By Kevin Collison
A proposed $29 million boutique hotel that would be the first big commercial project on the downtown riverfront during its recent revival won preliminary support Monday from the Port KC board.
The 118-room Origin hotel proposed by The Thrash Group of Hattiesburg, MS would be located across from Berkley Riverfront Park.
It would be close to another major development proposal that received preliminary support from Port KC during the meeting, a 250-unit apartment project being pursued by Lux Living, a St. Louis developer.
Both development plans were unanimously approved for what were called “inducement” resolutions by Port KC, broadly outlining their proposed financing.
Each still will have to be reviewed by the Port KC development committee and return to the full commission for final consideration.
The five-story hotel would include a full-service restaurant and coffee shop, and feature a fitness center, conference spaces and what’s described as a “signature fountain.”
In his presentation, Jon Stephens, Port KC president and CEO, said the hotel would not compete with other downtown hotels because of its riverfront location. Stephens also served a stint as head of Visit KC.
“This would be the only boutique hotel north of the downtown Loop,” Stephens told the board. “This would be a significantly different project.
“It would not impact or take rooms away from existing properties. This would be net new.”
The developer is seeking a 20-year property tax exemption for the project, which would be built on a slightly less than one-acre site that’s currently publicly owned and not generating taxes.
The incentives request is for a 75 percent exemption for 10 years and 50 percent for 10 years. It would yield $4.1 million in new tax revenues to schools, libraries and other taxing jurisdictions during that period.
Without the exemption, the project would generate $10.9 million in new property tax revenues.
During the discussion before supporting the preliminary bond financing request, two Port KC commissioners criticized the 20-year request as being excessive, and said they would push back on that request as the project continues through the review process.
The 20-year exemption also was opposed by representatives of the Kansas City Public School District and the KC Library District, who said it would delay their jurisdictions from benefiting from the full new tax revenues for too long a period.
The 76,000 square-foot hotel would create 70- to 75 part- and full-time jobs, according to Port KC.
This would be the sixth Origin hotel to be opened by The Thrash Group.
In a previous interview, the hotel operator has described the Origin concept as emphasizing additional fitness facilities for its guests in what’s described as a “lifestyle action brand.”
As for the $56 million Lux Living apartment proposal, it would be the first to meet the affordable housing mandates established by the City Council a year ago for residential projects seeking tax incentives.
The plan calls for reserving 50 units, 20 percent, to meet the city requirement. Ten percent of the apartments would be reserved for tenants earning less than 70 percent of the Area Median Income, the other 10 percent for those earning less than 30 percent.
Monthly rents for apartments at the 70 percent AMI would be studios, $1,061; one-bedrooms, $1,212, and two-bedrooms, $1,364. Rents for the 30 percent AMI units would be studios, $455; one-bedrooms, $520, and two-bedrooms, $585.
To be able to finance the project and meet those city mandates, the developer is seeking a 25-year property tax exemption from Port KC: 90 percent for 10 years, 75 percent for 10 years, and 25 percent for five years.
As with the hotel, the publicly-owned property currently yields no property taxes. With the exemptions, it would generate $5.5 million over 25 years for the taxing jurisdictions. Without, it would yield $18.2 million over that period.
During the Port KC hearing, City Manager Brian Platt spoke in favor of the Lux Living proposal.
“This project transforms previously vacant land into property that attracts more residents and more visitors,” he said. “It is taller and more dense than many other projects we’re considering…It’s a big risk in a neighborhood like this.”
The city manager also said the incentive request reflected the financial challenge of meeting the Council’s affordable housing policy.
“It’s the first project to meet the affordability requirements as set forth by our City Council,” he said. “That’s the hardest part about it.
“It’s the lowest income restriction of 30 percent that’s the hardest one to produce. It takes the most amount of incentive and subsidy to get that.”
Kathleen Pointer, senior policy strategist for the school district, was concerned a 25 year property tax exemption could set a precedent for developers trying to meet the city’s affordable housing goal.
“KCPS has been raising this issue with regards to the (affordable) set aside ordinance,” she said. “It’s putting an unfair burden on the school district and other taxing jurisdictions if there’s not additional revenue sources to support this.
“We desperately need the city to have a robust Housing Trust Fund to help support these addition of these 30 percent units.
“Otherwise we’re going to have 25 year abatements all over Kansas City without adding a significant number of affordable units and the school district will be giving up significant revenues.”
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Great coverage Kevin! I appreciate the fact that you’re breaking down what tax revenues will be with and without incentives, hopefully it’ll help some people to see that they’re not this big scary monster that a certain Star has made them out to be.
Agreed, thank you Kevin. Also, I don’t understand the big ask for tax abatement when the Union apartments are currently charging comparable market rates. There is a demand for more locations along the Riverfront, so at some point the market will bear out.
The big incentive ask is due to the fact the developer intends to meet the strict, new affordable housing mandates the Council approved a year ago. The Union project had no such restrictions.
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