5th and Main (Northwest Corner)

[FangKC]

One must recognize that placing affordable housing in the most expensive type of new building -- a highrise with mandated structured parking -- is the worst way possible to create affordable housing units.

With all due respect, why is it the worst way? I hope it's not just because the haves don't want to share a front door with the have-nots. Revitalized downtowns are as much about the successful mixture of races and incomes as it is about the removal of parking spaces.

It's about maximizing the number of affordable units in the City, which we are woefully short of doing. If we sit around waiting for some developer to build 15 affordable apartments in a highrise with structured parking -- getting the building approved through all the various levels of government, dealing with tax entities protesting subsidies, and public outcry, etc. -- when we could get 30 units of affordable housing built in a triplex-fourplex stick-built building on a slab with surface parking--in 1/4th the time for about the same cost, then we should do the latter.


In-Depth: Thousands of families on years-long waiting lists for affordable housing in Kansas City

https://www.kshb.com/news/local-news/in ... ansas-city

Creating an apartment in a highrise with steel and concrete is probably the most expensive method to build anything. Add the garage parking spaces and that adds anywhere from $30,000 to $40,000 per spot, also increasing the cost of creating that apartment unit. It also takes longer than any other type of development. This, while thousands wait for an affordable unit.

If you want to create affordable housing units downtown, build stick-built structures without a garage. Like below at the link, stick-built apartments within Greater Downtown.

https://www.google.com/maps/@39.1108878 ... 384!8i8192

https://www.google.com/maps/@39.1038355 ... 384!8i8192

In many parts of KCMO, a builder can purchase a parcel from the land bank for less than the cost to build one garage parking space in an apartment building like City Harvest. Maybe multiple parcels.

My goal is the creation of the maximum number of affordable units. If I can get 30 affordable housing units built spread around the City, I will take that any day over 15 affordable units in a highrise. People seeking affordable housing units -- often on long waiting lists -- probably would as well.

If you want to build government-owned affordable housing in high rises, well, we used to have that not very far from the edge of "Greater Downtown." They were within a 5-minute bus ride from 12th and Grand.

https://kchistory.org/image/wayne-mine ... ffset%5D=7

https://kchistory.org/image/wayne-miner ... ffset%5D=0

Opened in 1962. Demolished in 1987. Buildings only existed for 25 years. Why? It's because it's expensive to maintain high-rise buildings when the rents aren't high enough to maintain the building, AND federal and state governments don't provide consistent funding for the maintenance of public housing. Maintaining elevators alone is costly as a building ages.

If you can create affordable units in highrise buildings on the most expensive parcels in the City, then go do it.

Acquire this parcel and build three-story stick-built apartments with surface parking behind the units with alley access. Clicks all the boxes: in Greater Downtown, near multiple bus routes, near two grocery stores (Cosentino's and Aldi), Downtown CVS and Walgreens at Truman Medical Center, walkable to many of the City's amenities (performing arts center, Copaken Theatre, T-Mobile Center, P&L, public library, banks, Crown Center, and possibly new Royal Stadium.

https://www.google.com/maps/place/On+Oa ... 1sysrk9z9

Or here. Near 11 and 27 bus lines. Near groceries and drug stores via 11, 27, and streetcar. Seven minutes to downtown, 21 minutes to Aldi. Likely less expensive land plot compared to the RM or Downtown Loop.

https://www.google.com/maps/search/bus+ ... a=!3m1!1e3

Or try building a high-rise with affordable apartments in them on those two parcels. Good luck to you.

Keep in mind it wasn't me that caused the reduction of the affordable housing units in this building, it was those demanding expensive parking spots be added. City Market tenants demanding expensive-to-build free parking for themselves and their customers that the developer must provide while getting no income from it.

[FangKC]

People really have a skewed perspective of developer profits, especially when they insist on adding parking, publicly-accessible amenities, no incentives, and affordable units. If you applied the same logic to, say, a restaurant, they'd go out of business.

Yes. People don't take into account the years of developers' time investment in achieving projects like this. They have to pay their own employees for years working on a development that might not pan out; as well as lawyers, architects, and interior designers; likely make multiple attempts at getting financing; go through all the hoops to get incentives; deal with taxing jurisdictions protests, and negotiations, public meetings with angry citizenry; negotiations with unions, contractor bids, contractor problems, delays, possible lawsuits that hold up the project (see Jonathan Arnold's Second and Delaware thread), carrying financing and insurance costs for years during construction, months of tenant applications to fill the building, credit checks, constant tenant complaints, late rent payments, repairs, evictions, etc., all to hopefully earn a 6 percent annual return on their investment. They could likely make that in an Index Fund through an investment firm.

Add to that the fact that it's an incredibly stressful endeavor for them. Not to mention all the risks they take. The whole thing could end up in bankruptcy if the real estate market collapses.

This project creates 300 apartments on a parcel size that might have 5-7 houses in a subdivision in the suburbs. Do you know how much room it takes to create 300 houses or 150 houses? That's a win for the City under any measure. Just the sales taxes from such a small parcel of land that the City will get from people living in those 300 apartments, plus some earnings taxes. Win.

People also forget developers are doing a public service: creating housing, retail, and commercial buildings needed for society to function.

Who is going to build the housing units people want to live in unless it's a developer? Most people can't custom-build their own housing.

People who buy a new house rarely complain about the house builder making a profit.

The house, townhouse, duplex, or apartment you are living in now was very likely built by a developer.

If citizens demand the City start providing affordable housing units in high-rise buildings downtown, then the City should buy a high-rise building from Cordish and provide that affordable housing through taxes raised for that purpose and set aside in the City budget.

Or, the City can contract with a developer to build City Harvest, rent affordable apartments, and retain ownership.

[missingkc]

Reasonable, informed discussion taking place here about how to produce affordable housing, I think. The Star should take notice and follow suit.

[alejandro46]

Agreed, I also would note that there are more aspects to housing being affordable than just how much it costs to build. There is a lot of affordable land / housing up north, but it's hard to access this area without a car for example as it was built out during the 50s-80s.

KCMO has tons of land but it is a 'hidden tax' on residents who are car dependent or mostly dependent. We need to improve transit throughout our inner core and 435 loop so that low income residents can be less dependent on cars.

[langosta]

Iirc Milwaukee was trying to use Housing Authority as equity to develop luxury apartment towers with 20-25% affordable . I think Covid killed the plans along with not able to get debt

Edit: found old article
https://urbanmilwaukee.com/2019/04/17/h ... ble-twist/

[CrossroadsUrbanApts]

A few stray thoughts:

- As Dave said, developer margins are smaller than one might think. It is a competitive market, and profit tends to be competed away. A lot of the profit goes to the landowner/seller. (Hence common argument for a land value tax...)

- Low-income (affordable) units cost the same to build as other units. Even if one was to cheapen out on some of the finishes relative to the market rate apartments (countertops? appliances?), finishes are like 2% of the budget. The real cost is in the structure, parking, elevators, windows, fire protection, etc. Plus economies of scale in terms of purchasing probably wouldn't make it worth it to have two different qualities of finishes in a building. Makes more sense to just have every apartment with same flooring, counters, cabinets, faucets, etc.

- Including affordable units is way, way more impactful than changing from "$50M profit to $49M profit". First off, a project with $50M profit would need to have a total project size of like $500M. Unless you are confusing sales price with profit. Not the same thing! Second, each affordable unit loses the project money relative to their cost to build. So the market rate units will have to generate enough profit to offset the loss on each affordable income unit, as well as generate enough return to interest lenders and investors.

- I'm in agreement with FangKC. If you want to create as many affordable housing opportunities as possible given limited resources - and resources for such things are clearly very limited - the worst thing you can do is spend $300K-$400K building each high-rise apartment unit. For less than half of that you can build low-rise purpose-built apartments in duplexes, fourplexes, etc.

[Chris Stritzel]

FAA issued final height approval.
https://twitter.com/cityscenekc/status/ ... qhwUCQR_zw

[Cratedigger]

- I'm in agreement with FangKC. If you want to create as many affordable housing opportunities as possible given limited resources - and resources for such things are clearly very limited - the worst thing you can do is spend $300K-$400K building each high-rise apartment unit. For less than half of that you can build low-rise purpose-built apartments in duplexes, fourplexes, etc.

This is the way.

I really wish KC would create a version of the pre-approved building plans "Sears Catalog" that South Bend, IN put together. Contingent building and site development approval means significant time and cost savings when developing means cheaper housing in KC.

[Rabble]

Fang, I appreciate all the information.

The question I now have is why the East Village stalled after just one apartment building? What got built was low rise and wood framed, but instead of getting neighbors, it will probably be torn down for the ballpark. I guess it concerns me that affordable housing has to be relegated to outside of downtown when so much of downtown is surface lots.

[langosta]

Fang, I appreciate all the information.

The question I now have is why the East Village stalled after just one apartment building? What got built was low rise and wood framed, but instead of getting neighbors, it will probably be torn down for the ballpark. I guess it concerns me that affordable housing has to be relegated to outside of downtown when so much of much of downtown is surface lots.

Im not sure if this quite answers your question:

The city identified a master developer for the east village with the power to condemn and right to buy city-owned land (which is much of what is over there) with minimal if any competitors. Swope-Sherman won and we saw the JE Dunn HQ, parking garages, and that single apartment built. Swope was a small local firm that lacked the experience needed for such a big project. Years later, Vantrust was added to the team. Baseball has been a dream there for a while we all know.

NorthLoop and Crossroads have similar issues where large parking lot owners are not interested in selling - even at high prices.

[atticus23]

Thank you for the in-depth discussion about affordable units! I actually learned a lot from this discussion. Hopefully others in our city will be able to see this (KC Star, KCT, etc...)

[TheUrbanRoo]

Thank you for the in-depth discussion about affordable units! I actually learned a lot from this discussion. Hopefully others in our city will be able to see this (KC Star, KCT, etc...)

And now back to discussing the actual project which is in motion...

[FangKC]

Fang, I appreciate all the information.

The question I now have is why the East Village stalled after just one apartment building? What got built was low rise and wood framed, but instead of getting neighbors, it will probably be torn down for the ballpark. I guess it concerns me that affordable housing has to be relegated to outside of downtown when so much of downtown is surface lots.

One cannot ignore several major factors in regard to slow development in the East Village. One was awarding the entire neighborhood to one master developer with not enough experience or "gravitas" in the field of major real estate development--Swope.

The other is speculation about the Feds building a new GSA office building there. Because of post 9-11 security concerns, the building might need two square blocks with a wide perimeter. Then the Feds didn't fund it. More wasted years. Then talk of the downtown baseball stadium began and East Village blocks were always in play for that -- holding up earlier plans for a mixed-use neighborhood. The City then revoked master developer rights from Swope to Van Trust, who hasn't done anything except slowly buy up remaining parcels and demolish buildings. Van Trust still hasn't secured all the privately-owned parcels in the East Village. I've always believed this slow movement by Van Trust was waiting to see what was going to happen with the Royals.

To give some contrast, there was a lot more neighborhood redevelopment on the west side of the Downtown Loop during this period. The Apex on Quality Hill Apartments and The Summit on Quality Hill were proposed after the East Village redevelopment plan, and those apartments are occupied by people now.

https://www.google.com/maps/@39.1008228 ... a=!3m1!1e3

The other area that was built after the EV talk started was a lot of the West River Market neighborhood: Second and Delaware, Market Station, and River Market West Apartments (phase one and phase two). Further east 531 Grand Apartments and Centropolis Apartments were built.

https://www.google.com/maps/@39.1093444 ... a=!3m1!1e3

To further illustrate the absurdity of this is the fact the Oxbow Apartments in NKC weren't even a thought when the EV redevelopment was initiated.

https://www.google.com/maps/@39.141990 ... =!3m1!1e3

Why does a building this size get financed and built in NKC before something on the 8th,9th, Holmes, and Charlotte block?

There was never any talk about the baseball stadium being on that block.

[FangKC]

...I guess it concerns me that affordable housing has to be relegated to outside of downtown when so much of downtown is surface lots.

There has been affordable housing added Downtown. It's just that those units have been part of the redevelopment of older, existing buildings. A lot of downtown buildings have affordable units but it's just not obvious because it's a certain percentage of total units. I think the Midland Office Building conversion is the only building I can think of that is all affordable units.

In principle, it's not a good idea to have all affordable units in a building. It's easy for that situation to turn into a shit-show because of tenants and their visitors acting badly, and secondly, all affordable units mean the property owner might not be getting enough revenue to maintain the building. They will take any meager profit for themselves, and "starve" the building. You see KMBC's Matt Flener on TV regularly exposing these slumlord situations.

https://www.kmbc.com/article/kmbc-9-inv ... s/28285608

https://www.kmbc.com/article/possible-r ... s/30936400

And one gets the Wayne Minor public housing projects all over again.

A little remembered fact is that HUD provided financing for the redevelopment of the Quality Hill neighborhood back in the early 90s and a percentage of units were set aside as affordable.

The reason one doesn't see it done in new high-rise buildings is that it's just so expensive to build that type of structure. Adding affordable units in that situation means you have to have a huge volume of market-rate apartments and retail space to offset the loss of revenue from the affordable units. Kansas City rents are barely high enough to justify a high rise with full market rate occupancy. That is why you don't see many high-rise residential buildings going up everywhere in Kansas City unless they get subsidies.

If a developer could build a high rise without a parking garage, then it would be easier to add affordable units because the developer doesn't have that extra expense. That's really hard to do in KC because residents demand a parking spot.

There is a lot of room to add affordable units Downtown adjacent that are a short bus-ride away. All of the area show below falls in federal opportunity zones where investors can offset capital gains taxes on investments for a period of years if they develop in these areas. Make these neighborhoods dense and walkable again.

https://www.google.com/maps/@39.122457, ... a=!3m1!1e3

[WoodDraw]

People really have a skewed perspective of developer profits, especially when they insist on adding parking, publicly-accessible amenities, no incentives, and affordable units. If you applied the same logic to, say, a restaurant, they'd go out of business.

This is very accurate. You can say no incentives, public parking, affordable units, ground level amenities, and fine? You’ll just end up with kcrag arguing over proposals.

Good people tried to make this project better and I’m sad to see it turn out this way.

KCT can go fuck themselves, but they didn't even care about this. I know there was some outreach here and as far as I know they didn't get involved. Because it's a listless organization obsessed with their own ego beyond putting out any actionable plan to make the city better.

It was the local businesses that wanted subsidized parking for their employees.

Let's call it what it is.

[Rabble]

I’m confused, is the enemy of this almost perfect development, the KC Tenants or the local merchants?

[TheUrbanRoo]

Can we move this convo over to the Affordable housing thread and get this back to 5th & Main. Pls.

[Rabble]

Can we move this convo over to the Affordable housing thread and get this back to 5th & Main. Pls.

Blaming the local merchants for the failures of this development has nothing to do with affordable housing.

[kenrbnj]

FangKC nailed it. The skyline reflects the economics.

Well stated, Fang.

[Anthony_Hugo98]

I’m confused, is the enemy of this almost perfect development, the KC Tenants or the local merchants?

Yes.