The Kansas City Council has questioned the city’s approach to public/private partnerships for some time, most recently with new single terminal at Kansas City International Airport. These partnerships are critical for leveraging public dollars to maximize public benefit. These relationships, commonly referred to as P3s, are becoming increasingly popular. Unfortunately, our city doesn’t have a stated policy on how to evaluate and negotiate these agreements.
This lack of policy is on display in the negotiation of the 13th amendment to the city’s Master Development Agreement, or MDA, with the Cordish Companies over the construction of a new 300-unit luxury apartment tower, to be called Three Light. There should be a healthy dialogue about the financial impact and public benefits of the project.
In 2004, the city entered a master development agreement, or MDA, with Cordish to revitalize downtown. It was a huge risk at the time, but one that has paid off. Indeed, since 2004 Cordish has successfully developed the Power and Light District, including the KC Live Block, and 600 luxury apartments in One Light and Two Light.
The benefits of Cordish’s development in downtown Kansas City is undisputed. However, these benefits have come with cost. Taxpayers have subsidized millions in debt related to the MDA through fiscal year 2017. Those subsidies come directly from the city’s general fund. The same general fund that maintains our roads and bridges, provides neighborhood services, pays for 911 call operators, and many other vital services important to maintain a first-class city.
The MDA granted Cordish 99 years of development rights downtown, among many other benefits. As part of that agreement, Kansas City agreed to subsidize parking structures for residential buildings, including One Light, Two Light, and future buildings such as Three Light. In exchange, Cordish represented to Kansas City it intended to make 15 percent of the units in each residential building it develops affordable. Sadly, Cordish has not provided what I would call affordable units in the existing One Light and Two Light buildings, and has no plans for Three Light.
The bigger issue here is that the MDA and financing model are not sustainable. If the amendment that may go before the council Thursday is approved, the taxpayers’ subsidy will increase by $17.5 million, and debt service would exceed $15 million from the general fund — equal to 2 percent of the city’s general fund budget.
To offer a different perspective, this debt service obligation would be a third of the entire Neighborhoods and Housing Services Department budget. That $15 million comes from the same budget where the city manager proposed a variety of cuts to vital services, including deferred maintenance of city assets.
This MDA has been amended 12 times already to accommodate Cordish’s business interests. This amendment, if approved, should create more certainty for taxpayers by mitigating our financial exposure and realizing promised public benefits. Any appropriations toward residential development should include a commitment to support the city’s housing policies, and also follow the U.S. Department of Housing and Urban Development’s guidelines of promoting mixed-income units to increase the supply of workforce housing in the metro area.
Councilwoman Katheryn Shields and I have co-sponsored a resolution that directs the city manager the renegotiate the agreement with Cordish to address our concerns: affordable housing in the residential towers, impact to the general fund, parking subsidies, and the number of years the agreement covers.
The final arrangement between the city and Cordish must clearly define terms that will satisfy the 2004 MDA and remove this 99-year burden on the general fund and the taxpayers of Kansas City.
These are reasonable requests to create transparency, accountability and fiscal responsibility. This negotiation with Cordish is much bigger than affordable housing. That was just the low-hanging fruit.
Alissia Canady represents Kansas City's Fifth District on the City Council.