Kansas City mayor says housing plan would boost supply, affordability. Critics disagree

No new apartment complexes seeking taxpayer-funded incentives have been proposed in Kansas City for 18 months, since the city required developers to make more units affordable in exchange for tax breaks.

Kansas City Mayor Quinton Lucas’ proposed solution is to relax those private sector requirements, while also increasing the pool of taxpayer dollars available to build or rehab more housing for people with low or moderate incomes.

In a package of proposed ordinances he announced at Thursday afternoon’s City Council business session, Lucas recommends that the city borrow $50 million through the sale of general obligation bonds to fund those affordable housing projects through the city’s housing trust fund.

At the same time, he would dramatically alter the approval process for projects receiving taxpayer incentives by allowing the city manager to greenlight them without input from the public or approval from the City Council and economic development boards that now have oversight.

Lucas believes that together this would boost the supply of housing in the city and help slow the rapid rise in rents for people who can least afford it.

“We’re a city that needs to build more housing, and I’m concerned when people aren’t building housing in Kansas City,” Lucas said in an interview. “We need more product to make sure that we can have places for people to live in our city, and I think this is a bold proposal that does that.”

Council members did not comment on the package after Lucas gave a brief overview and said he would go into more depth at upcoming committee meetings.

Yet even before his plan was publicly announced, it was being criticized by affordable housing advocates. They say the city is playing to rich developers by relaxing affordable housing requirements and reducing opportunities for public debate on development projects by giving the city manager the power to approve standardized incentives for projects that meet certain benchmarks set by City Council.

“We refuse to be sacrificed for a vision of our city that doesn’t include us,” KC Tenants tweeted Monday. “We’re not going to sit back and watch city leaders sell our neighborhoods off to the highest bidder. We’re not going anywhere.”

To emphasize their point, two dozen members of the group attended the council business session wearing KC Tenants’ trademark yellow T-shirts, but remained silent during and after the mayor’s brief presentation.

In addition to borrowing money to better fund the housing trust fund, the package also proposes borrowing another $125 million, also through the sale of general obligation bonds, to improve city parks, swimming pools and the City Hall parking garage. Both would require voter approval.

In his 2019 run for mayor, Lucas campaigned on the need for more affordable housing, while also stressing his desire to scale back incentives for developers, particularly downtown.

Since he took office, he said, “we’ve seen real progress, almost historic progress on housing policy in Kansas City, a tenants Bill of Rights, the production of more affordable housing in the last several years than I think we’ve seen in many years in the past.”

But he said some of the housing policies he backed need tweaking, such as the rules set in January 2021 when the Council unanimously approved legislation requiring that real estate developers seeking government financial aid include affordable units in their apartment projects, or pay into the housing trust fund.

The definition of affordability is a matter of debate.

As a general rule, experts says renters and home buyers should pay no more than 30 percent of their income on housing, which is rent or mortgage payments plus utilities. Any more than that cuts into people’s ability to buy groceries and other essentials.

The rules passed in 2021 require that one fifth of the units in taxpayer-subsidized apartment buildings be affordable. Half of those must be affordable to families earning 70% of the area median income and the other half to those earning 30%.

The mayor’s proposal would change that. In exchange for incentives, developers would have to set aside one fifth of their units to those earning 60% of the area median income.

The proposal is aimed at addressing the concerns of developers, who have claimed that the city’s requirements are too burdensome. The city saw a spike in incentive applications for new apartments in the months before it implemented the new set-aside requirement.

Since then, no new apartment projects seeking incentives have been announced.

Lucas recognizes that some affordable housing advocates won’t like that change, and has seen comments to that effect on social media from KC Tenants members who say even the current rules fall far short of making housing affordable for many city residents.

They say the city’s definition of affordability is out of whack because the figure used to define affordability is inflated. The federally set median area income that the city relies on averages the incomes of homeowners and renters across the metro area, in rich areas and poor. A better yardstick would be the average earnings of renters within Kansas City, the group says.

Lucas counters that the city is merely following the same federal income guidelines as other cities, and he says his proposed 60 percent standard is aimed at jump-starting housing projects.

“While I certainly also want to live in a world that’s creating as many affordable units as possible, there are a few realities,” he said. “One: under the plan that’s existed for the last year or so we have not produced any units of affordable housing pursuant to that order. None. That means that nobody’s getting any opportunity.”

Public shut out

The proposal coming in for the most criticism from housing advocates is the one that would sideline the City Council and the city’s incentive-granting agencies like the Land Clearance for Redevelopment Authority and the Planned Industrial Expansion Authority from deciding which projects get aid.

Those groups all hold public meetings, in which developers present details of their projects and answer questions from board members. The mayor’s proposal would allow City Manager Brian Platt to administratively approve incentives for many residential, office and industrial developments. It would also waive existing requirements for financial analyses of projects seeking incentives.

Lucas said the change is necessary to “fast track” projects, especially ones providing more housing.

“Time and again, “ he said, “I hear from people that maybe they’re interested in building in KC, but they think it’s just too hard. They got to deal with too many political changes and differences. And so this is an opportunity for the City Council to say, you know, what, we have a view of this is good, these areas are good for development. Why don’t we try to go ahead and actually get them done as quickly and effectively as possible?”

But approving tax breaks for projects administratively, as long as they conform to certain guidelines, is a way to cut the public out of decisions that have an impact on them, said Wilson Vance, organizing director with KC Tenants.

“Any changes to the incentive process that limits public comment should be considered exactly what it is, which is limiting the voices of the people and undemocratic,” Vance said. “And it’s honestly in direct retaliation to tenants and the voices of the most impacted starting to show up to these meetings.”

The move would apparently cut out taxing jurisdictions like Kansas City Public Schools and the Kansas City Public Library that often weigh in on tax incentive projects. That’s because city officials generally are cutting future potential property taxes that those entities rely upon.

KCPS has tracked a spike in the amount of incentives being approved within its boundaries. The school system says the amount of property tax abatements increased by 60% between 2017 and 2020. Officials estimate that developer incentives cost the schools $37 million in 2021.

In recent months, members of KC Tenants have attended incentive agency meetings, questioning developers and board members, who rarely reject incentive proposals.

Vance said the city’s housing policies will further price people out of Kansas City.

“If we keep incenting and subsidizing housing that we know, that the city knows damn well, is not affordable for the people who live here in Kansas City, then we won’t recognize our own home in four to 10 years,” Vance said.

“I would say the soul of Kansas City is at stake.”

The proposed legislation would set different incentive rates for different parts of town. For new apartments, the city would offer the richest awards towards new builds in already desirable locations like downtown.

“They’re trying to turn Kansas City into a playground for developers and they know that those are the most desirable areas for people to build,” Vance said. “But in my opinion it doesn’t really make the most sense to give the most incentives in the areas that are already the most attractive places for developers to build. That doesn’t quite check out.”

Housing trust fund

The proposed $50 million bond issue would be a huge boon for the Housing Trust Fund. Created in 2018 with his support when Lucas sat on the city council as the 3rd District representative, the fund sat empty until May 2021, when the city infused it with $12.5 million from a pot of federal pandemic aid money.

Last month, the Kansas City’s Housing Trust Fund board recommended that the council spend almost $8 million out of the trust fund for 14 affordable housing projects that would create 456 units.

Among them, the board recommended awarding $1.7 million to the Palestine Economic Development Corp. for its plan to provide 118 units of affordable housing for older people.

The Whole Person Inc. would receive $1 million to develop 30 new affordable rental units for people with disabilities, as well as a community space and a universal design park with community programming.

The Ivanhoe Neighborhood Council would get $725,000 for its Heroes Home Gate project to develop a 24-bed facility to help homeless veterans.

City officials estimate the next round of funding will allocate the remaining $12.8 million in COVID money. And another $10.5 million will go to the fund over several years.

The proposed bond issue would get the fund closer to the initial goal of investing $75 million into the fund.

Granny flats

One other proposal in Lucas’ package might help increase the supply of housing in a small way. It would allow the construction of so-called “granny flats” in the rear or side yards of residential lots. The living area could also be in a detached garage.

In legalese, these are “accessory dwellings units” that could be used by a relative of the homeowner, or a tenant, providing the owner a little extra income and the renter an affordable place to live.

Current city code prohibits construction of granny flats. Existing ones were grandfathered, Lucas said.

Cortlynn Stark also contributed to this article.