KCK approved Strawberry Hill high-rise despite pushback. Why developer might scrap plan
An eight-story apartment building planned in the Strawberry Hill neighborhood of Kansas City, Kansas, is facing financial challenges that have significantly delayed construction and could result in abandonment of the project, a lead developer said Monday.
The proposed high-rise, dubbed 505 Central and partially backed by public financing, is envisioned at Sixth Street and Central Avenue, a gateway to the city’s eastern end. The $40 million project, which has drawn opposition from neighbors, would boast 129 apartments with views overlooking the Kansas River.
Mark Moberly, director of real estate development for local firm Sunflower Development Group, told elected officials during a committee hearing Monday that interest rates started spiking shortly after the approval of its development agreement in late 2022.
The developer’s chief problem now, Moberly said, is finding enough investors as interest rates have climbed and construction costs have grown.
The developer is asking for an 18-month extension on its construction deadline. That should allow time to determine whether the project is “financially viable,” Moberly said, though the developer left the door open to coming back with another request down the line.
“If the capital markets do what everyone thinks, and interest rates start going down, maybe once this year, and a few times next year, our hope is our ability to secure private debt and equity is back to where we thought it was when we originally proposed this project,” Moberly said.
“If for some reason we can’t do it, then we probably need to abandon the project and walk away.”
The proposed extension would be the second offered to Sunflower Development.
Last year, commissioners agreed to extend the construction commencement deadline to Sept. 1. Under the amended proposal sought by Sunflower, construction would begin by March 2026 and finish within two years.
An agreement with the city and county government approved in 2022 provides a tax-increment financing plan to help pay for the development. It is valued at up to $6 million, which would represent approximately 15% of the estimated total cost, according to documents submitted to the government.
Since its inception, the proposal has drawn opposition from some neighbors in Strawberry Hill and Russian Hill.
Neighbors who dislike the idea have pointed to the height of the eight-story tower and its overall character within the corridor, which is home to small businesses and single-family residences. Other criticisms have been aimed at affordability of rent within the building.
During the committee hearing Monday, Commissioner Bill Burns, whose 2nd District covers the area where the building would be constructed, supported the timeline extension.
“This is going to be a wonderful project in the future,” Burns said.
Commissioners Tom Burroughs, 2nd District at-large, and Chuck Stites, 7th District, said the extension aligns with other requests the governing body has granted developers in the past.
The committee voted 6-0 to extend the project’s required start time. The action put the measure up for final consideration by the Unified Government Board of Commissioners to take place Aug. 29.
Moberly said the proposed plans for the one-acre site have not changed. He added that Sunflower wants to move forward with the project.
“We don’t make money until we start,” he said. “So we’re absolutely motivated to get this project done.”
This story was originally published July 30, 2024 at 2:53 PM.
