenues. Both agencies objected to taxpayers helping with the developer’s purchase of the building, which they bought at a premium price.
The Bernstein Companies recently bought the building for $13 million at auction from another developer who purchased the tower for only $6.85 million in 2019. The Bernstein Companies did not provide an appraisal of the property, which could identify the fair market value.
“It feels like you’re going both ways,” said Janice Bolin, the library’s finance director. “You need help financing the project and you also overpaid for the building.”
The project was characterized as a historic preservation effort.
While it was only built in 1973, the AT&T building was listed on the National Register of Historic Places for its Brutalist architecture.
“To have an out-of-town investor spend over $80 million in rehabbing a historic building is exactly what we want in downtown Kansas City,” said Jared Campbell, who works for the Downtown Council.
The office building sits at 500 E. 8th Street in the northeast corner of the downtown loop. AT&T in 2019 relocated its workers from the building to another facility in south Kansas City. It has sat vacant since.
Developers said the building is uniquely challenging. Most surfaces are covered in spray-foam asbestos, which will cost millions to remove. The building touts a 570-space parking garage — well above the anticipated demand for parking there. But two floors of the building will not be renovated as they contain no windows.
The renovated building will include 25 studio apartments designated as affordable. Those will rent for $1,128 per month. Market rate apartments will rent from $1,246 for a studio to $1,678 for a two-bedroom unit.
The LCRA board ultimately approved a slightly smaller incentive package than was requested by the developer. It awarded a 10-year property tax abatement of 75%, rather than the 100% abatement Bernstein Companies sought.
The value of the property tax incentives was estimated at $3.6 million. Once the building is redeveloped, a third-party financial analysis estimates the project will raise $3 million over the first decade for taxing jurisdictions. It’s estimated to raise $13.9 million over 25 years.
This story was originally published March 22, 2022 at 2:16 PM.
