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Update: After more than an hour of testimony on Feb. 22, much of it from midtown residents, the board of the Kansas City Area Transportation Authority voted to deny a developer’s request for tax subsidies to construct an apartment building at Main Street and Armour Boulevard. This long-controversial project had originally been rejected for city development subsidies last year.
The vote was a victory for the activist group KC Tenants, which has opposed the project, saying it would displace low- and moderate-income residents. The Kansas City Public Schools also opposed the subsidy, saying it would drain money from future school district budgets.
After months of quietly approving development projects in Kansas City, often with subsidies, the Kansas City Area Transportation Authority (KCATA) is finally attracting attention from local residents and city officials.
At a board meeting at noon on Feb. 22, KCATA will consider tax exemptions for Mainland, a long-controversial project that was already rejected for city development subsidies last year.
The Mainland project, at the southwest corner of Main Street and Armour Boulevard, has been recommended by RideKC Development Corp., the development arm of KCATA, for 15 years of a 75% tax exemption. If KCATA votes to approve the “inducement resolution,” it will pass the first of three steps in the process of receiving the tax exemption.
But groups including KC Tenants, as well as some city officials, were frustrated to learn that the Mainland proposal is asking for public assistance once again, a little more than a year after the Kansas City Council voted against providing the developer with a $10.5 million subsidy.
Their opposition is compounded by the fact that the latest rendition of this proposal includes no set-aside for affordable housing, meaning that rent will cost upwards of $1,200 to $1,600 per month for a one-bedroom.
“That’s unacceptable. That is unacceptable to incentivize in 2023, given the huge investment that people are making around the streetcar,” City Council member Melissa Robinson said.
The Mainland proposal had been rejected by City Council in 2022
The Mainland project is not a new proposal — it had come under consideration by the Kansas City Council in January 2022 for a $10.5 million subsidy, using expiring funds from a tax increment financing (TIF) package previously granted to assist development projects in midtown.
At the time, legislation sponsored by council members Eric Bunch and Katheryn Shields would have offered the subsidy in exchange for a commitment by Mac Properties to set aside 77 apartment units as affordable. However, at the Jan. 20, 2022, meeting, the tide turned against this proposal.
Councilmembers Melissa Robinson and Ryana Parks-Shaw submitted an amendment that would instead redirect the expiring TIF funds to the affordable housing trust fund, which was created in 2018 to increase the city’s stock of housing for people with low and moderate incomes. Their amendment effectively rejected a subsidy for the Mainland project.
Although he had originally sponsored the subsidy request, Bunch ended up supporting the change because of constituent testimony and concerns about whether another TIF subsidy was financially justified.
“I’ve heard from hundreds of constituents, dozens of whom are residents of Mac Properties, and while not all of the stories are bad, many of them are not good,” he said at the council meeting. “Life safety issues not being addressed in the properties, like elevators and fire alarms — that brings me some real concern.”
He also expressed concern that the city had not conducted a third-party “but-for” financial analysis at the time.
This kind of study is conducted by an independent financial analyst to determine the amount of assistance that is necessary in order for a developer to break even. In other words, “but for” this level of assistance, the project would not be financially feasible.
“We don’t know that (this cash infusion) is actually needed because we haven’t seen a third-party analysis,” Bunch said. “For that reason, I think that we have to be consistent with our policy in evaluating projects in their need for incentive.”
The revised ordinance passed by a 9 to 3 margin, with Shields, Heather Hall and Teresa Loar voting against the amended ordinance.
Under Mac Properties’ latest proposal before RideKCDC, a third-party financial analysis still has not been completed. KCATA issues incentives based on the number of transit-oriented criteria that have been met, rather than financial necessity.
Local officials growing frustrated with RideKC development activity
Since RideKC began offering tax incentives through its START program, tensions have slowly risen between the transit agency and local officials, including Mayor Quinton Lucas, Kansas City Public Schools (KCPS) and City Council members.
A few years after the creation of RideKC’s development arm, then-KCPS Superintendent Mark Bedell criticized the agency for failing to keep the school district informed about developments that redirect property tax revenue from schools and into private projects. He also criticized RideKCDC for a lack of developments east of Troost Avenue — a historic economic and racial dividing line in Kansas City created by racist housing practices.
Since then, several projects have come under consideration by RideKCDC that include affordable housing east of Troost, including Promise Place at 45th and Olive streets, which will be discussed at the Feb. 22 board meeting.
Lucas has also quietly expressed concerns with RideKC’s development projects, saying that it distracts from improving transit.
In an interview with The Beacon, Robinson said she was frustrated that the Mainland project has now bypassed City Council and could receive a tax exemption after the council “candidly denied” assistance a year ago.
“It’s completely infuriating that we have these boards and commissions that are bypassing the democratic process,” she said. “We’ve said that this is not something that is good for our city, and I find it deeply troubling that (RideKCDC) would vote to (recommend) this. I’m very hopeful that the commissioners on the KCATA board will see this as a nonpriority for the city.”
RideKCDC did not respond to email questions before publication.
In an interview with The Beacon in January, KCATA CEO Frank White III said the development agency would pass a policy that would limit competition with the city development process. Under the policy, RideKCDC would not consider developments that had previously been denied by the city.
RideKCDC did not say whether the policy had been written or formalized at this time, or whether the Mainland project would violate this policy.
“We cannot be a city that completely ignores the conditions of our school system and incentivizes development that is not even necessary,” Robinson said. “I am just in disbelief that they would green-light a project that the City Council has turned down.”
Latest proposal requests 75% tax exemption for 15 years with no affordable housing
On the morning of the Feb. 15 Super Bowl victory parade, dozens of members of the public attended an online RideKCDC board meeting to voice their concerns with the Mainland project.
The Midtown Tenants Union (MTU), which formed in opposition to the project, objected to the project’s lack of affordable housing at the meeting, as well as concerns with the START program’s incentive process, which they deem anti-democratic. The MTU is a subset of KC Tenants, the citywide tenants union in Kansas City.
In January 2022, the MTU organized opposition to the $10.5 million subsidy through the City Council, and the union’s lead organizer Gabe Coppage remains strongly opposed to the latest proposal.
“It seems like Mac has gone behind the backs of our elected officials in this neighborhood,” Coppage told The Beacon. “They’ve essentially found a loophole through RideKC, which has no affordability requirements and no third-party financial analysis. We formed around this campaign for this development, and we’re not going to let them go behind our backs.”
After half an hour of public comment in opposition to the project, Mac Properties presented its tax exemption request to the board. During the presentation, an MTU leader asked, “Do you mind if I ask a question? How much will the rent be at this location?”
In response, RideKCDC President Brien Starner said, “We will address that question, but at this point, the public component is over.”
Later in the meeting, Peter Cassel, a representative of Mac Properties, said that he predicts the rent will be market rate, meaning upwards of $1,200 to $1,600 for a one-bedroom unit and $1,800 to $2,200 for a two-bedroom. He anticipates higher rent along the planned streetcar extension than in some of the other properties that they manage.
At the end of the meeting, the RideKCDC board voted to recommend the project for approval by KCATA.
Council member Robinson said that incentivizing apartments at that price point is inappropriate, particularly in a neighborhood that has already seen subsidized development as a result of the streetcar.
“I am infuriated that they thumbed their nose at the taxing jurisdictions, and they thumbed their nose at the real development needs of the city. It’s insulting,” Robinson said. “How much further in the sand could our head be, making those types of decisions?”