Divided City Council approves scaled back financing deal for downtown office tower
A divided City Council approved a financing agreement on Thursday for a multi-tenant downtown office tower, the likes of which Kansas City hasn’t seen in more than 25 years.
The $133 million tower, called Strata, will be built atop existing retail on the southwest corner of 13th and Main streets. Its developers, Jon Copaken, Ron Jury and H&R Block are building it speculatively, meaning they’ll build it without first securing a tenant.
The tower, which will receive substantial tax incentives, has followed a long and rocky road to approval. Developers last year announced the proposal, the first multi-tenant tower to be built downtown since 1991, with a request for $63 million in city guarantees on the debt developers will take on to build it. Since then, the deal has ping-ponged between the full City Council and committee meetings and was scaled back through negotiations with developers.
Under the agreement council members passed Thursday, the city will guarantee $36 million in debt on a 750-space garage for the 250,000 square-foot building. Developers dropped a request that the city also guarantee $27 million in debt on the tower itself in exchange for a stake in the revenues generated off of tenants’ rent payments.
In a tweet Thursday, Mayor Quinton Lucas pointed to the revised deal as an example of “standing up for public,” but he questioned why the original “inflated deal” ever reached council members.
“For most of (2019), electeds heard downtown needs new commercial office,” Lucas said. “Sure! Agreed! (The question) always should be — at what cost to taxpayers? Developers gonna be developers. City Hall should always aggressively protect public.”
To cover up-front costs, developers are benefiting from a Port KC Aim Zone, which redirects some state taxes generated by new office jobs in the tower to help cover construction costs. Developers are also seeking a 75% abatement of property taxes and a 75% redirection of city earnings taxes generated by the jobs at the site.
On Wednesday, the revised deal passed the City Council’s Finance, Governance and Public Safety Committee by a 3-1 vote.
The full council voted 7-4 in favor of the deal. Council members Heather Hall, Kevin O’Neill, Dan Fowler, Katheryn Shields, Eric Bunch, Ryana Parks-Shaw and Kevin McManus supported the proposal. Mayor Quinton Lucas and council members Brandon Ellington, Melissa Robinson and Teresa Loar voted no. Councilwoman Andrea Bough recused herself because of a potential conflict of interest, and Councilman Lee Barnes was absent.
