Streetcar-Linked Affordable Housing Incentive Plan On Track for City Hall

By Kevin Collison

A proactive approach to encourage making affordable housing part of the redevelopment boom anticipated along the planned streetcar extension route is on track for City Hall.

The proposed Midtown Affordable Housing PIEA Plan was endorsed recently by the board of that development agency and is expected to be reviewed by the City Plan Commission in October.

If ultimately approved by the Kansas City Council, it would provide more generous tax incentives to developers who include affordable units in projects located within several blocks on each side of the planned streetcar route between downtown and UMKC.

“Affordable housing is a germane topic that’s on the front burner,” said David Macoubrie, executive director of the Planned Industrial Expansion Authority.

“We started a conversation…to talk about how we could make a more effective impact with the PIEA’s limited resources in anticipation of the streetcar expansion. We thought it would be an area where we could generate the highest number of (affordable) units.”

The Midtown Affordable Housing Plan also would reinforce the Streetcar Authority’s application for the $151 million in federal funding needed to extend the route.

Boundaries of the proposed Midtown Affordable Housing PIEA Plan. (Map from the PIEA)

Federal transportation officials want communities to demonstrate a willingness to create socially-beneficial spinoffs on transit investments as part of their funding application, said Tom Gerend, executive director of the Streetcar Authority.

“Affordable housing is one of many components in our evaluation,” Gerend said.

“Anything we can do to align local policies with the objective of locating affordable housing opportunities in the streetcar corridor is advantageous to us.”

The PIEA is asking the city to allow it to offer up to the maximum property tax abatement allowed by state law, 25 years at 100 percent, for developers who follow the guidelines of a proposed city affordable housing ordinance being considered by the Council.

Currently, the PIEA, like other development agencies, is restricted by the city to offer a maximum property tax abatement of 75 percent for 10 years and 37.5 percent for 15 years.

The affordable housing legislation currently being considered by the Council would require any residential developer seeking city tax incentives to reserve at least 15 percent of the total number of units in their project as affordable housing.

The city would define affordable as units available to households with incomes at or below 80 percent of the median income for all Kansas City households. Rents, including utilities, could be no more than 30 percent of an eligible household income.

The median household income in the city was $50,136 in 2017, according to the Census Bureau. An affordable apartment meeting those city income guidelines would cost about $1,000 per month including utilities.

Developers already are buying properties in anticipation of the streetcar extension on Main. Work is well underway on a $34 million redevelopment of the historic Netherland Hotel and adjoining Monarch Storage buildings at 38th and Main.

A blight study done for the proposed Midtown Affordable Housing Plan revealed many properties in disrepair. (Image from the PIEA)

Rents in that project are expected to be about $600 per month for a 375 square-foot studio, $1,000 for a 577 square-foot one-bedroom and $1,500 for an 825 square-foot two-bedroom apartment.

Macoubrie said the PIEA has been considering the Midtown Plan for about a year, and has had discussions with developers, taxing jurisdictions and city elected officials.

He said the area included in the plan is roughly four- to five blocks or walking distance from the planned streetcar route.

“It’s an area that would be good to provide workforce housing for people in the service industry working in downtown, the Plaza and ultimately Midtown,” he said.

Macoubrie said the proposal would not affect the property tax surcharge planned for Transportation Development District created to fund the streetcar extension.

“The TDD levy, as well as any CID’s, stay intact and are not abated,” he said.

While the proposal calls for developers to be able to receive up to the maximum incentive, Macoubrie believes most of the property tax abatements would be 10 years at 100 percent and 15 years at 50 percent.

The PIEA official said his agency believes that without an enhanced incentive package, developers will not be able to afford to do projects that meet the city’s goals for affordable housing.

“Without that exemption, projects won’t pencil out,” he said. “It’s a step in the right direction that can be used to leverage other incentives.”