Why is Lenexa handing out tax subsidies for luxury apartments and offices?

Voter voices: What issues will the next mayor face while dealing with Kansas City’s economic development?

Kansas City has historically been generous in awarding property tax breaks to big developers. Will the next mayor take a different approach?
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Kansas City has historically been generous in awarding property tax breaks to big developers. Will the next mayor take a different approach?

Last week, officials in Lenexa broke ground on a new luxury apartment and office complex called the Lofts at City Center.

The $14 million project is part of a massive development near 87th Street and Renner Road. The 67 apartments, to be finished next year, will be pricey — roughly $2,200 a month for a two-bedroom unit. For that kind of money, builders say, you get 21st-century cool: a fitness center, a courtyard, high speed Wi-Fi.

But cool costs money, and the Lofts will use all the tools of modern development. Builders will get tax increment financing — in the first five years of the deal, all of the higher taxes from the site will go back to the project, much of it to pay for parking. Developers can use something called industrial revenue bonds to exempt building materials from sales taxes.

If this sounds familiar, it should. It’s a smaller version of the Cordish Company’s apartment projects in Kansas City’s downtown.

We’ve been critical of public incentives for luxury apartments and luxury hotels. When thousands of residents are struggling to pay the rent, it’s ludicrous to pour millions of dollars of incentives into high-end projects without some concrete benefit for the middle class.

That concern now extends to the suburbs. Lenexa’s decision to offer incentives for a luxury apartment complex should trouble residents and everyone who lives in Johnson County.

The lack of affordable housing isn’t just a crisis in Kansas City. By one estimate, one in four Johnson County residents is burdened by excessive housing costs — that is, rents or mortgages that exceed 30 percent of income. High housing costs are huge hurdles for young teachers, retail clerks, blue-collar workers and others.

In Lenexa, one in 10 homeowners — and one-third of all renters — face excessive housing costs, according to a 2016 housing needs assessment.

Yet many in Johnson County act as if the lack of affordable housing is a mere hiccup. “Because the issue in not in the public discourse, there is less recognition that any action is needed to keep housing affordable,” the Lenexa housing study found.

“Others questioned whether it was necessary for Lenexa to be able to offer a range of housing options that would accommodate service industry workers and those with low incomes because options for those populations are available elsewhere in the region,” the study reported.

The idea that Lenexa, or any community, could solve its affordable housing problem by hoping that lower-income workers will move somewhere else is offensive and ill-considered. Vibrant communities include families of all incomes, with varied backgrounds, ages and life experiences.

Residents are awakening to this reality. Development incentives were the key issue in the 2017 mayor’s race in Overland Park. Other cities will have to face the housing challenge, whether they want to or not.

To its credit, Lenexa’s new 2040 “visioning statement” includes a promise to explore ways to make housing more affordable. That commitment includes discussions with developers “to understand where the difficulty lies with financing, so the city can learn how to encourage more attainable housing.”

Here’s one way: Use incentives and subsidies to encourage affordable housing developments, not just to pay for luxury apartments. Lenexa, and every Johnson County community, should consider that approach.

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