By Kevin Collison
The planned Three Light luxury apartment project got a rough reception from an advisory board reviewing its proposed incentives Wednesday, echoing criticism the deal endured from the Kansas City Council two months ago.
Members of the Chapter 353 board narrowly endorsed tax incentives for the 300-unit project planned by the Cordish Co. but not before attaching strings suggested in a consultant report.
The incentive package includes a 25-year property tax abatement, 100 percent for 10 years and 50 percent for 15, and upfront city cash to build a parking garage.
The most notable recommendation adopted by the board was that the project’s financial performance be audited after five years.
If Three Light is performing better financially than projected, the consultant, S.B. Friedman, suggested its 25-year property tax abatement could be reduced or eliminated.
The board also adopted a recommendation from S.B. Friedman that a certified review of the construction costs and rents at Three Light be conducted before groundbreaking.
If they are lower than projected, that also would be an opportunity for the city to reduce its incentive package.
The Chapter 353 board’s recommendation however, is not binding on the Kansas City Council which is expected to take up the issue of Three Light incentives in committee in mid-June.
A final vote by the full Council could occur in early July.
How the Council responds to the recommendation of the board, which is named after a property tax abatement program, already may have been answered.
Assistant City Attorney Brian Rabineau pointed out Council members were aware of the S.B. Friedman recommendations, including the five-year audit, when they debated the Three Light deal and approved spending $17.5 million to build a garage March 22.
He also said any attempt to reduce a property tax abatement after its approval would be unprecedented.
“I’m not aware of any project where the city approved abatements when this has happened,” he said.
That tough 8-3 Council vote also included a requirement that Cordish develop 100 units of affordable housing in the historic Midland Building.
The 12-story office building behind the Midland Theater was included in the original Power & Light development agreement between Cordish and the city in 2004.
That deal, which came after tough negotiations with Cordish, was intended to require the developer to begin providing affordable housing in its residential projects. The city will contribute $2 million toward the redevelopment cost of the Midland.
The 100 units are intended to meet the affordable housing goal of not only Three Light, but potential Four and Five Light projects as well. The city has capped its obligations to Cordish to a maximum six apartment projects.
The decision to locate affordable housing in the Midland was criticized by Chapter 353 board members, although the agreement was outside their review.
“It sounds like poor people being warehoused,” member Daniel Edwards said, later adding he was “embarrassed” the city had accepted that approach.
The incentive package also was opposed at the Chapter 353 board meeting by representatives of the Kansas City Public School District, Community Mental Health Fund and Kansas City Public Library, as well as the Coalition for Kansas City Economic Reform.
They said the 25-year property tax abatement, 100 percent for 10 years, 50 percent for 15 years, would divert too much of the new revenues generated by the project from their budgets.
There also was a general distaste the city was subsidizing luxury apartment developments. Cordish opened its One Light luxury project in 2015 and Two Light opened three weeks ago.
Officials with the city and the Economic Development Corp. said Cordish has agreed to pay a $175,000 annual payment in lieu of taxes (PILOT) to the taxing jurisdictions which will increase roughly 2- to 3 percent each year over the 25 year life of the abatement.
The city also will receive payments from Cordish to help cover the cost of the Three Light garage. Those will start at $325,000 annually and increase up to $659,000 at the end of 25 years.
In addition, Cordish is assuming the cost of managing and maintaining two existing garages at the Power & Light District, saving the city about $500,000 annually.
Greg Flisram, vice president of redevelopment for the EDC, said the Three Light project and additional downtown investments are needed to make Kansas City competitive.
“Our city wants to compete with the Dallas’s and Denvers…if we want to get there, we need to pack more density and vibrancy in our downtown to attract retail and jobs from other parts of the country,” Flisram said.
“We’re not there yet, we still have plenty of parking lots.”
If it wins Council approval, the $124.1 million Three Light project is expected to begin construction later this year at the northeast corner of Truman Road and Main Street. The site is currently a parking lot and located along the streetcar route.
Cordish officials have project completion in early 2021.
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