How is Kansas City going to pay for more affordable housing?
Over the last few weeks, we’ve been speaking with Kansas City mayoral candidates about how they’d use the office to approach the biggest challenges facing Kansas City. Pick up our March issue, out next week, for a preview of the race.
Back in December, the City Council approved a proposal, sponsored by Councilman Quinton Lucas, directing the city manager to identify $75 million for an affordable housing trust fund.
The fund would be a dedicated source of money for construction and rehabilitation of affordable housing for low-income residents. Some candidates think the only way to support the $75 million fund would be through a property tax increase, which would likely go in front of voters later this year. Others say it should be a priority supported by the city’s general fund dollars. Still others think public-private partnerships will be necessary to pull together the $75 million.
We recently asked the candidates about their take on the issue, and how they propose the city pays for it.
“Something I want to do as mayor is make sure that we have created nearly 5,000 additional single-family and multifamily housing units by 2023, with the focus on people who make less than $60,000 per year. I think the creation of that trust of $75 million is of great importance. That provides a rehabilitation for financing for homeowners and also some of the pre-development cost. I think also making sure that seniors are able to age in place is of great importance…I think it’s more than just providing legislation, and saying ‘This is maybe a fix’ — people want real solutions and that’s why my goal of 2023 is providing some real tangible solutions that are targeted and that will make a real difference in the lives of people who need it the most … We would have to probably have a property tax increase. But of course, that is something that is approved by voters and if voters were to approve it, then that gives us an opportunity to address it.”
“I think [a housing fund] is critical so that we can make sure that we can start to do a few things. The request for $75 million for that fund has been looked at through a hundred different lenses of: Where are we going to get that? Some people say maybe we should do a property tax. Other people have said, ‘Well, let’s move money from the scooters that are being rented in the city’ — but of course that’s just a drop in the bucket. Others say that if it’s a priority it needs to come out of the general fund. Unfortunately, there’s a whole lot of things that are competing for that [general fund]. So one of the things I would like to see is whether, you know, maybe we have a situation where a developer is getting an incentive and they don’t have an affordable housing component, so they make a payment in lieu of affordable housing, which goes into the trust fund. We can be coming up with creative ideas like that, and I’m going to be proposing those as we move forward.”
“It’s long past time that we have a plan. The business that my wife and I own has built over 5,000 affordable housing units nationwide, so I know what it takes to do it. It takes public-private partnerships — there is no secret pot of money at City Hall to go out and build all of these affordable houses that we need. The [$75 million fund] that is being debated is important. To actually build these homes is going to need someone with the experience of putting public-private partnerships together and getting deals closed, and getting construction going. That’s where I feel I have a really strong case to make to the voters, because that’s what I have been doing for my entire career.”
“We need to be spending the money we get already. Each year since I’ve been on the council, Kansas City, Missouri, gets about $8 million from HUD [Housing and Urban Development]. So eight times five actually gets you to $40 million of the $75 million dollar fund. Do we have a real plan for how we spend it? No. Do we actually try to see long-term measurable goals of how it’s been allocated throughout the city? No. I would suggest in a big part of the fund that you need to make sure you’re being smart with what you’re doing with it and how it’s aligning with long-term business goals with the city. So, how do you get to $75 [million]? You really simply get to $75 million by being smart about what you’re already getting in. Your funding from HUD, then we’re getting $10 million a year [in] sales tax on the East Side [from] the one-eighth cent City Economic Development Sales Tax — some of that money this year went into housing. So over a 10-year period, you get $50 million from the one-eighth cent sales tax, $40 million from the federal government, all of a sudden you’re to $90 [million]. Not to mention the time we’ve spent money like, I believe, $10 million on demolition of housing in KC, which breaks my heart because I would have loved to see $10 million instead spent on preservation. I just identified $100 million worth of funds for you. I think there are other ways we can look at this more intentionally, ways we can better spend, and I think that’s what the housing trust fund is all about.”
“I think we definitely need a local fund. I will tell you, sitting on this economic development committee for eight years, getting some of this stuff done, I understand the economics better than anybody else. Affordable housing on paper is more difficult to get financed by the bank. That’s why, in almost every instance, if you look at what we’ve done, it either involves HUD giving us money from the federal level or at the state level. If we had our own local fund, we wouldn’t have to worry as much. We wouldn’t be as dependent on the federal government or state. So I advocated a similar thing but the financing would be to take some of the surplus funds from different development projects that come back to the city … In the next decade we’re going to see quite a few of the larger downtown TIFs end and what that means is all the property built up is back on the tax base for the school districts, but a lot of times there’s excess money that comes back to the city. I’ve heard there might be one as much as $2 or $3 million [and] if we transfer that into an affordable housing fund, we could start building that up. I would also reach out to other private sources. We definitely need a local fund.”
“We’re going to have to make the commitment with the general fund dollars. We’ve made commitments to large-scale developers for luxury. We have to make the same commitment for affordable housing in the city. Everybody’s going to say, ‘Well, there’s no money in the budget.’ Well, there’s $1.6 billion in the budget. Again, we have to look at our priorities. Where are we spending money that we need to reallocate? The only money that we spend on housing comes from the federal government in the form of CDBG dollars, and that number is getting smaller and smaller. We have sales tax authority that we could use. The mayor’s currently wanting to use that for early Pre-K. I support early Pre-K, but the city has priorities of addressing its own housing crisis, and we have a shortage over 5,000 units.
I think we also need to look at how we leverage those CDBG dollars to be able to get folks to the table. In addition to that, working with the private sector, we’re not going to build 5,000 new units. It’s just not cost effective. We’re going to be looking at rehab and infill housing, and doing some partnerships with existing landlords where they will make a commitment to rent at affordable rates with some type of incentive…[The $75 million affordable housing fund] is a property tax. To be honest, it’s really a political question, and I think that there are many people throughout the city that may or may not necessarily agree with taxing their property to provide housing for other people. We do need to establish a fund of some sort. Again, there are a number of other ways to accomplish it other than a property tax increase.”
“It’s a day late and a dollar short. The other aspect of this that really bothers me is that I don’t just want to have funds. I want to have real projects that can be moved forward…We give a lot of incentive dollars on the basis of these projects that would not get done otherwise if we don’t give these incentive breaks…Going forward, entities like Cordish or other developers that are going to come to Kansas City, are going to be expected to do something else in addition to what they’re doing right now…My great hope and desire is that we’d have some of these projects close to shovel-ready. In other words, ‘Here’s some of the things that we want to do, and we’re going to offer these developers some of these types of projects.’ If they want the latitude to do something different, that’s fine, but they’re going to have to give back to the city that gave to them. Inside of all of that I think are some strong housing solutions. My dream is to rebuild Kansas City and work on the housing issues that we have one block at a time. Now, that doesn’t mean we just do one block, but that we focus on each block and have sort of an interesting subset of solutions…We would go at it with a model like Habitat [for Humanity] where we would build two or three houses. We would rehab two or three houses and we would help the other neighbors on the stage here.”
“I was the one who actually submitted the resolution in 2017 to get the housing policy discussion going. And so that’s what we’re into right now. As far as the $75 million, my attitude is that you’re going to need that. The real question is, How badly do you want it? Because those out there who think that $75 million is just going to kind of fall out of the sky — I have to remind them that back in the last term, we were talking about just doing a $5 million fund, which we never were able to achieve. The real question is not, Do you want the fund? It’s, Are you willing to pay into the fund? Are we willing to, for example, tax ourselves? I submitted a resolution that’s now sitting in the Housing Committee that would put on the ballot next November a … property tax raise [that would bring] about three $3.8 million a year so that you can actually inject the type of money that you need to actually make a difference in affordable housing. We’ll see if the committee actually moves it forward to the council and if the council wants to put it on a ballot later this year. But the whole thing is — if we’re serious, then that means that the citizens of this city are going to have to say they’re serious. I’d like to get them the opportunity to weigh in if they are or not. But quite honestly, I do not see how you could possibly reach that number in any meaningful sense without asking a taxing question.”
“The problem is there is no plan right now to get [it] funded. Basically, they keep going back to the city manager to find funding for it. So, I applaud the efforts for housing and to do something with 18th and Vine, addressing investment on the East Side — that’s important. Unless there’s a hard effort to figure out where the funding for that is, they are just presents under the tree that have been wrapped, with nothing inside. So, I think it’s really hard work for the next mayor to figure out how we bring real funding to make these things happen. And the reality is there is just not enough money in government to solve all the problems. What we’re going to have to do is public-private partnerships. And that means our government working very closely with private businesses and putting together a sound policy that encourages private investment, because that’s where the money is this in this world, it’s in our free markets. Safe, sound, policy, and government, and having a leader with a vision helps to get those investments.”