After more pushback, Port KC says no to St. Louis developer’s riverfront apartment plan

An incentive request for a controversial St. Louis developer hit a major roadblock at the Port Authority of Kansas City on Monday.

The board overseeing Port KC was asked to approve issuing $56 million toward St. Louis developer Lux Living’s proposal to build 250 new apartments at Berkley Riverfront.

But a bombardment of questions and criticism from KC Tenants appeared to push board members to reject the proposal, which received a nod of approval from a board committee only last week.

Lux Living has a history of unfavorable press coverage surrounding tenant complaints, lawsuits and use of incentives in St. Louis. But Port KC officials on Monday continued to vouch for the company. They said they were comfortable with the developer after a recent visit to its St. Louis properties, where they spoke with Lux Living staff and tenants.

Wilson Vance, among several KC Tenants leaders who testified against the developer, said it would be “simply embarrassing” for the board to approve Lux Living’s request for a 25-year property tax break worth nearly $7 million.

“I cannot believe that with this evidence against this developer, with the lack of truly affordable housing in the year of 2022, we are about to give a 25-year tax abatement ... It’s shameful and I can’t even believe it at this point. I would laugh if it weren’t absolutely disgusting.”

In April, the St. Louis Post-Dispatch reported on complaints from Lux Living tenants who moved into expensive new apartments to find they weren’t yet completed. Tenant complaints date back to at least 2016 when the Riverfront Times documented problems with cockroaches, maintenance issues and bait-and-switch practices from the company, which at the time was called Asprient.

Since then, as the company has grown, it’s butted heads with construction labor unions for hiring non-union contractors and filed lawsuits against a competitor and the city. Lux Living also led St. Louis to create new incentive claw-backs after the developer made millions selling two apartment buildings to investors quickly after securing 20-year tax breaks from the city.

The company also failed to disclose previous SEC violations in its application to the port authority, NPR’s Midwest Newsroom reported.

Lux Living CEO Victor Alston was sanctioned by the Securities and Exchange Commission in 2017 while running a separate company in California. The federal agency found Alston broke accounting rules, fined him $100,000 and banned him from serving as an officer of any public company for five years.

Port KC officials said the company technically was not required to disclose the issue since Alston was not “formally charged” with a violation.

Kathleen Pointer, senior policy strategist for Kansas City Public Schools, noted that Port KC doesn’t require an independent financial analysis of incentive projects like other incentive agencies in Kansas City. She said taxing jurisdictions like public schools should not be solely responsible for subsidizing the creation of new affordable housing through tax incentives that deprive jurisdictions of potential new revenue.

Lux Living’s proposal included 50 units that met the city’s definituion of affordable housing.

Pointer asked whether the port authority had added any claw-backs — ways to get the incentive dollars back — to its development agreement, given Lux Living’s history in St. Louis.

In 2020, St. Louis officials proposed new claw-back measures after Lux Living sold two apartment projects for massive profits. The issue was covered in the St. Louis Post-Dispatch in May 2020 and in a lengthy story last month about the controversial development firm.

But Port KC officials said Pointer’s mention was the first they had heard of the issue. And their proposed agreement with the developer included no claw-back measures.

It’s unclear whether the riverfront project may come back in an altered form or if Lux Living will nix its plans entirely. Alston could not be reached for comment on Monday.

Port KC CEO Jon Stephens said he planned to discuss the project, which would be the first to meet new Kansas City rules on affordable housing development, further with the developer and the board.

At Monday’s board meeting, commissioner Henok Tekeste, who originally seconded a motion to approve issuing the bonds, withdrew that second after lengthy public testimony.

“The school district is not happy. The tenants association is not happy,” Tekeste said. “I mean, what are we doing really?”

After he withdrew his second, no other commissioners voted to second the measure. So the motion failed.