‘A sham’? Developer asks bus agency for tax breaks after KC Council denied millions
Just over a year ago, the Kansas City Council made the rare move of rejecting a developer’s request for millions in city funds to help build hundreds of new apartments in Midtown.
But the same developer is now poised to receive millions in taxpayer subsidies from the Kansas City Area Transportation Authority, which is becoming a larger player in the region’s development process.
Mac Properties is seeking a 75% reduction in its property taxes for 15 years as it revives plans for a new residential and commercial development at the intersection of Main Street and Armour Boulevard.
As most of the region was preparing for the Chiefs’ Super Bowl parade on Wednesday morning, the RideKC Development Corporation board voted to recommend approval of the incentive request.
That means the project will move forward to the full board overseeing the transit agency for consideration.
The KCATA, which crosses city, county and state lines, was created in the 1960s as a result of a bi-state “compact” approved by state legislatures in Kansas and Missouri and ratified by Congress. Several years ago, the organization sought to leverage its unique authority to do more than just run buses and play a larger role in development deals — typically the purview of city agencies or others like the Port Authority of Kansas City. To do so, it created Ride KC Development Corporation, a separate nonprofit overseen by the KCATA squarely focused on economic development.
With its 1 W Armour development, Mac Properties aims at renovating a U.S. Bank building on Main Street into new housing and retail space and adding two apartment towers over the site of current parking lots and a Pancho’s fast food restaurant. The $100 million project would add 25,000 square feet of new retail space, 300 new market rate apartments and 191 parking spaces.
Mac Properties is one of Midtown Kansas City’s most prolific developers. Owning 2,500 apartments, the Chicago-based firm has renovated historic buildings into new housing and built new apartment buildings on Troost Avenue, Armour Boulevard and Main Street.
But it’s also been heavily criticized by KC Tenants for driving up rents in Midtown, once an affordable haven in the city’s rental market. On Wednesday, KC Tenants and Midtown residents asked the board to reject the incentive request.
Mary Allison Joseph, a staff member of Trinity United Methodist Church in Midtown and a KC Tenants member, said the board is “unaccountable to the public” and should not be in the business of development incentives.
“You give away our tax dollars to projects that don’t need them,” she said. “And you do all this with an intentionally undemocratic process.”
The board did not allow members of the public or affected taxing jurisdictions to ask questions about the project. Rather, public comments were accepted at the outset of the meeting, more than an hour before the developer and staff presented details on the project.
Only those who signed up the day prior were allowed to speak, though no details about the project were included in the board’s agenda.
“Ride KC is a racket and a sham — nothing more than a developer front group,” Joseph said. “And we won’t stand for it.”
While Mac Properties said it has been working with the transit agency for months, Kansas City Public Schools only learned about the latest incentive request days ago, said Kathleen Pointer, senior policy strategist for the school system.
A 15-year tax abatement would most impact public schools, which disproportionately rely on property tax revenue.
Transit agency officials mentioned the possibility of a Community Benefits Agreement with Mac Properties that could provide some support in offsetting deferred maintenance costs for schools, but no such agreement has been negotiated.
Pointer asked the board to follow the City Council and reject the company’s request for public support.
“This project has already been around the block for an incentive ask,” she said.
To qualify for the incentives, Mac Properties does not have to demonstrate any real need for incentives.
Other Kansas City development agencies require independent financial analyses that show projects could not be built without public support. But KCATA only requires that projects meet their own internal benchmarks related to population density and transit ridership.
“When we give tax breaks that aren’t needed, Kansas City’s kids pay the price for that,” Pointer said.
In January 2022, Mac Properties was seeking millions of surplus funds from the Midtown Redevelopment Tax Increment Financing Plan, which helped fund the development of the area’s Costco and Home Depot.
The company said it was seeking the funds to help offset the costs of meeting city goals on new affordable housing development.
At the time, the proposal included 385 units, 10% of which would be rented to those with an income at or below 60% of the U.S. Department of Housing and Urban Development median family income and another 10% at or below 30% of the median family income. That totals 77 units.
But, facing immense pressure from KC Tenants, the City Council instead voted to transfer the $10.5 million to the city’s Housing Trust Fund, which funds new affordable housing projects.
The company reportedly said it would drop the project after being denied the money from the Council.
Since that time, Mac Properties has removed the affordable housing component and reduced the scope of the proposal.
Peter Cassel, the company’s director of community development, told the board that the council’s rejection of the request for Midtown TIF funds was not a rejection of the project outright.
“That vote was related to that specific issue only,” he said.
He noted that the city has approved a rezoning request for the development, though no city body has weighed in on the new incentive request.
While the developer is not required to show any need for incentives, Cassel said the Midtown area is challenging for new residential construction. That’s because construction costs are just as high as in pricier markets like downtown or the Country Club Plaza.
“However, in Midtown we’re receiving rents that are 60 to 80 percent of the downtown rents,” he said. “So that difference really creates a deep need for the subsidy.”
Brien Starner, president of RideKC Development Corporation, assured board members that all the organization’s development projects were “strongly scrutinized” by staff.
While other incentive-granting agencies consider matters like blight, affordable housing and the need for incentives, he said that KCATA’s incentives had different aims. The agency seeks to entice transit-oriented development, a term for dense developments that promote walkable neighborhoods with easy access to public transit.
Starner said Kansas City’s sprawl is a major challenge for effective public transportation. So the agency’s policies aim at promoting denser neighborhoods that will increase transit ridership and efficiency.
“This is the policy of the land if you will,” he said.
On Wednesday, the board voted 4-2 to recommend approval of the Mac Properties deal. It will now move onto the full KCATA board for consideration. That 10-member board of commissioners includes five representatives from Kansas and five from Missouri.
While one board member unsuccessfully sought to hold the project for further consideration, board member Kenneth Bacchus said he wanted to move the project in front of the full transit agency board.
“We need to have more density in the area,” Bacchus said Wednesday, “and this developer seems to be very cognizant of that.”
This story was originally published February 15, 2023 at 4:45 PM.
