Port KC approves 20-year tax incentive deal for Plaza apartments
Under the incentive deal, the developer would avoid paying about $28.9 million in taxes over the next two decades.
The economic development agency Port KC unanimously approved a 20-year property tax abatement plan for a project on the Country Club Plaza.
The developer, local real estate firm LANE4, plans to build a 13-story market-rate apartment building with 328 units on top of a parking garage along Belleview Avenue between 47th and 48th Streets.
The project would take the place of a surface parking lot and two unoccupied office buildings.
The site was formerly home to JJ’s Restaurant, which was destroyed in a natural gas explosion and fire in 2013. The development will cost about $140 million. The developer plans to break ground on the apartment project in 2024, with construction lasting until 2026.
Port KC’s deal gives LANE4 a break on some portion of their property taxes over the next two decades:
- 85% property tax abatement for 10 years
- 80% property tax abatement for 5 years
- 75% property tax abatement for 5 years
The current site has been vacant for 10 years. Brandon Buckley with LANE4 said three other projects were proposed but failed because of difficulties building on the site.
“Combining eight separate parcels allows us to go extremely dense on this site, and thereby maximizing the revenue potential from property tax over the long term,” Buckley told Port KC commissioners on Monday. “Increased density will maximize the potential for area businesses by increasing walkability to the Country Club Plaza and businesses along 47th Street.”
Port KC has yet to approve the developer’s request for $143 million in revenue bonds for the apartment project.
Jon Stephens, president and CEO of Port KC, said the site currently generates $41,000 in taxes every year, which would amount to about $1 million over 25 years. That’s money that goes to taxing jurisdictions like Kansas City Public Schools, which gets the bulk of its budget from property taxes.
The approved tax abatement means the developer doesn’t have to pay $28.9 million in property taxes over that 25-year period.
Kathleen Pointer, a policy analyst for Kansas City Public Schools, opposed the incentive request.
“We go backwards in our support of public schools if we continue to give out incentives that are 20 and 25 years, especially in areas like the Plaza,” Pointer said.
Pointer also criticized Port KC for approving incentive requests at 20 and 25 years, when other economic development agencies approve five- or 10-year tax breaks. She says it leads to “incentive shopping,” where developers might try for a Port KC incentive package first.
“People are coming here, not because they're gonna get the incentive they need, but they're gonna get the incentive they want,” she said. “Every time we give dollars that are unnecessary to a development project, we are taking dollars directly out of schools.”
The development is projected to generate about $19.5 million in new property taxes over 25 years even with the tax breaks, which would then go to taxing jurisdictions like KCPS.
“The assumption of the school district is that if this project isn't done with incentives, then some other project's gonna be done without incentives that will bring them this property tax,” said Katheryn Shields, a former city council member and current Port KC commissioner. “I don't think we have any evidence.”
The developer has also promised to give $1 million to Kansas City’s Housing Trust Fund, which allocates money to affordable housing projects.
But that’s not in line with Kansas City's set-aside requirement, which mandates that a developer seeking incentives must make 20% of its units affordable for households at or below 60% of the area median income. Under that policy, a one-bedroom apartment would cost nearly $1,200.
If a developer doesn’t make any of its units affordable, like in Lane4’s proposed project, then it needs to give money to the Housing Trust Fund. That amount is calculated by taking the 20% of units a developer should have made affordable and multiplying it by the affordability offset value, which is the estimated financial gap in revenues between market-rate units and affordable units. The affordability offset value in 2022 was an estimated $100,000, according to the city’s ordinance.
Lane4’s project proposes building 328 units. If Lane4 were following the city’s set aside rule, 65 of those units would have to be affordable. Since all units are market rate, Lane4 would need to give about $6.5 million to the city’s Housing Trust Fund instead.