Inclusionary Zoning

KC topics that don't fit anywhere else.
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DaveKCMO
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Re: Inclusionary Zoning

Post by DaveKCMO »

The opposition to incentives and density cuts across the traditional political spectrum (and that is not unique to KC). This is the first position -- which is not unanimous -- that resembles anything close to redistribution of wealth. I would argue that since it's tied only to the provision of public incentives, that it's really not even that.

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Re: Inclusionary Zoning

Post by CrossroadsUrbanApts »

I agree that this isn't really about redistribution of wealth. I think a lot of KC citizens and non-profits perceive a problem of affordable housing, and the city doesn't have a lot of tools or budget to work with. Developers (like me) are seen as an easy target that isn't seen as doing their part to help the problem because housing that is new built is as a rule more expensive than older housing.

The problem is that the cure of affordable set-asides is clearly worse than the disease, as others said so well above. Targeting new development/new construction to solve the affordable housing problem is a comically bad approach, regardless of the political advantages. New development will never be more than a small fraction of the overall housing market. And it is by its very nature the most expensive housing, not the least because it must be up to date on all the most recent building codes and zoning codes, all of which over the years have been generally changed in the direction of making the housing more expensive to build, not less. Not all for bad reasons, mind you, but a fact nonetheless.

The right approach is to try and keep existing housing ("used housing", if I may) as affordable as possible. And of course one important way to do that is, in an environment of rising population, is to build as much new housing as possible to meet that increased demand. New housing of all types and all price levels. In the absence of new housing supply, the incoming population (which is generally wealthier than existing residents) will bid up the price of existing housing. California and other coastal areas amply demonstrate this phenomenon.

I agree that some of the developer carping seems like typical 'woe is us' complaining. But it generally is easier to build in non-KCMO markets and this kind of ordinance will only make the difference starker. There is only so much bandwidth in terms of projects to take on, and a lot of the low hanging fruit in Kansas City has already been plucked (note declining rent levels and increasing vacancies downtown - wow supply and demand do work after all). At a time when development should be made easier (because the easy wins have been had, now things are pushing into more challenging areas), the political situation is moving in the opposite direction.

A few modest suggestions that I think would be more productive than affordable set-asides in new development projects:

- Have the city strategically buy existing apartment buildings (like the Alps in Midtown) and preserve them as permanently affordable housing (finding $ will of course be tricky, but cheaper to buy existing apartments than build new)
- Simplify the incentive process and make them geographically dependent (i.e., 100% tax abatement for 10 years east of Troost, 50% tax abatement for 10 years west of Troost).
- Make the incentive application process simpler and with fewer steps/veto points. The current system favors large developers that know the game and can pay the best lawyers. The key is to allow smaller developers who are more willing to tackle small but difficult projects to be able to avail themselves of these important tools.
- If you must, cap incentives so projects above 150 apartments don't get them. If you can't make a 150-unit project pencil without help, it's probably a bad project. I honestly don't love this but maybe this is the political trade-off necessary to prevent some of the perceived abuses of the system.

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TheLastGentleman
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Re: Inclusionary Zoning

Post by TheLastGentleman »

I’m still waiting for some actual examples to back up any of the claims in this thread. There’s absolutely no way kc is the only city to come up with policy like this.

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Re: Inclusionary Zoning

Post by alejandro46 »

TheLastGentleman wrote:
Fri Jan 22, 2021 9:15 am
I’m still waiting for some actual examples to back up any of the claims in this thread. There’s absolutely no way kc is the only city to come up with policy like this.
https://reason.com/2019/10/07/when-mand ... n%20income. (Libertarian leaning source)

Good examples
  • Massachusetts spurred the production of affordable housing with its Comprehensive Permitting and Zoning Appeal Law and Smart Growth Zoning Overlay District Act, which streamline approval processes for local affordable housing permits and allow by-right development in smart growth locations, respectively.
    California’s parking reduction law allows developers to construct fewer parking spaces for affordable housing developments located within a half-mile of transit.
    California’s planning and zoning laws require local governments to adopt ordinances for accessory dwelling units to increase the supply of affordable housing in areas occupied predominantly by single-family homes.
https://www.huduser.gov/portal/periodic ... ight3.html

I think this will just result in making developers ask for more incentives if they need to build affordable units, not build at all, or actually increase the amount of rent due to having to pay extra into the Trust. As I said earlier, there are better strategies to make it easier to build new developments than to make it harder.

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Re: Inclusionary Zoning

Post by CrossroadsUrbanApts »

The main examples that come to my mind are requirements for affordable housing set-asides in San Francisco, Los Angeles, and the Boston area. All high-cost areas with large barriers to entry for development. In California, the affordable housing set-aside is typically paired with density bonuses, like I discussed earlier. So there is a big carrot to go along with the stick.

I would be cautious of pointing to these as "successes" because these areas have way underproduced housing relative to their population growth. I wouldn't chalk up the underproduction solely due to affordable set asides, but they are one part of the reason. Small developers really also have no chance in those markets, so all of the housing production is undertaken by the largest development firms.

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Re: Inclusionary Zoning

Post by flyingember »

TheLastGentleman wrote:
Fri Jan 22, 2021 9:15 am
I’m still waiting for some actual examples to back up any of the claims in this thread. There’s absolutely no way kc is the only city to come up with policy like this.

This article does a really good job at summarizing the topic. For a regular of this site most points will be recognizable.
https://archive.curbed.com/2019/5/15/18 ... -apartment

It's not strictly housing policy that's the problem.

There's a lot on N. Oak in the 3000s block that's 6.6 acres at $37k per acre. That's a huge opportunity for affordable housing. Put up 100 units and the land is $2490 per unit.

There's a 0.03 acres single family lot on the westside at $35k.

The only way to build affordable housing is to shift people outwards. This is what we're seeing in the northland with the number of new apartments along 152 Hwy. The problem is transportation is a huge cost for people so our lack of comprehensive transit limits options for affordable living.

On the other end of things with 100+ year old houses I learned this week NKC is 80% rental units. It has only one seven day bus route through town, mostly far away from where people live. So people rely on cars to get around which makes their housing less affordable. There's plans for hundreds of new units and no clear plans to take transit so it can be a TOD project

A $50 regular bus pass for two people is $1200 per year. A month's worth of gas from NKC to old Overland Park is around $2075 per year. 1% of income citywide sales tax at $15 per hour x2 (assuming 80% remaining after taxes) is $500

Switching from two cars to free bus is a month's worth of rent saved
Last edited by flyingember on Fri Jan 22, 2021 9:56 am, edited 3 times in total.

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Re: Inclusionary Zoning

Post by CrossroadsUrbanApts »

Here's an article on the impact of the 25% set aside in San Francisco passed several years ago. The KC requirement is in this magnitude range because of the 10% requirement for 30% AFI, which is a deeply affordable unit.

https://medium.com/yimby/the-25-inclusi ... 143c4abd31

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Re: Inclusionary Zoning

Post by alejandro46 »

I would also note that Kansas is more than happy to keep subsidizing and building out greenfield apartments out in the far flung reaches of the exurbs. This would be a great deal for them.

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Re: Inclusionary Zoning

Post by normalthings »

alejandro46 wrote:
Fri Jan 22, 2021 10:58 am
I would also note that Kansas is more than happy to keep subsidizing and building out greenfield apartments out in the far flung reaches of the exurbs. This would be a great deal for them.
Kansas has been densifying the Metcalf corridor too. They are starting to create some actual dense core type areas.

KC Council needs to loosten zoning, mostly remove themselves from development plan approval, and keep incentives available in the urban core. I’d be fine if they limited them in greenfield sites.

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Re: Inclusionary Zoning

Post by DaveKCMO »

streamline approval processes
ding ding ding!

The city already did this once for the downtown streetcar TDD. It technically still exists, but they sorta stopped promoting it.

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normalthings
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Re: Inclusionary Zoning

Post by normalthings »

I highly encourage everyone to provide public testimony on this ordinance. Make your voice heard for or against. Testimony can take the form of an email to a council member or city clerk.


It doesn’t appear that testimony so far has been limited to city residents.

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normalthings
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Re: Inclusionary Zoning

Post by normalthings »

Had a call with a government authority involved, in part, with promoting housing construction in London UK. Big push to remove and/or reduce their local affordability requirements after they found that developers reduced their housing production and were incentivized to build more commercial,etc. The new strategy is to streamline the process and make more land available for high-density development.

Chris Stritzel
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Re: Inclusionary Zoning

Post by Chris Stritzel »

I reached out to one of my developer contacts about the affordable housing rule, his response was simply this (all copied from an email)...
Chris,

Firstly, the proposed rule is bullshit in more ways than one.

How are start up developers going to make a name for themselves when they’re told by a City “you must include so many affordable and extremely affordable units to get incentives.”? They can’t! This leaves the door wide open for big developers to come in and control the market while small, start up firms are pushed to the suburbs where the rules don’t apply. For example Chris, it’s like if you wanted to build something and the City came in, told you “no, you’re gonna do this or else no incentives to make your project happen” then left you sitting there like you were told to “f-off”. It’s not a sustainable move and will lead to many developer’s budgets and analysis not adding up without having to increase rent elsewhere and reduce total amenities. In that case, then what do you do? No one will want to live in a development like that.

Secondly, this is all a political move to appease people living in neighborhoods that have not seen significant development in years. It's not the developers fault that those neighborhoods are not hot. It's the politicians fault. Politics and policies have consequences. Some can be good and some can be bad. Developers follow trends set in markets, not just in Kansas City, St. Louis, Nashville, but all across the nation. If other developers are developing in a single part of a City, other developers will follow to create competition. In this case, developers innovate to remain competitive, which can deliver a better product to residents of apartments, or tenants of a commercial building. Personally, I'd love to invest in communities that haven't seen significant investment in years, but the numbers just do not add up. To make anything worthwhile, it would have to be a mass-redevelopment of an area and, to the disgust of politicians, home and rental prices will go up. Trust me, I know. I've worked on projects like this before and had to leave them shelved.

Lastly, I want to make it clear that a policy, like the one proposed, would harm ongoing development in "hot" markets within a City. In the example of Kansas City, the area bounded by the State Line, Missouri River, Troost, and (in my view) 63rd benefits the most from all the investments happening. It's because the area is highly desirable. Boosted by job centers, entertainment centers, shopping areas, colleges, and a free to ride streetcar line. There are also a lot of sites primed for redevelopment in this area moving forward. Past developers and community leaders made this area the place to be in KC, and I believe it is wrong for newcomers and other developers to be punished in the manner that is proposed when we're just trying to contribute to the growth of the area. Until presently "non-desirable" areas can get a footing, expect to see little to no development. It's hard to hear that, but it's the truth.

Personally, my firm can develop without needing incentives 90% of the time. That other 10% of the time comes from entering a new neighborhood with no comparable projects in the near vicinity of my own. It's called taking a risk, but when you believe in a neighborhood and see success flourishing all around, you'd expect a similar result but do not want to go "all-in" without reducing the risk factor a bit. As I know you were told by 17th Ward Alderman Joe Roddy here in St. Louis, tax incentives are meant to bridge the gap between construction costs and project revenue. As it currently stands, some "hot" neighborhoods in the markets I've looked at require incentives because the rents I would have to fetch to justify costs of construction without incentives would be far too high for the neighborhood I would be investing in. Elsewhere, that's not the case. In the case of Kansas City, I can think of several neighborhoods that individually fall into the categories mentioned.

What I personally want to know is, how can the developer of the Atlas 303 project make that work without incentives? It's in an armpit of a hot neighborhood, borders a highway that will undergo reconstruction in the following years, and it's disconnected from basic neighborhood amenities (like shops, restaurants, bars, grocery, and a pharmacy). I understand that the City Market is just down the road, but come on. It's a hot mess of a location. They're taking a big risk there and I personally wish them luck, but it seems odd in a broad sense.

And don't think I'm directing any of this anger towards you, Chris. I'm not. It's just frustrating that a City like Kansas City, which is positioned to grow rapidly in the next few years, is willingly ready to pull the trigger to shoot themself in the foot and allow other peer cities to blow right past them. This will have negative effects on the overall picture and I would hate to see that. I sincerely hope the politicians understand what they're doing could come back to bite them, but from what I've seen from and read about Mayor Lucas and other members of the City Council, my hopes are quickly being dashed.

Common sense will prevail in the end! Always remember that.
The email ended just after that point.

Read into this as you wish, I just thought he was being very truthful. He intends to reach out to the City Council and voice his concerns and provide specific data sets to back up his claims about project financials. I did find the part where he questioned Atlas to be interesting.

Note: The email is not word for word due to some more colorful language and other stuff, including who the developer is.

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Re: Inclusionary Zoning

Post by kboish »

His example of the Atlas 303 project being "disconnected from basic neighborhood amenities" is absurd. City Market just down the road? its a block and a half away.

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Re: Inclusionary Zoning

Post by TheLastGentleman »

kboish wrote:
Thu Jan 28, 2021 9:12 am
His example of the Atlas 303 project being "disconnected from basic neighborhood amenities" is absurd. City Market just down the road? its a block and a half away.
Walking is difficult for Kansas Citians

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Re: Inclusionary Zoning

Post by kboish »

Its not though. Thats a pernicious meme that won't die.

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Re: Inclusionary Zoning

Post by Chris Stritzel »

Legislation requiring affordable units passed 12-0 per the Mayor.
https://twitter.com/MayorLucasKC/status ... 4613870600

I wonder what type of damage this will cause in terms of development.

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Re: Inclusionary Zoning

Post by alejandro46 »

QL is not a businessman nor has good economic sense. He was a professor and now is a politician and wants to be re-elected/take Emmanuel Cleaver's seat I suspect. This is trash policy, but makes politicians feel like they are solving a problem without spending any real money. There will be real effects to this, however. Any new developments will either be super expensive (to avoid asking for any incentives), have two classes of micro-mini units thrown in the basement somewhere to somehow get around this, or something.

So many units have been built I think the market has about peaked this cycle so not sure if there will be that huge of an effect, but hopefully something that can be repealed eventually.

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Re: Inclusionary Zoning

Post by chaglang »

It passed 12-0 because it was politically impossible not to vote for it. It's hard not to be cynical about this ordinance.

In the city-commissioned case study, the MAC project at Armour and Troost came closest to being affordable by maxing out (the term used in the case study) incentives and the developer accepting for a significantly lower yield... and to include units at 30% MFI would have required further incentives. So I don't understand how this ordinance will work in practice. Worth noting that the study also states that requiring low MFI units will probably result in a boom of cheap studios, which will be less impactful to project pro formas than cheap 2-3BR units. So much for concern about disadvantaged families.

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Re: Inclusionary Zoning

Post by Rabble »

From Kevin Collison's 1/18 column referencing a letter in support of the legislation: "Kansas City is behind the curve when it comes to implementing affordable housing policy," the letters continue, adding several peer cities including Minneapolis, Nashville and Denver have set-aside policies for affordable units.

Has anybody checked to see if any of this is true? It's popular to distrust ethnic-urban politicians, but I'd be a little skeptical of the data provided by the development community, it all sounds about 30 years old.

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