A divided City Council approved a financing agreement for a multi-tenant downtown office tower, the likes of which Kansas City, Missouri hasn’t seen in more than 25 years.
The development group, led by H&R Block Inc. and Copaken Brooks, plans build a 25-story, 250,000-square-foot (23,226-square-meter) speculative office tower, called Strata, atop existing retail on the southwest corner of 13th and Main streets.
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The US$133 million tower will receive substantial tax incentives. Developers announced the proposal in 2018, but it has followed a long and rocky road to approval. Under the negotiated agreement, the city will guarantee US$36 million in debt on a 750-space garage. Developers dropped a request that the city also guarantee US$27 million in debt on the tower itself, in exchange for a stake in the revenues generated off tenant rent payments.
Proponents say speculative office space is a necessary risk Kansas City should take, because many of the most appealing tenants that bring attractive jobs need large chunks of premium Class A space available quickly, not in the several years it would take to complete a build-to-suit office project.
“To cover up-front costs, developers are benefiting from a Port KC Aim Zone, which redirects some state taxes generated by new office jobs in the tower to help cover construction costs.”
To cover up-front costs, developers are benefiting from a Port KC Aim Zone, which redirects some state taxes generated by new office jobs in the tower to help cover construction costs. Developers are also seeking a 75 percent abatement of property taxes and a 75 percent redirection of city earnings taxes generated by the jobs at the site.
The revised deal passed the City Council’s Finance, Governance and Public Safety Committee by a 3-1 vote. The full council voted 7-4 in favor of the deal.
The project has been actively in the works for about three years, but grew out of a 2004 development agreement between the city and H&R Block to build its world headquarters within the then-proposed Kansas City Power & Light District. That agreement also gave the company the ability to buy “air rights” to build what was billed at the time as an expansion of its headquarters across Main Street.
H&R Block exercised the right to buy the property sometime in 2017, and in late 2018 announced a joint development group to build the tower.
For more on this story go to The Kansas City Star.