Divided Council Approves Strata Office Plan, Work Starts This Spring

(Updated Nov. 15: The Kansas City Council approved city support for the 25-story Strata office plan at 13th and Main on a 7-4 vote Thursday.

Supporters were led by Councilwoman Kathryn Shields who originally opposed a deal that called for significantly more city incentives, and led negotiations as chair of the Finance Committee to ultimately arrive at a compromise plan.

“I think it’s an excellent project which will bring additional new businesses to Kansas City,” Shields said. “We’ve dramatically limited the liability of the city versus the nature of the deal that was first brought to us.”

The new redevelopment plan calls for the city to allow its credit to back a $36 million, 780-space garage that will be below the 250,000 square-foot, $93 million office tower.

City staff assured the Council the garage and the project should generate enough parking and incremental new tax revenues to adequately repay the $36 million bond, leaving the city’s credit risk negligible. 

The redevelopment plan was opposed by Mayor Quinton Lucas. While the mayor praised the compromises negotiated by the Council, he said he couldn’t support city incentives for project that he had criticized frequently during his mayoral campaign last spring. 

“We should hold the line on development incentives more often,” the mayor said.)

(The following is a previous article based on the Wednesday City Finance Council meeting)

By Kevin Collison

The proposed 25-story Strata office tower development picked up critical support from the City Council Finance Committee Wednesday after its developer returned to City Hall with a significantly reduced financial ask from the city.

The “Power Tower” development team dropped its earlier request that the city authorize is credit be available to backstop financing for the $93 million office tower component and instead is seeking city credit backing for the $36 million garage.

At one time, the developer also had asked the city to invest $27 million in cash in the office tower development in return for a share of its potential profits.

City Manager Troy Schulte said the city risk was negligible in the revised deal because the garage financing had solid projected revenue streams: parking revenues, a state job-creation program and part of the city earnings tax generated by new employees.

“The deal eliminates all risk and shift it to the developer,” Schulte said. “It puts us in a more comfortable position on the parking issue.”

The 250,000 square-foot office development, which includes a 780-space garage, could accommodate up to 1,100 employees.

The speculative office tower plan, first proposed to the City Council in January, is expected to be considered by the full City Council today (see above) where its prospects appear better than its last Council appearance in mid-September.

Should it win approval, construction is expected to start next spring with completion anticipated in spring 2022.

In clearing the Finance Committee, the office building proposed for the southwest corner of 13th and Main picked up critical support from a key Council member who earlier had opposed the deal.

“I think this is a great project,” said Finance Committee Chairwoman Kathryn Shields.

“I think this is very responsive to how they’ve adjusted their request to work with the city versus the original commitment requested from the city which was much larger.”

The Strata project is planned for the block between Main and Baltimore, from 13th to 14th streets immediately west of the H&R Blocks headquarters. It would be built above an existing retail structure that includes the Yard House restaurant. (Image from Google Maps)

In September, Shields and Mayor Quinton Lucas voted against the earlier plan.

The project narrowly escaped denial then after the Council voted 6-5 to give the developer more time to come up with a plan that reduced the city’s credit risk. Power Tower is a partnership between Copaken Brooks, Jury & Associates and H & R Block.

Strata is proposed for a site above an existing retail structure in the Power & Light District. The location was reserved for an anticipated second office tower for Block in the original 2004 redevelopment agreement between the city and the Cordish Co. of Baltimore.

While Block does not intend to locate offices in the proposed Strata building, its partnership in the development team fulfilled the agreement, according to the city and the Power Tower group.

That interpretation however, has been challenged by Cordish. Under the 2003 agreement, the firm would receive the right to develop another apartment building there should Block not pursue its project by 2027.

The Strata project is what’s described as a speculative office building, which means it would start construction before any firm tenants were signed. Jon Copaken said there already is interest in the project.

“We’re having good discussions,” he said.

The developers say the project is needed because downtown Kansas City currently lacks enough premium office space available in large chunks for potential new businesses wanting to locate there.

Attracting more jobs to downtown is a key strategic goal for the Downtown Council, an organization representing businesses and property owners.

Since Strata was first proposed almost a year ago, downtown has landed two significant employers.

The U.S. Department of Agriculture is relocating two agencies employing about 550 people to vacant space in a former State Street office building at 805 Pennsylvania.

Waddell & Reed also has announced its relocating its 1,000-employee headquarter. Sources say the firm is looking at occupying a new 12- to 15 story building to be built either at 13th and Grand or 14th and Baltimore. A decision is expected soon.

The Council Finance committee voted 3-1 to support the project. Shields was joined by Council members Kevin McManus and Heather Hall. Councilwoman Ryana Parks-Shaw voted against the plan.

Councilman Dan Fowler was absent.

Councilwoman Melissa Robinson, who expressed doubts about the Strata plan during the discussion, had to leave the meeting, which had been delayed a couple hours by an earlier morning session, before the vote was taken.