The Kansas City Council voted 8-3 Thursday to offer incentive terms negotiated between City Manager Troy Schulte and the developer of the Kansas City Power & Light District to support the construction of a new $130 million, 300-unit apartment high-rise.

The project, dubbed Three Light, is expected to begin by the end of the year at a site along Truman Road between Walnut and Main streets.

The three votes opposing the incentive ordinance were cast by Alissia Canady, Dan Fowler and Kathryn Shields, who said they thought the negotiated terms were still too generous and did not go far enough to protect the city’s general fund.

Chief among the incentives approved for Three Light, which will be The Cordish Cos.’ third luxury high-rise in the district, is a $17.5 million subsidy the city has agreed to pay for a parking garage for Three Light — as it did for One Light and Two Light.

As part of a 2004 master development agreement governing development of the Power & Light District, the city agreed to subsidize garages for an unlimited number of Cordish apartment projects in the entertainment district for as long as 99 years.

The ordinance adopted Thursday shortens the 99-year term of the agreement by 58 years, caps the number of apartment towers the city must subsidize garages for at six and requires Cordish to redevelop the historic Midland office tower into 100 workforce, or affordable-rate, apartments.

Negotiations about affordable units

Canady said Cordish indicated at the time the master development agreement originally was negotiated that the company intended to make 15 percent of the units in each apartment tower it developed affordable. But that did not happen with One Light or Two Light, and Cordish officials said Three Light would not pencil out if they were forced to include affordable units.

During recent negotiations with Schulte, Cordish officials agreed to include the affordable units in the Midland building if the city paid an additional $3.9 million to subsidize that project, which is to be developed simultaneously with Three Light.

"To ask the city to provide $3.9 million to subsidize a commitment they made is not an appropriate negotiating response," Canady said.

In addition, the negotiations yielded the parties’ agreement to seek a second 1 percent community improvement district sales tax in the central business district that will raise about $1 million to be split evenly between the city and Cordish.

The idea was that the city’s $1.4 million annual cost of bonding its new parking subsidies for 20 years could be covered by the city’s roughly $500,000 annual share of the CID tax revenue, roughly $500,000 in savings from Cordish’s agreement to take over operations and maintenance of the district garages from the city, and increased rent payments from Cordish.

Shields, however, wanted greater assurance that the city would get its share of the CID revenue. Noting that the proposed ordinance limited Cordish’s garage maintenance exposure to repairs less than $10,000, Shields offered an unsuccessful motion calling for Cordish to receive its full CID share each year only after an accounting has revealed that the city’s $1.4 million bond payment and garage maintenance costs have been covered.

After that motion failed 8-3, Shields tried another one that would have eliminated Cordish’s $10,000 maintenance cap from the ordinance and held it responsible for all garage maintenance except for that caused by catastrophic events. It failed 9-2.

“I was told somewhere along the way that the third time is a charm,” Councilman Jermaine Reed said of Shields’ motions. “I hope this will be the last (motion) so we can continue with the rest of the docket.”

It wasn’t. Shields offered two more unsuccessful motions, both attempting to nail Cordish down on its affordable housing commitment.

“I’m not sure what Cordish considers affordable,” Canady said, noting that she’d been informed Cordish's affordable units would rent for $1,870 a month.

Councilwoman Heather Hall said she didn’t necessarily disagree with Shields’ points but added that they could be addressed when Cordish comes back for approval of other incentives for Three Light.

Property tax abatement

In addition to the CID and a sales tax exemption on its cost for building materials, Cordish is expected to request a 25-year Chapter 353 property tax abatement. The developer will seek a 100 percent abatement but has agreed to make payments in lieu of taxes starting at $550,000 a year and increasing 4.5 percent every other year, which would make the effective abatement approximately 30 percent.

Canady said the subsidies mean that Kansas City Public Schools will receive only $175,000 a year in tax revenue from Three Light.

“When the average person (living) in these units is making $175,000 a year ... that’s ridiculous,” Canady said.

Canady and Shields argued that it is time to further renegotiate with Cordish, which they say got such generous development terms in 2004 because no one else wanted to invest in the beleaguered Downtown of that time.

Although the city’s legal department advised that the council wasn’t still bound by all of the terms negotiated in 2004, Mayor Sly James said that reneging on the deal now probably would result in a lawsuit.

“It may not be popular, fun or the progressive way,” James said. “But I was brought up in a day when your word was your bond. I think we honor our contract and get the best deal out of it, which we did (through the negotiations involving Schulte).”