Why one big KC developer is fixing up apartments and keeping rent under $1,000

Imagine this: A historic apartment building gets purchased and renovated by a big developer — perhaps a new roof or landscaping, and repairs inside. But instead of spiking, the rent stays the same or goes down as units become available.

That’s what a new Kansas City nonprofit says they’ll do as they push to not just maintain, but create, affordable housing across the metro, both single- and multi-family.

The organization, recently renamed Driven Development, is tied to prominent developer VanTrust Real Estate and has already started work on new and refurbished apartment projects in Kansas City, Missouri, while working with officials in Johnson County to improve housing options in an area that’s quickly losing its affordable housing stock.

The organization has already bought two 36-unit apartment buildings in Midtown neighborhoods — Dutch Hill in Longfellow and Plaza 36 in Rockhill — and has continued renovations while ensuring they remain affordable to residents with lower incomes.

Rent for a studio in Dutch Hill is $800 a month, while a two-bedroom is $1,100. In Plaza 36, two-bedroom apartments rent for $900 a month, according to Driven Development’s website.

Neither project has received tax incentives.

“To date, our projects are serving individuals and families earning between approximately 50% and 80% of the area median income as published by HUD (The U.S. Department of Housing and Urban Development), across a variety of household sizes from one to four people,” VanTrust officials said in a statement. For a family of four in Kansas City, that would be a household income between $33,000 and $89,000 a year.

Dave Harrison, the president of VanTrust and Driven Development, said the nonprofit will be an “engine” to add affordable housing stock and is a “natural extension” of the brick, dirt and mortar work of what VanTrust already knows.

“And that conviction that we’ve had, besides the other involvement we’ve had in the community, is to take that and attempt to have an impact on one of the biggest challenges all our communities have, and that’s affordable housing,” Harrison said.

In the Kansas City region, there’s a gap of 64,000 affordable rental units for households with lower incomes, according to data from the Mid-America Regional Council. The median gross rent in Kansas City is around $1,200 with utilities, according to the most recent census data.

At the same time, home prices continue to increase. In Johnson County in particular, more than 90% of the homes went up in value, with average home prices sitting at $508,000 and the average sale price at $557,000. As home values increase and affordability becomes less available, more families are burdened by the cost of housing.

Driven Development will seek to ensure affordable housing for households across income levels below the area median — including workers like teachers, health care staff and first responders — alongside residents with lower incomes.

“We’ve had a deep, ingrained conviction to help in that housing silo, the affordable housing silo,” Harrison said, coming to the conclusion that it had to be a nonprofit. “And there’s no such thing as kind of nonprofit. It has to be nonprofit. We have to squeeze out the fat in delivering housing — whether it’s apartments, townhouses, single-family homes, whether it’s ground up or whether it’s renovated.”

While the team is still “building the plane as we take off,” Harrison envisions that this will be no different than what VanTrust did 15 years ago.

“And that is: You do one project, you make it successful, you do another, then you do 5, then you do 10. And some day you look back and you’ve done hundreds and hundreds and hundreds and hundreds of units,” he said.

History and how it will work

VanTrust launched in 2010 with the help of the Van Tuyls — a prominent wealthy family based in Arizona with deep ties to the KC region — to work on projects like redevelopment in the Country Club Plaza.

Since then, the company has opened six offices across the country and developed several projects across the region.

The idea of Driven Development stemmed from an idea to create a rent-to-own housing nonprofit in 2019 and 2020. But increased construction costs and high interest rates from the pandemic shifted the approach to a broader focus on affordable housing and housing assistance.

“There’s a lot of for-profit, affordable housing groups out there, and a very needed niche, but as you try to reach deeper and deeper into helping those folks that really need some assistance, you have to take out the profit components,” Harrison said.

Like VanTrust, the Van Tuyl family will also be backing Driven Development initially, and Harrison said they are working on approaching other philanthropic avenues like foundations to help fund the mission.

He also envisions Driven Development working with government partners and other nonprofits to collectively assist those in need through wraparound services on project sites.

“The only thing we’re focused on is the delivery and manufacturing of those residential units, in whatever form they are, and then we’ll rely on those other folks to help populate those buildings or those units and help the residents,” he said.

No specific partners have been named yet.

Matching Kansas City’s style

The focus of what would become Driven Development was originally going to be single-family housing, but Harrison said market challenges that emerged in recent years have made the numbers challenging.

“We’re not going to abandon that, but we ran out of patience,” he said. “And lack of patience, I think, is one of our biggest attributes in attacking this.”

Besides the two buildings it’s renovating, the nonprofit is also working on an infill project off Linwood and Main with 10 three-story walk-ups with six units each that are inspired by Kansas City’s historic colonnades.

The Port KC Board of Commissions approved on Monday a financial incentive plan for the Linwood project that includes $3.1 million in property tax exemptions over, while the property would generate $841,000 in property tax revenue during that time, which is higher than if it remained vacant.

Harrison said the colonnade-inspired buildings, which match the kind he sees driving around KC, are more efficient to construct and have more of a personal feel for residents while still offering a degree of density.

The group has also partnered with the Urban Neighborhood Initiative to build three homes in the Wendell-Phillips neighborhood.

Across the state line, the nonprofit has also signed a letter of intent with Johnson County to collaborate on housing there. The letter does not outline any specific obligations, but the nonprofit is looking at land in the county. Further details are to be announced.