3G Development wins incentive approval for River Market apartments

A Kansas City agency’s decision to deny incentives did not shut down a transit-oriented apartment complex proposed in place of a surface parking lot in the River Market.

Rather, at its latest meeting, the Planned Industrial Expansion Authority approved a 25-year property tax abatement for 3G Development for its $61.6 million plan to build 246 market-rate apartments northeast of Third Street and Grand Boulevard. 3G is a development partnership between EPC Real Estate Group LLC and CBC Real Estate Group LLC.

In late April, when the PIEA voted down the abatement by a 6-4 margin, the apartments’ projected rents and related affordability questions garnered the lion’s share of discussion from members and public speakers. Councilman Kevin O’Neill at the time voiced a struggle with public subsidies for market-rate units.

But the development team did not make any material changes to the project or underlying incentives in the intervening months. Rather, a different matter, passingly noted as a concern only by O’Neill at the April meeting, appeared to make the project more palatable Thursday: prevailing wage assurances.

In April, 3G presented that 30% to 40% of construction jobs would be paid at prevailing wages, equaling more than $14.4 million in contracts.

On Thursday, 3G agreed to ensure that at least 40% of project work is awarded to contractors paying union-established prevailing wages and that if one contractor paying prevailing wages submits a bid within 10% of a contractor that does not, the former will be awarded.

O’Neill’s new support, plus three new member appointments to the PIEA since late April, shifted the vote on 3G’s incentive request to a 9-4 margin.

The development team’s property tax abatement will run at 75% for 10 years and 37.5% for the next 15, coupled with a sales tax exemption on construction materials. One PIEA member, Andrea Flinders, motioned to reduce the abatement term to 15 years, but the board voted 10-3 against the measure.

The Third and Grand development’s rents will average $1,138 for 76 studios; $1,462 for 158 one-bedroom units; and $2,036 for 33 two-bedroom units. The proposal is exempt from the city’s affordable housing thresholds for incentive-seeking projects, based on 3G’s application timing.

Combined, the requested incentives are valued at $11.6 million, according to a third-party analysis SB Friedman Development Advisors conducted for a slightly larger version of the project.

The development is projected to generate about $9.5 million in property tax revenues to affected taxing jurisdictions during the 25-year abatement period. An additional $3.4 million is to be generated from sales and earnings taxes, and the city and Kansas City Area Transportation Authority will split $2.2 million in proceeds from 3G’s land acquisition.

3G’s incentive request had received letters of support from City Council members Eric Bunch and Katheryn Shields, the area’s representatives, plus City Manager Brian Platt. The project’s backers have praised its multifamily density and transit focus, with a multimodal transit hub that will accommodate passengers using the streetcar and local MAX bus service.

This spring, the development team expressed an aim to break ground in late February and open to residents in December 2024.

3G’s approach to winning incentive approval — addressing individual PIEA member concerns — may present a blueprint for developers of different projects that have failed to secure public financing from other bodies in recent months. This includes Lux Living’s $55 million mixed-income apartment plan at Berkley Riverfront and eventually a redevelopment of 3.2 acres that Mac Properties still owns at Armour Boulevard and Main Street.