KANSAS CITY, Mo. — The developer behind downtown’s Three Light apartment building took one step closer to getting property tax breaks for the tower as an incentive for construction, but not on the terms it wanted.
Wednesday, The Economic Development Corporation of Kansas City’s 353 Board recommended the city council not collect property taxes from the tower for 25 years, but added two stipulations: 1) The city review the cost of construction prior to crews breaking ground on the apartment complex, and 2) the city audit Three Light’s success five years after its opening to decide whether to continue offering the property tax break.
The Kansas City attorney’s office estimates the recommendation will go the city’s Planning, Zoning and Economic Development Committee in about three weeks, and then to the full city council for final approval by about the beginning of July.
Cordish Companies previously developed One Light and Two Light luxury apartment buildings in downtown near the Power and Light District, which Cordish also owns. It plans to begin construction on the $130 million, 300-room Three Light apartment building by the end of 2018. It will be directly west of Two Light, near 14th and Main Streets.
In exchange for the break in property taxes, Cordish proposed paying the city $175,000 each of the 25 years as a Payment In Lieu of Taxes (PILOTs). That money would go directly to taxing jurisdictions within the city that fund schools, libraries and other services. Cordish would also pay between $325,000 and $659,000 each year to the city for utility-type services related to the site.
"The partial abatement requested by Three Light allows the project to move forward, creating new tax revenue (and thousands of jobs) that doesn't exist today," wrote Nick Benjamin, Cordish Comanies' vice president of development, manager of multi-family development in an email after the meeting.
Others argue even combining the payments Cordish has proposed is less than what the city estimates it would collect in property taxes. Therefore, it cheats services from getting a full benefit.
"From day 1, Three Light will make more than $500,000 of annual payments in lieu of taxes. Without the abatement none of that revenue gets created. In addition, Three Light is creating more than $40M of new direct revenue to the City of Kansas City over the next 25 years. Nobody is getting cheated, all sides are benefiting and the downtown tax base will continue to grow as it has over the last 10 years," Benjamin continued in his email.
Opposition to the property tax proposal has grown. One group started an online petition against the idea. Only one protestor appeared at Wednesday’s meeting. But representatives from Kansas City Public Schools, Jackson County Community Mental Health Fund, Coalition for Kansas City Economic Development Reform and Kansas City Public Libraries spoke against the 25-year property tax plan.
Their testimony, combined with recommendations from a third-party consultant who analyzed the deal, convinced board member Gabriel Okafor to add the two stipulations to the board’s recommendation.
“I feel like it's the best of both worlds,” he said. “The developer gets incentives, but then the city and the community get the reward that comes with that development, if the project is performing well after five years.”
During the board meeting, and again in his email, Benjamin said these "stipulations would make it impossible for us to proceed with Three Light."
The Economic Development Corporation director supports a 25-year property tax deal. Greg Flisram said Kansas City has to give developers deals in order to encourage them to develop in the downtown area because the city needs to increase its density to reach its goals.
The board members who met Wednesday are part of an advisory board; the full city council will have the final say on how to move forward.
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