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‘Who are you building it up for?’ Troost revitalization raises affordability concerns

For decades, Troost Avenue has been Kansas City’s shorthand for separation: east from west, black from white, poverty from opportunity.

That partition, a legacy of government policies that promoted discrimination and neglect, is dissolving. A wave of economic development, pushing for years from the west, has broken through. Between 24th and 52nd streets, more than 800 new apartments and a hotel are under construction or in the planning pipeline.

The once-vibrant shopping district at 31st Street is headed for renewal. Home rehabilitation and infill construction that started in Beacon Hill is surging south through the Center City, Squier Park and Manheim Park neighborhoods.

But with its transformation, Troost risks becoming shorthand for another kind of historic failure: The absence of city policies to ensure affordable housing and protect long-time residents from displacement.

Despite the city’s acute need for low-and moderate-income housing, nearly all of the corridor’s new apartments will be “market rate”— even after developers (MAC Properties, Milhaus and UC-B, among others) received tax abatements and other incentives for investing in a blighted community. It means the units will be largely beyond the reach of those making below the city’s median household income of $51,235.

Unlike most big cities, Kansas City does not require residential developers to set aside a portion of their new units as “affordable,” or costing a family no more than 30 percent of their gross income.

“Let’s be honest. It’s not a bad thing to build more expensive housing for people who can afford it,” said Father Justin Mathews, executive director of Reconciliation Services, the 30-year-old community development nonprofit at 31st and Troost. “The rub is that we’re doing that without having provided for the thousands of families struggling to survive and succeed on the east side.”

Within a one-mile radius of Mathews’ office, 50 percent of households make less than $25,000 a year, according to census data. Thirty percent are headed by one parent, twice the statewide rate.

At 30th Street, workers are putting the last touches on apartments and shops in what had been an industrial bakery. But at Wonder Lofts, where two-bedroom apartments go for $1,100 to more than $1,300 a month, a single parent with two children would have to earn about $25 an hour — more than twice what the Missouri minimum wage will be in 2023 with the recent passage of Proposition B — to rent there.

“We’re building up Troost. We’re building up all these nice condos and stuff, but who are we really building them up for?” asked Linda Benson, 71, who has lived in several east side neighborhoods over her half-century in the city. “You know minority people can’t pay $1,200 for rent. That’s ridiculous. So who are you building it up for?”

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Long-time east side resident Linda Benson, 71, is not against new development but is concerned about affordability as Troost Avenue and surrounding neighborhoods are revitalized. Keith Myers kmyers@kcstar.com

There is chatter in the local real estate industry that at least some segment of Troost is the next Crossroads, the warehouse and industrial district that evolved into art galleries, restaurants and chic apartments.

“Things are happening faster here than the Crossroads,” said Jason Carter-Solomon, vice president of Enterprise Bank and Trust, an active lender in the area. ”You have a lot of people circling Troost.”

‘A clear political choice’

For the most part, the new construction is aimed at attracting young professionals and their families. They’re uninterested in the suburbs, have been priced out of a newly expensive downtown but want to be close to work in an authentically urban environment.

Housing advocates said City Hall — not developers — is accountable for failing to insure that the new housing on Troost will be available to a mix of income levels.

“Low- and moderate-income residents deserve assurance that there is a place for them on Troost, both now and in the future,” said Matt Nugent, an architect who lives in Squier Park. “And developers need to know from the beginning of a project what will be required of them in terms of affordable housing. Unfortunately, we don’t have a city housing policy that does either of those things.”

The city introduced a draft of its first-ever housing policy in September, calling for a $75 million public-private housing trust fund and creation or preservation of at least 5,000 affordable homes and apartments by the end of 2023.

Even if approved by the City Council, the plan is no more than a modest start. Officials estimate that 7,000 additional affordable units are needed for families making less than $15,000 a year. Households in the $50,000 to $75,000 range face a deficit of more than 10,000 affordable places.

Councilman Quinton Lucas and Mayor Pro Tem Scott Wagner, both candidates for mayor in 2019, are sponsoring their own package of initiatives. They include a requirement that developers seeking economic incentives from the city set aside 15 percent of new units for households at or below 80 percent of the city’s median income, or about $41,000 a year.

Other ideas in play include freezing property taxes for long-time owners in areas with fast-rising home values, and limiting tax abatements available to those rehabbing existing homes or building new ones.

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“Let’s be honest. It’s not a bad thing to build more expensive housing for people who can afford it,” said Father Justin Mathews, executive director of Reconciliation Services, the 30-year-old community development nonprofit at 31st and Troost. “The rub is that we’re doing that without having provided for the thousands of families struggling to survive and succeed on the east side.” Keith Myers kmyers@kcstar.com

These issues, and the possible prescriptives, have been clear and urgent for many years. Yet only recently, in the final year of Mayor Sly James’ second four-year term, has affordability become a front-burner issue.

Why has it taken so long?

Lucas, chair of the council’s housing committee, said he’s experienced resistance from James and City Manager Troy Schulte, whom he called essential allies in any attempt to address the complexities of affordable housing.

“I think when you look at Kansas City in the last eight years, it was about airports and infrastructure and keeping the momentum going,” said Lucas, who is serving his first council term. “That was a clear political choice.”

James, in an emailed statement, said it has taken Schulte’s office time “to gather data and information necessary to creating a comprehensive housing policy,” including partnering with Greater Kansas City Local Initiatives Support Corporation (LISC) on an in-depth study of the local housing market.

James also noted that he created a separate housing committee when the current council took office in 2015, decoupling it from neighborhoods and making Lucas the chair because of the importance of affordability.

“The adoption of a comprehensive policy is appropriately initiated by the housing committee that Councilman Lucas chairs,” James said.

Developers’ dilemma

Developers along Troost said any new city policy has to come with a recognition that even with tax incentives, lower rents will require more capital to make projects financially viable. Banks lend based on the cash flow a building is expected to produce. Investors expect annual returns of 10 percent and upward.

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Neil Nakahodo

Wonder Loft’s developers obtained a 10-year, 100 percent property tax abatement from the city, followed by another seven-year 43 percent break and state and federal historic tax credits. But its co-developer said reducing rents would make it difficult to get a large enough construction loan.

Architect Caleb Buland said setting aside 20 percent of Wonder’s units for renters making 60 percent to 80 percent of median income would erase about $1 million of rental revenue over 10 years.

“At that point, we would have to cut the bank loan or find an investor, plus find revenue to continue to balance the operating budget,” Buland said.

Builders assert that any form of “inclusionary zoning,” requiring set-asides for income-restricted apartments, would only drive them away from projects in areas like the Troost corridor.

Audrey Navarro, managing partner of Clemons Real Estate, which is redeveloping the 31st shopping district, said smaller building footprints and partnerships with nonprofits could do more to bridge the financing gap between market rate and affordable.

“The solution isn’t always let’s define more rules and regulations,” she said.

Other prescriptives include revival of Missouri’s Low Income Housing Tax Credit, which offsets tax liabilities for developers of low-income housing. The program was killed earlier this year under the administration of then-Gov. Eric Greitens. Gov. Mike Parson said he won’t support renewal of the program until it is revamped to eliminate inefficiencies revealed in state audits.

There is also hope that the new federal Opportunity Zones, a product of this year’s federal tax reform bill, will have an impact. The program allows investors to put capital gains into special funds that, in turn, invest in projects in impoverished communities. Depending on how long the money remains in the fund, taxes on those gains would be deferred or reduced.

Matthews said he has to believe that the capacity is there.

“If we can’t figure out a way as a city, as brilliant and entrepreneurial and philanthropic as we are, to pursue a development without displacement strategy, then we’re never going to be the great city we claim to be.”

Gentrification or not?

Nowhere in Kansas City’s 72-page draft housing proposal is the word “gentrification.”

The term has a range of definitions, most boiling down to how people with money change predominantly poor communities when they move in: higher housing costs, a loss of local culture or identity, and displacement. It has played out on a dramatic scale in big cities like San Francisco and New York, and to a lesser degree in Kansas City.

John Wood, the city’s neighborhood and housing services director, said that while Crossroads and the West Side experienced some gentrification, the Troost corridor’s deep inventory of abandoned housing and vacant lots create a different scenario.

“We’re a long way from gentrification,” Wood said in a September interview. “We’re not displacing people. In my mind we have too much land, too much real estate, that sits vacant right now. Nobody’s been pushed out.”

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The revitalization of Troost Avenue includes new apartments going up between 26th and 27th streets. kmyers@kcstar.com

Other housing and neighborhood advocates adopt a version of the late Supreme Court Justice Potter Stewart’s definition of pornography when they discuss gentrification. They know it when they see it.

“It’s so close. It’s happening right now,” said Stephen Samuels, executive director of LISC, which is partnering with the city and other organizations to redevelop the urban core east of Troost in a way that still benefits longtime residents.

“It’s not enough to say we didn’t drive anybody out. It might not be displacement at first,” Samuels said, but a slower, 10- to 15-year process of rent and property taxes ticking upward to the point of becoming untenable for residents on fixed incomes.

It’s not just new construction making the area more expensive. In ZIP codes on both sides of Troost, residential rents have risen 17 percent to 20 percent over the last three years — about twice the citywide rate of growth, according to the research firm RENTCafé.

“It used to be that you could find a one-bedroom apartment with utilities included for $450 to $500,” Matthews said. “Now you’re lucky to find an apartment that’s a one-bedroom without utilities for $800 or more.”

On a recent afternoon Clay Marcusen, a retired registered nurse, was collecting the last of his belongings — bicycle, a laundry basket and small plant — from his one-bedroom apartment in South Hyde Park. He’d lived on the second floor of a modest but sturdy fourplex for nine years at $575 a month.

In September, the building’s management company, Douglas J. Hannah, informed residents that their leases would not be renewed. It was not an eviction in the strictest sense: the company invited tenants to look at its other listings, all more expensive.

Hannah didn’t share its plans for the building, and a company spokesman didn’t return a call for comment. It’s likely to be remodeled to attract higher rents.

Marcusen, 68, who is moving in with his girlfriend south of the Plaza, said it was a shock, even though he’d been watching other buildings undergoing the same metamorphosis in his jogs along Troost.

“You wonder where people are going to go,” he said.

Veteran developer John Hoffman of UC-B Properties, who has been building and remodeling homes in neighborhoods east of Troost for the last several years, doesn’t do much hand-wringing about affordability. Failed public schools and stagnant wages are the issue, he said, not new investment.

“Our philosophy is that we can’t be all things to all people,” said Hoffman, who sees his mission as trying to rebuild neighborhoods by “blending” small amounts of new and rehabbed housing. He has recently built and sold four homes in Manheim for $275,000 — a price unheard of even a couple of years ago — on vacant lots he acquired.

“To me it’s not gentrification at all,” he said.

Chris Goode, owner of Ruby Jean’s Juicery, which offers handcrafted juices and “healthy bites” catty-corner to the Wonder Lofts, embodies gentrification’s conundrum.

A former college football star-turned-entrepreneur with locations downtown and in Springfield, Goode is proud of his business and the lifestyle it promotes in an urban core where fast food has been king.

He’s also aware of the tensions that change creates. His juices and smoothies go for $7.50; add a sandwich and the tab nears $20.

He’s introducing a lower-cost “Troost Meal,” with $5 vegan chili and other offerings available to those who live or work in the area. Goode hopes it will make his product more accessible.

“I understand the sensitivity about price,” said Goode, who grew up at 39th and Wabash. “We benefit from gentrification but we have to be sensitive to it. It’s a real worry.”

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