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Katz Drug Store Apartment Project Sinks After Kansas City Council Votes Down Tax Breaks

Katz project 2.jpg
Lux Living
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St. Louis-based Lux Living won't revamp Katz Drug Store after the Kansas City Council voted against advancing the development project today.

The project died after the developer told a council member that a scaled-back incentive package wouldn't suffice.

A project to build an upscale apartment complex and revamp Katz Drug Store in midtown Kansas City fell apart Thursday after the city council voted against tax breaks for the developer.

St. Louis-based Lux Living planned to repurpose the historic building for an amenities like co-working spaces, an audio studio and a fitness center for the adjoining upscale apartments.

Supporters of the project, like councilwoman Katheryn Shields, said Thursday’s vote sends the wrong message to developers who want to preserve historic Kansas City buildings.

“How heavy of a burden do we want to place on a developer who’s willing to do historic preservation?” Shields said.

Project fails over scaled-down tax breaks

The first two Katz Drug Stores opened in 1914, eventually expanding to 65 stores across seven states. Its location at Westport Road and Main Street 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.

Last week, the city’s neighborhood, planning and development committee passed an incentive package that included a 75% tax abatement for 10 years and a 50% abatement for the final five years. The five-year abatement would have needed a financial review after the first 10 years to be approved.

But the $37.6 million project appeared to die when the full council narrowly passed an amendment that scaled back those abatements.

Councilman Eric Bunch offered an amendment at Thursday’s meeting that reduced the incentive package to the levels recommended by a third-party financial firm.

S.B. Friedman Development Advisors, a firm hired by the Economic Development Corporation of Kansas City, initially recommended a 10-year 75% tax abatement.

Bunch’s amendment, which passed by a vote of 7-6, also included affordable housing allocations and considerations for rentals for minority-owned businesses.

After the amendment passed, Shields, told the council to vote “no” because the developer’s attorney told her they couldn’t move forward with the project with a 10-year abatement.

The City Council unanimously voted against the plan.

Kansas City Public Schools superintendent Dr. Mark Bedell praised Thursday’s vote by the council. The district supported a 10-year abatement.

“We applaud our City Council members who did not give in to the unreasonable ask for more,” Bedell said.

School districts, as well as libraries and other taxing jurisdictions miss out on potential revenue when property taxes are abated.

“As we continue to emphasize, over-incentivizing projects is an inappropriate practice that has had Kansas City’s kids paying the price for too long. We look forward to continued collaboration along the way in these conversations and decisions,” Bedell said.

A question of city priorities

Critics of the project argued that the true purpose of the project wasn’t historical preservation.

“This is about luxury apartments,” Councilman Kevin O’Neil said.

“More luxury apartments — after dealing with what we’ve dealt with in the last three or four months trying to get low-income housing in here and then trying to pass this through as a ‘historic preservation project’, I don’t see it.”

But councilwoman Teresa Loar, who said she “didn’t have a dog in the fight,” argued the city shouldn’t focus solely on affordable housing.

“We have a whole city to look after, we have the poorest of the poor and the richest of the rich and we have to do a balancing act. We have spent the last six months dealing with the poor and we have spent a lot of money dealing with that issue.” Loar said.

“People need places to live, whether you’re really wealthy or you don’t have any money. But it’s the wealthy people that provide those dollars that come to help us take care of the poor folks.”

The city council is slated to vote next week on a $2.7 million proposal to build a community of tiny homes to provide temporary shelter to people experiencing homelessness.

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