Density Bonus Incentives

[daGOAT]

Anyone acquainted with this term? I think this would be something the City should pursue, it works wonders here in Los Angeles. Coupled with removing parking minimums and I'm sure developers would obtain construction loans much easier for Kansas City projects if this were an in effect ordinance.

[CrossroadsUrbanApts]

Density bonuses work in California because they are state-wide and a partial remedy to local jurisdictions' ridiculously restrictive zoning, when it comes to units/acre allowed. So it is a second-best policy where the first-best policy would be to raise the allowed density with no trade-offs (i.e., set-asides) required at all.

I don't think it would work in Kansas City because only sometimes is the limiting factor on density the zoning rules. For example, in the downtown districts (DX, DC, etc.) I don't believe there are any restrictions on units per acre. So you aren't going to include affordable housing just to be able to build more units because you can already build as many units as you like.

I suppose it could work in some of the more downzoned parts of the city (R-6, etc.) but I just don't see that happening. It works in California because the density bonus law is state-wide and part of the state's attempt to force cities to allow more housing.

[daGOAT]

Hmm all good points. I just wonder what could encourage development since clearly inclusive zoning is failing. It he real problem is a city hall that mandates a 20% affordability rate that it doesn’t even use. The 20% was claimed to be enough to justify incentives but you have a school district, library, and groups of concerned citizens who don’t have their facts straight with more clout than the ones actually investing in the city.

[FangKC]

I wouldn't be opposed to a carve-out state law that allows cities to ignore libraries, museums, and school districts' input on the development of new construction buildings and repurposing abandoned properties that require incentives on urban parcels. Those entities are already getting what the parcel is producing now. This would allow the development of new projects that will provide future tax revenue for all, but those entities don't get access to those revenues right away. As it stands, these entities are delaying and preventing redevelopment efforts the city and county need to provide revenues in the future to provide services. This would not apply to renovating an existing building that is occupied now, or recently occupied (within 10 years). There might be exceptions to this rule if the building suffered a fire, needs abestos remediation, or a extensive utility work replacing heating and cooling systems, plumbing, and electric -- basically a complete gut renovation.

It would also not apply to the development of new structures on raw land that has never been developed before (not parcels that have had structures on them in the past).

If a building has been empty for 10 years or more, it's obvious it is having problems being redeveloped and is potentially becoming a nuisance for the City. If the City can't get movement on it, there is a possibility that the City will incur expenses to demolish the building. Costs that the libraries, school districts, and museums don't have to pay.

[CrossroadsUrbanApts]

Hmm all good points. I just wonder what could encourage development since clearly inclusive zoning is failing. It he real problem is a city hall that mandates a 20% affordability rate that it doesn’t even use. The 20% was claimed to be enough to justify incentives but you have a school district, library, and groups of concerned citizens who don’t have their facts straight with more clout than the ones actually investing in the city.

The problem is that the 20% inclusionary set-aside ordinance was really about killing off the use of incentives for multi-family development. There were (are) loud voices railing against incentives being used for highly-amenitized "luxury" housing. Maybe not every councilmember thought exactly that way, but I think enough thought it overall a bad look politically that incentives were being used to help development west of Troost. The council members and city staff who thought that the ordinance might actually yield affordable housing were just naïve (or ignorant) in their understanding of development economics. So now LCRA/PIEA incentives are unusable and everyone is looking to the Port or KCATA. Not a great development.

The development problem we face is that rents in Kansas City are lower than many peer cities and construction has become a national/global market. So it costs the same to build in KC but the income is much lower. Lower land prices help offset the difference somewhat but not enough. I'm sure I'm a broken record at some point but this is why I feel so strongly that tax abatements for infill projects are a win/win in the long-term for everyone - development works because the overall tax burden (an operating cost) is lower for the crucial first years of investor and lender return and the city and taxing jurisdictions get more tax revenue both in the early years (through PILOTs) and later years when the buildings are paying unabated taxes.

If we could just reset the development conversation to 2018-2019 that would go a long way to helping the situation. Go back to 75% abatements with no inclusionary requirements and maybe cap at 15 years rather than 25 years. Then make the process streamlined and transparent rather than based on backroom deals. Would go a long way to opening up KCMO for business again.

[DaveKCMO]

Anyone acquainted with this term? I think this would be something the City should pursue, it works wonders here in Los Angeles. Coupled with removing parking minimums and I'm sure developers would obtain construction loans much easier for Kansas City projects if this were an in effect ordinance.

I would rather focus on things that will get built with little or no opposition -- like "missing middle" or infill SFH. KC is so large with so much opportunity that creating all this new friction with high density apartments no one wants to live next to seems folly.

As others point out, no real restrictions in the downtown core or parts of the Crossroads where there are still plenty of opportunities to densify.

[CrossroadsUrbanApts]

Anyone acquainted with this term? I think this would be something the City should pursue, it works wonders here in Los Angeles. Coupled with removing parking minimums and I'm sure developers would obtain construction loans much easier for Kansas City projects if this were an in effect ordinance.

I would rather focus on things that will get built with little or no opposition -- like "missing middle" or infill SFH. KC is so large with so much opportunity that creating all this new friction with high density apartments no one wants to live next to seems folly.

As others point out, no real restrictions in the downtown core or parts of the Crossroads where there are still plenty of opportunities to densify.

Unfortunately even missing middle or infill SFH can face significant opposition. Look at the Westside and the townhomes proposed on Belleview. The former Bryant School in the middle of Brookside should definitely be redeveloped as missing middle housing but good luck getting that parcel rezoned from R-6. By their nature missing middle projects are smaller and operate on thin margins due to lack of scale - so it is just not worth it in the same way to undertake an expensive and time-consuming entitlement process.

And demand for those high density apartments is still quite strong and banks and investors love to finance them, so people will keep trying.

[rxlexi]

The problem is that the 20% inclusionary set-aside ordinance was really about killing off the use of incentives for multi-family development. There were (are) loud voices railing against incentives being used for highly-amenitized "luxury" housing. Maybe not every councilmember thought exactly that way, but I think enough thought it overall a bad look politically that incentives were being used to help development west of Troost. The council members and city staff who thought that the ordinance might actually yield affordable housing were just naïve (or ignorant) in their understanding of development economics. So now LCRA/PIEA incentives are unusable and everyone is looking to the Port or KCATA. Not a great development.

The development problem we face is that rents in Kansas City are lower than many peer cities and construction has become a national/global market. So it costs the same to build in KC but the income is much lower. Lower land prices help offset the difference somewhat but not enough. I'm sure I'm a broken record at some point but this is why I feel so strongly that tax abatements for infill projects are a win/win in the long-term for everyone - development works because the overall tax burden (an operating cost) is lower for the crucial first years of investor and lender return and the city and taxing jurisdictions get more tax revenue both in the early years (through PILOTs) and later years when the buildings are paying unabated taxes.

If we could just reset the development conversation to 2018-2019 that would go a long way to helping the situation. Go back to 75% abatements with no inclusionary requirements and maybe cap at 15 years rather than 25 years. Then make the process streamlined and transparent rather than based on backroom deals. Would go a long way to opening up KCMO for business again.

Truth - thank you. I'm assuming these setbacks are somewhat temporary - some variation of the reset you describe is likely with the next council and/or mayor, but as has been pointed out by others on this topic, peer cities aren't standing still and KC has seemed to be sitting at a sort of tipping point for several years, never quite able to get over the hump.

RE: development/multifamily incentives, I'm curious how much current KCMO policy is/will drive investment into the adjacent northland cities (NKC and Riverside). These are places with approximately midtown proximity to downtown (1-4 miles) that would be thrilled to grow substantial "luxury" multifamily inventory and likely incentivize it heavily. You're seeing some of this occur in NKC, but still not as much as I would have anticipated even without KCMO's nonsensical development requirements.

[daGOAT]

Anyone acquainted with this term? I think this would be something the City should pursue, it works wonders here in Los Angeles. Coupled with removing parking minimums and I'm sure developers would obtain construction loans much easier for Kansas City projects if this were an in effect ordinance.

I would rather focus on things that will get built with little or no opposition -- like "missing middle" or infill SFH. KC is so large with so much opportunity that creating all this new friction with high density apartments no one wants to live next to seems folly.

As others point out, no real restrictions in the downtown core or parts of the Crossroads where there are still plenty of opportunities to densify.

You're right about that. Building on the Eastside is the best thing developers could do right now but everyone wants to maximize density and that's when the neighborhoods get mad, height/design/parking tend to be atypical complaints. Personally I'm getting my firm to consider townhomes, live/work, and small apartments but that's still a ways from being a realistic proposal and making the numbers work with mixed rents and planned energy efficiencies is quite difficult.