KCATA Rejects Tax Break for Mac Properties in Midtown Big Apartment Complex in Limbo
Published February 23rd, 2023 at 6:00 AM
Above image credit: The Mac "1 W. Armour" proposal looking northwest with the proposed segmented apartment building in the foreground. (Rendering | Hufft architecture)Confronted by overwhelming testimony from opponents, the Kansas City Area Transportation Authority (KCATA) board voted 6-2 Wednesday to reject a tax incentive request for a 300-unit apartment development proposed for Main Street and Armour Boulevard.
The development proposed by Chicago-based Mac Properties had been endorsed for a 15-year tax abatement by the authority’s development arm last week. But the full board rejected the incentives when 20 people testified against it and no one spoke in favor.
It was opposed by Kansas City Public Schools, which alleged it would divert future tax revenues, and by Midtown residents, organized by KC Tenants, who said the project would contribute to gentrification .
Residents also accused Mac of being a “slumlord” that failed to adequately care for its properties.
“By approving this tax abatement, the KCATA is saying they approve of Mac’s behavior and that funding our city’s essential services is less important than padding the pockets of development companies,” said Katie Pummill, a resident.
Mac’s application for a property tax abatement from the KCATA came as a surprise to many.
The developer had been turned down a year ago when it asked the City Council to provide a $10.5 million cash subsidy in surplus tax-increment financing funds to help provide affordable housing. That proposal also was opposed by KC Tenants.
Mac then returned to the city in October with a revised plan without affordable housing that did not seek city approval of incentives.
But it turned out that while Mac was not seeking city tax incentives, it had turned to RideKC Development Corp. to seek a tax break.
RideKC, an arm of the KCATA, handles the agency’s START program, which is intended to incentivize transit-oriented development.
“This fits our policy,” Brien Starner, RideKC Development president, told the board.
“The facility itself is a $100 million investment. It would represent 300 units and it has a reduced parking ratio, which is good from the standpoint of TOC (transit-oriented communities).”
The opponents organized by KC Tenants, an affordable housing activist group, claimed Mac had been gentrifying the Armour Boulevard corridor and that rents expected to be charged at what Mac is calling its 1 West Armour development would be unaffordable.
Mac has said rents at 1 West Armour were expected to be similar to those charged at its newest apartment development at Armour and Troost. Studios and one-bedrooms there range from $1,300-$1,800, and two bedrooms go for $1,800 to $2,400.
“Most people who rely on transit are likely to be low income,” said Jakob Benedetti. “Having these be completely market rate and above and are going to be getting tax incentives for being TOD (transit-oriented development) makes no sense at all.”
Kathleen Pointer, a policy analyst for the school district who also is on the board of KC Tenants, said the school district opposed the proposal’s incentive request because it would not provide the full tax value of the project for 15 years.
The development, however, would have paid the current tax value of the property to schools along with the incremental 25%t increase until it would go fully on the property tax rolls after 15 years.
“Giving the project a tax break of 75 percent for up to 15 years, especially when the rent rates are more than $1,600 for a one-bedroom apartment, is an inappropriate ask from Kansas City kids and their teachers,” Pointer said.
She also criticized RideKC Development for failing to require an independent financial analysis of whether the project needed the incentives to be viable. A third-party analysis is required by city development agencies considering incentive requests from developers.
Mac’s 1 West Armour land-use proposal had been endorsed by the City Plan Commission and approved by the City Council. It calls for the renovation of the existing U.S. Bank building at Main and Armour and construction of three 10-story apartment buildings.
The project is proposed next to the planned streetcar stop at Main and Armour and the developer said it was an ideal transit-oriented development.
Peter Cassel, Mac director of community development, also said the project would be built on parking lots and not displace any residents.
“We’re not talking about One Light and Two Light here. We’re not talking about the fancy new buildings down in the Plaza. This is workforce housing in Midtown,” he said.
The project also had support from Midtown KC Now, a property and business group, which said it fulfilled the city’s plans to increase population density in the area.
Before voting to deny the incentive request, the KCATA board turned down a motion on a 5-3 vote that would have delayed consideration a month so the authority could obtain additional information.
After the denial, Cassel was noncommittal about whether his firm would continue pursuing the project.
“I don’t know what’s next,” he said. “We respect the process and appreciate everybody’s time and consideration.”
Cassel did defend Mac’s record maintaining its apartment projects.
Over the last 15 years, Mac had renovated dozens of buildings along Armour between Troost and Broadway, and added several new ones. It’s developed more than 2,000 new apartments and the occupancy rate is 94 percent.
“We’re incredibly proud of all our work on Armour Boulevard and hopefully people will continue to come look at us,” Cassel said.
Flatland contributor Kevin Collison is the founder of CityScene KC, an online source for downtown news and issues.
