Kansas City denies tax breaks for apartments on streetcar line after outcry from schools and tenants
Chicago-based Mac Properties was seeking tax incentives from the Kansas City Area Transportation Authority for a $100 million apartment and retail project in Midtown with no units designated as "affordable." City Council rejected a similar request last year.
Chicago-based developer Mac Properties was again denied tax breaks to fund a project in Midtown — just a year after the Kansas City Council refused a similar request.
Facing steep opposition from local school districts, tenants and housing advocates, the board of the Kansas City Area Transportation Authority denied tax incentives for a $100 million apartment and retail project at the corner of Main Street and Armour Boulevard on Wednesday, 6 to 2.
The company sought a 75% reduction in its property taxes over 15 years.
The KCATA board is made up of 10 members, five from Missouri and five from Kansas. Two members were absent Wednesday.
Jeff Meyers, who represents Johnson County, voted to deny the tax incentives.
“I don't have a whole lot of faith that that can take place when you have the city having negative comments, when you have residents having those comments, with the school district having negative comments,” he said.
Mac Properties sought the tax breaks through the RideKC Development Corporation, the economic development arm of the KCATA. The 1 W Armour project would include 25,000 square feet of retail space, 300 market rate apartments and 191 parking spaces.
Kansas City Public Schools and members of the Midtown Tenant Union and KC Tenants spoke against the incentives.
“You talk about building transit oriented communities, but you are effectively tearing our community apart,” said KC Tenants leader Gabe Coppage. “Buildings don't make Midtown what it is, it's the people.”
Peter Cassel with Mac Properties told the KCATA board that the development project fits into the agency’s goals of supporting transit-oriented development, or projects designed around access to different forms of transportation. He said the project would be located near the upcoming KC Streetcar extension and bus routes.
“We have planned car sharing, district parking, short-term and long-term bicycle parking, giving people the opportunity to really use bicycles — both for recreation, but also for transportation,” he told the KCATA board.
Mac Properties has spent more than a decade buying properties in Kansas City’s Midtown neighborhoods and turning them into apartments. Local tenants have criticized the developer for driving up rent prices and displacing longtime and low-income residents.
Kathleen Pointer, senior policy strategist with Kansas City Public Schools, also spoke against the incentive request. Money collected from property taxes makes up the bulk of the school district’s budget — and tax breaks mean they don’t have to pay as much.
“When we give away unnecessary dollars, we are taking away money that could be used for early education, for expanded course offerings and for teacher pay,” Pointer said. “We cannot be a city that completely ignores the conditions of our school system and incentivizes development that is not even necessary.”
Pointer also criticized Mac Properties for “incentive shopping” by going to different economic development agencies to ask for tax breaks.
Last year, Mac Properties asked for about $10.5 million in surplus funds collected from the Midtown Tax Increment Financing Plan to support the same project.
Mac had to meet the city’s affordable housing requirements to be eligible for a City Council incentive. At the time, Mac was proposing 385 units. It had to set aside 10% of units for people making 60% below the median family income set by the U.S. Department of Housing and Urban Development, and another 10% had to be affordable for those making 30% or below the median family income.
After pushback from KC Tenants, City Council rejected Mac’s request — a rare move in a city where tax exemptions for developers has been the norm.
Instead, the council voted to allocate $10.5 million into the city’s Housing Trust Fund, which supports projects that create and preserve more affordable housing.
In their latest proposal, Mac Properties included no affordable units at all.
How the RideKC Development Corporation works
The KCATA formed the RideKC Development Corporation in 2018 as a 501(c)3 to focus on economic development and advance the transit agency’s policy goals. The agency can issue bonds and approve tax incentives.
One of the agency’s goals is promoting transit-oriented development throughout Kansas City — for example, building housing in neighborhoods where residents can easily access a transit network such as bike infrastructure, a streetcar or a bus route. RDKC argues that transit-oriented development makes neighborhoods move livable, reduces the cost of living, fosters communities and supports small businesses.
The RideKC Development Corporation issues tax incentives through its Sustaining Transportation and Reinvesting Together Program, or START. Unlike other development corporations that grant tax incentives, the KCATA does not require a third-party financial analysis to determine if a developer actually needs a tax break for its project.
Instead, the RKDC awards tax incentives based on merit. The agency has a “heat map assessment” to see how a developer’s proposed project matches up with its goals of promoting transit-oriented development.
RKDC evaluates incentive requests by the development’s proximity to existing public transportation, low ratios of parking spots to businesses or housing units and the ability to access jobs, healthcare and schools.
RDKC issues points depending on how closely a development aligns with the organization’s transit-oriented development criteria. A higher score means a larger tax break.