Developers Want Tax Breaks For Kansas City's Katz Drug Store, But Some Worry The Price Is Too High
Historic preservation groups and affordable housing advocates are butting heads over a proposal giving tax breaks to build an upscale apartment complex near the iconic Katz Drug Store.
St. Louis-based Lux Living plans to fix up and use the historical building for a fitness center, audio studio, co-working spaces and other amenities. Most of the amenities will be available only to residents except for a bistro cafe, which will be open to the public.
The developer will also construct a six-story, 192 multifamily unit building behind the Katz building at Westport Road and Main Street. The project will cost $37.6 million.
Supporters of the tax breaks argue that it’s important to ensure the Katz building is brought back into use.
Councilwoman Katheryn Shields said she’s a strong supporter of the project because it's a way for the city to show they can put historical buildings to good use.
“If we can’t find a way to promote and support the rehabilitation and reuse of the Katz building, which is the first one we’re looking at, we aren’t even going to find developers that want to talk about historically preserving any of the other buildings,” Shields said.
Historic Kansas City, an organization that advocates for historic preservation, strongly endorsed the tax breaks.
The first two Katz Drug Stores opened in 1914, eventually expanding to 65 stores across seven states. Its location at Westport and Main opened in the midst of the Great Depression in 1934 and was the largest drug store in the world when it opened, according to the Kansas City Public Library.
However, critics argue that the project isn’t meant to preserve the Katz building. They believe the true purpose of the tax breaks is to help the developer and wealthy residents, not historical preservation.
Wilson Vance grew up close to the Katz building. She said a corporate developer bought her nearby mother’s apartment complex, raised her rent and forced her out during the pandemic. She said this is another project that will push the rent up and displace residents.
“Who do you serve? Do you serve the people or their developers and attorneys?,” Vance said.
The Kansas City Neighborhood, Planning and Development Committee passed a 15-year plan that grants a 75% tax abatement for 10 years, after which a final review is required. If the review determines that additional abatement is required, there will be a 50% abatement for the final five years.
This plan was a compromise. Shields originally sponsored a measure for a 25-year tax break, as requested by the developer. Under that plan, 75% of property tax would have been abated for the first ten years and 37.5% for the next 15 years.
The original proposal was much more than recommended by third-party financial analysis by S.B. Friedman Development Advisors, a firm hired by the Economic Development Corporation of Kansas City. The firm recommended a 10-year 75% tax abatement.
S.B. Friedman recommended a smaller break because the complex’s market value will increase following the completion of the nearby streetcar line, pushing the cost of rent up, according to Vice President Lance Dorn.
Kansas City Public Schools objected to tax breaks beyond the recommendation from S.B. Friedman. The school district gets much of its funding from property taxes
“Something in this city is fundamentally broken when we are even considering prioritizing the wants of a private development company over the needs of public school children,” Kansas City Public Schools public policy strategist Kathleen Pointer said.
The Kansas City Council plans on voting on the proposal Thursday.