Mac Properties, the Chicago developer responsible for swaths of rental housing in Midtown Kansas City, received a multimillion-dollar tax break to build an apartment building off a future streetcar stop despite significant pushback from some Midtown residents and Kansas City Public Schools.
Kansas City’s Planned Industrial Expansion Authority on Thursday approved a public financing deal that will allow Mac to not pay 95% of its property taxes on a $101.5 million multi-use apartment building off Armour Boulevard and Main Street during its first 15 years.
The 15-year tax break and an additional sales tax exemption on construction materials are valued at $9.3 million, according to a financial analysis. Mac’s request to the economic development agency marked its third attempt to secure tax incentives for its 1 W. Armour project.
In 2022, the Kansas City Council denied Mac’s request for $10.5 million in surplus tax increment financing money to fund the project. Mac then asked the economic development arm of the Kansas City Area Transportation Authority for incentives, and was again shot down.
Mac’s current plans include 300 apartments and restaurant and retail space over 2.9 acres. Mac plans to renovate a U.S. Bank branch building on the street corner and rehabilitate an existing two-story parking deck.
Mac will demolish existing parking lots and two retail buildings, and build fitness centers and other shared amenity space.
Peter Cassel of Mac Properties said the incentive request reflects developers’ high construction costs, high interest rates and “significant uncertainty.”
“No development has ever solved all the challenges of a community or a city, and no development ever will,” Cassel said.
Mac’s plan has evolved over the past three years as the developer has taken its proposal before different governing bodies and development agencies in its attempts to secure a financing deal. An early plan proposed 52 affordable units in the existing New Yorker Apartments nearby, which have since been cut.
Kansas City Mayor Quinton Lucas expressed support for the project and the incentive request. The city council previously approved Mac’s development plans in January 2023.
“Advancing this project will help to rebuild our city’s Midtown residential population along the Main Street corridor, a long-term need for the city's viability,” said a letter from Lucas’s office.
‘We can’t afford this’
Mac’s development will include studio, 1-bedroom and 2-bedroom apartments priced between $1,300 and $2,100.
Those rent prices exceed recently completed apartment projects in Midtown.
The project does not satisfy Kansas City’s requirement that a developer seeking incentives reserve 20% of units for households making 60% of the area median income — what officials have called the “affordable housing set aside.” Instead, Mac has to pay $100,000 into the city’s Housing Trust Fund.
Cassel described 1 W. Armour as “workforce housing.” Jamie Hobb, a Kansas City Public Schools teacher and Midtown resident, pushed back on that description at Thursday’s meeting.
“I'm sick of the word ‘workforce housing,’” she said. “We are the workforce. We can't afford this.”
Midtown resident Kyle O’Connor criticized Mac for “incentive shopping,” a common developer practice of searching for the most lucrative financing deal from the city’s various economic development agencies.
“Pete (Cassel, of Mac) just told you all that this is one of the most important street corners for development in the city, and yet they don't want to pay their fair share back to this city for the opportunity to build there,” O’Connor said.
Kevin Klinkenberg is executive director of Midtown KC Now, a nonprofit that supports economic development in the neighborhood. He said it’s important to move forward with new development and housing like the Mac project.
“If we have demand for housing and we aren't building new housing, that only exacerbates affordability problems,” Klinkenberg said. “So the solution for affordability is to keep building and building as much housing as we possibly can to soak up that new demand.”
Concerns from Kansas City Public Schools
Tax breaks withhold money from taxing jurisdictions that rely on property tax revenue as a funding source, like public schools and public libraries.
A recent report from watchdog group Good Jobs First found that Kansas City lost $551.3 million in revenue because of tax abatements between 2017 and 2022.
Keith Smith of Kansas City Public Schools said the district has $650 million in deferred maintenance costs that it couldn’t cover out of itsy property tax revenue because of the incentives the city frequently hands out.
“Imagine living in a home where your roof is leaking, you have holes in your walls, you have toilets that don't flush, and then you don't have the money to fix it,” Smith told the development agency board. “That's literally the situation our school district is in.”
Smith said the units in the project won’t be affordable for KCPS families or teachers. He called a 95%, 15-year tax abatement “egregious.”
With the abatement, Mac will pay $2 million to taxing jurisdictions over 15 years, and then $10.3 million over 25 years. According to the financial analysis, property taxes during that period would have generated $18.2 million.
