Kansas City’s East Side is long overdue for more development funds

It’s hardly time to cheer, but the long-neglected East Side of Kansas City is starting to see more funding proposed for housing and commercial development.

Some of the money comes from positive initiatives at City Hall. Other funds spring from a settlement in redlining complaints against First Federal Bank of Kansas City.

More market-rate financing is certainly needed on the East Side from banks and other financial institutions competing for business from the black community. Lenders have avoided the area for decades. That neglect must end.

Recent events offer a lot of promise for East Side development.

▪ For many years, African Americans have had to turn to the federal government when the age-old problem of discrimination occurs. In a recent case, the U.S. Department of Housing and Urban Development mediated a redlining settlement against First Federal Bank of Kansas City.

The $2.8 million in commitments from the agreement will increase financial services for African Americans on the East Side.

The bank agreed to make $2.5 million in mortgage loans for borrowers over three years in majority black neighborhoods. It agreed to provide $105,000 in a loan fund to rehabilitate vacant and blighted houses in distressed areas as well as $75,000 in mortgage subsidies to qualified borrowers in the black community. The bank also will spend $50,000 in print and radio advertising to market community events and outreach to African American communities and invest $30,000 in financial education programs for African Americans. Financial literacy for residents is essential for the growth and development of any area.

The Concerned Clergy Coalition of Kansas City and the Historic East Neighborhoods Coalition of Kansas City brought the complaints against First Federal through Legal Aid of Western Missouri and the Metropolitan St. Louis Equal Housing and Opportunity Council. The groups charged that the bank excluded African American neighborhoods and limited mortgage lending to persons based upon race, which is prohibited under the Fair Housing Act.

“It’s a shame that we have to resort to suing banks to get them to reinvest in the community,” said Joseph Jackson, executive director of the Historic East Neighborhoods Coalition. “We’re not looking for a handout. We’re looking for the same resources and opportunities that other people enjoy.”

▪ The city is partnering with the Local Initiatives Support Corp., the Kauffman Foundation and other philanthropic groups to create a loan fund of up to $4 million.

That would help fund architectural drawings, financial and environmental studies, legal fees and other pre-development costs tied to getting business and housing developments underway.

The money from Kansas City government would be used in low- to moderate-income areas and would be paid back over time, then recycled into new projects. That could include grocery stores, housing developments, other retail operations and health care facilities. The average loan would be about $250,000 with an interest rate of up to 4 percent.

▪ Mayor Sly James and City Manager Troy Schulte have proposed spending $10 million to demolish up to 850 dangerous houses and other structures. That’s a solid approach to eliminating blight in neighborhoods, but rehabilitation of other vacant houses should be pursued with equal vigor.

A lot of interest has grown from a plan to sell some of the dangerous houses for $1 each. The new owners would promise to renovate. If an owner-occupant moves in, the city would pay the person doing the rehabilitation work the $8,500 that would have gone to raze the building.

▪ James last month proposed the Shared Success Fund. It would reduce risks to developers by directing small amounts of city money — possibly $100,000 a year to start — to projects.

The city funds would help encourage builders struggling to get financing. It also could aid those deterred because of costs in lease or rental rates that make it impossible to otherwise get a good return from investing in an inner-city project.

▪ One of the Greater Kansas City Chamber of Commerce’s Big 5 projects is the Urban Neighborhood Initiative, targeting the East Side.

Plans include opening a new charter school sponsored by Kansas City Public Schools. The Kansas City Neighborhood Academy is to open in August in what now is Wendell Phillips Elementary School. It intends to attract students and families back to the district.

The Urban Neighborhood Initiative’s goal is to inject a new vitality into East Side neighborhoods running from 18th to 52nd streets and Troost to Prospect avenues. East Side residents need to insist on accountability from the chamber and Urban Neighborhood Initiative leaders to ensure that a verifiable amount of financing is injected into the community to make improvements possible.

Residents and city officials also must keep in mind that financial assistance for development and mortgages work best when they are market-driven and competitive. Banks must see the opportunity waiting on the East Side.

This story was originally published March 5, 2016 at 9:00 AM with the headline "Kansas City’s East Side is long overdue for more development funds."