Editorials

Tax breaks for a downtown KC office project that may not even be legal? Just say no

Potential site of new major office tower in downtown Kansas City

An ordinance in Kansas City authorizes city manager Troy Schulte to work on a development agreement on Strata, a new office tower in the Power & Light District. It would be the first major new office development since 1991.
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An ordinance in Kansas City authorizes city manager Troy Schulte to work on a development agreement on Strata, a new office tower in the Power & Light District. It would be the first major new office development since 1991.

Serious new concerns have arisen about a controversial office tower and parking garage planned for downtown.

Those questions, including the legality of the city’s financial involvement, should leave no doubt that the incumbent City Council should reject the project Thursday when it meets for the final time.

It will take seven votes to defeat the plan, assuming full attendance. An informal survey Wednesday showed five “no” votes — with several council members declining to comment or not responding to queries. Rejecting the plan is a real possibility.

Mayor-elect Quinton Lucas and fellow council members Teresa Loar, Katheryn Shields, Jermaine Reed and Alissia Canady told The Star they would oppose the proposal. Lucas should play an important role here. On Thursday, he should make his opposition to the project clear — and pressure colleagues, including those leaving the council, to help derail the proposal.

“This just really isn’t the right project,” he said Wednesday. He is correct.

The proposed office building, called Strata, has spurred controversy for months. The combined tower and parking garage would cost $132 million; of that, roughly $63 million would come from public subsidies, including a direct $27 million public investment in the offices.

That investment may be illegal.

The Missouri Constitution generally prohibits the use of public money to pay for private structures. There are exceptions: If a building has a public use or benefit, government funding is usually acceptable.

But there is no clear public benefit from the Strata office tower, other than a vague claim that it promotes economic development in the city. Councilwoman Shields has argued during the past week that the city cannot become a direct partner in the project without breaking the law.

Late Wednesday, a city legal official disputed her argument, claiming a “public purpose” is whatever the council says it is. Regardless, Shields’ concerns are legitimate. The City Council must reject the proposal if there are any questions about its legality.

Beyond that, the Strata building remains an iffy proposition on its merits.

In a July 16 memo to council members obtained by The Star, Strata developers insist new Class A office space is “badly needed,” even though there are no confirmed tenants for the structure.

Yet a study by the real estate consulting firm Cushman and Wakefield showed the vacancy rate for Class A office space in the Kansas City region was 11.6% in the first three months of the year. The overall downtown vacancy rate was 17.5%.

That suggests the demand for downtown office space is softer than developers claim. At a minimum, council members should insist on a full understanding of the proposal before taking a vote.

The Strata project saddles the public with an unacceptable risk and uses tax incentives that should go to distressed neighborhoods, not a vibrant downtown.

Kansas City should not be in the business of investing in office buildings. The City Council must send that clear message Thursday.

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