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Legislation #: 190498 Introduction Date: 6/20/2019
Type: Ordinance Effective Date: none
Sponsor: None
Title: Authorizing the City Manager to execute a Master Development Financing Agreement among the City, the Port Authority of Kansas City, Missouri and Power Tower Block 124, LP in relation to the construction of a Class A office tower and parking garage in the Power _ Light District; and recognizing this ordinance as having an accelerated effective date.

Legislation History
DateMinutesDescription
6/19/2019 Filed by the Clerk's office
6/26/2019 Do Pass
6/27/2019 Assigned to Third Read Calendar
7/11/2019 Councilmember Wagner (Second by Taylor) Move to Amend
7/11/2019 Councilmember Loar (Second by Shields) Move To Hold On Docket
7/11/2019 Held on Docket (7/18/2019)
7/18/2019 Referred to Finance, Governance and Public Safety Committee
6/20/2019 Referred to Finance, Governance and Public Safety Committee
8/14/2019 Hold On Agenda (9/18/2019)
9/18/2019 Advance Without Recommendation
9/19/2019 Councilmember Barnes Jr. (Second by Fowler) Move To Hold On Docket
9/19/2019 Held on Docket (9/26/2019)
9/26/2019 Held on Docket (10/24/2019)
10/24/2019 Held on Docket (11/7/2019)
11/7/2019 Councilmember Shields (Second by Robinson) Move To Re-refer
11/7/2019 Re-Referred Finance, Governance and Public Safety Committee
11/13/2019 Advance and Do Pass Second Substitute as Amended, Debate
11/14/2019 Councilmember Loar (Second by Robinson) Move To Hold On Docket
11/14/2019 Failed
11/14/2019 Passed

View Attachments
FileTypeSizeDescription
190498- 2nd CS for Ord..pdf Other 2015K Master Plan-Updated 11.13.19
190498 MASTER FINANCE AGREEMENT compare version CS for Ord 190498 As Amended.pdf Other 271K Master Agreement Compared Version
190498 MASTER FINANCING AGREEMENT clean CS for Ord 190498 As Amended.pdf Other 228K Master Agreement
Attach C CS Ord 190498 As Ameded.pdf Other 294K Attachment C
Attach B CS Ord 190498 As Amended.pdf Other 33K Attachment B
Attachment A CS Ord 190498 As Amended.pdf Other 2080K Attachment A
190498-Speaker Cards.pdf Other 70K Speaker Cards
190498 Ordinance 190498 fact sheet.doc Fact Sheet 48K Fact Sheet
190498 Master Financing Agreement v.22.pdf Other 244K Master Financing Agreement
190498 Financing Agreement.pdf Other 219K financing agreement

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SECOND COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 190498, AS AMENDED

 

Authorizing the City Manager to execute a Master Development Financing Agreement among the City, the Port Authority of Kansas City, Missouri and Power Tower Block 124, LP in relation to the construction of a Class A office tower and parking garage in the Power & Light District; and recognizing this ordinance as having an accelerated effective date.

 

WHEREAS, on January 10, 2019, the Council passed Committee Substitute for Ordinance No. 180982, As Amended, which authorized the City Manager to negotiate a development agreement with the Port Authority of Kansas City, Missouri and the Power Tower Block 124, LP for the development and construction of an office tower and a parking structure within the currently undeveloped airspace currently platted as Unit 3 of Block 124 K.C. Live Condominium; and

WHEREAS, in passing Committee Substitute for Ordinance No. 180982, As Amended, the Council recognized that there is an increasing unmet demand for new Class A office space in the Downtown Loop, to meet the needs of employers, particularly with respect to those wanting to be located in an urban environment with amenities that attract and retain a highly skilled and diverse workforce; and

 

WHEREAS, in doing so, the Council also recognized that the attraction of new and expanding businesses to the Downtown Loop serves multiple public purposes in that it, among other things, allows the City to retain and/or attract high quality jobs, generate additional new tax revenues, and support its existing financial investments and commitments in the Power & Light District; and

 

WHEREAS, there has not been a substantial multi-tenant office building developed in the Downtown Loop in decades, and office vacancy rates are steadily decreasing as a result of the conversion to other uses of older office buildings in the Downtown Loop; and

 

WHEREAS, the City Council passed Ordinance No. 040154 on March 3, 2004, which accepted the recommendations of the Tax Increment Financing Commission of Kansas City, Missouri (“TIF Commission”), as to the 1200 Main/South Loop Tax Increment Financing Plan (“1200 Main/South Loop TIF Plan”), approved the 1200 Main/South Loop TIF Plan, designated a Redevelopment Area, and contemplated the completion of multiple Redevelopment Projects for the purposes of remediating blight, including a new office tower; and

 

WHEREAS, on October 11, 2004, (a) the City and HRB Tax Group, Inc., formerly known as H&R Block Services, Inc. (“HRB”), executed that certain

Development Agreement dated October 11, 2004, as subsequently amended by that certain First Amendment to Development Agreement dated October 2, 2017 (collectively, the “HRB Development Agreement”) and (b) the City, as successor in interest to the TIF Commission, and HRB executed that certain Lease with Option, whereby HRB was granted an option to purchase Block 124, Unit 3 (“Option”), which Developer has since timely exercised; and

 

WHEREAS, the HRB Development Agreement obligates the City to finance the construction of up to 1,333 parking spaces to service the Block 124 Office Tower and the 1200 Main/South Loop TIF Plan Redevelopment Projects, and acquire additional real estate on which to locate such parking spaces, at an estimated cost of $69,000,000.00; and

 

WHEREAS, Redevelopment Project 7 of the 1200 Main/South Loop TIF Plan calls for, in part, the new construction of approximately 250,000 to 350,000 square feet of office space (“Block 124 Office Tower”) in the elevated condominium unit over the current retail space located generally on the southwest corner of 13th and Main (“Block 124, Unit 3”); and

 

WHEREAS, the City Council adopted Second Committee Substitute for Ordinance No. 040161, on February 20, 2014, and activated Redevelopment Project 7 of the 1200 Main/South Loop TIF Plan, so that the developer of Block 124, Unit 3 would be eligible to immediately receive the benefits of tax increment financing to implement Redevelopment Project 7; and

 

WHEREAS, since executing the HRB Development Agreement, the activation of Redevelopment Project 7, and in anticipation of the Block 124 Office Tower, the City and HRB have made significant financial investments in the Block 124 substructure, to provide structural support to the Block 124 Office Tower and a portion of the required parking garage; and

 

WHEREAS, in Committee Substitute for Ordinance No. 180982, the City approved an assignment of HRB’s development rights for the Block 124 Office Tower to Power Tower Block 124, LP or its affiliates (the “Developer”) in which HRB is a partner and consented to the assignment even though its consent may not be required; and

 

WHEREAS, the Developer’s proposal, if implemented, will reduce the City’s parking ratio obligation from 1,333 to 750 parking spaces, all of which parking will fit entirely within Block 124, Unit 3, and further reduce the City’s cost commitment for parking from $69,000,000.00 to approximately $36,000,000.00; and

 

WHEREAS, for the purposes of assisting the City in fulfilling its parking commitment to HRB, the City has requested that the Port Authority of Kansas City, Missouri (“Port KC”) establish an AIM Zone over Block 124, Unit 3, issue bonds pursuant to Chapter 68 of the Revised Missouri Statutes (“Port KC Bonds”) to contribute to the cost of financing the construction of a 750 space parking garage (“Port KC Parking Bonds”), and own the garage following the completion thereof and repayment of the Port KC Parking Bonds, whereby fostering implementation of the 1200 Main/South Loop TIF Plan and the continued development in the Downtown Loop; and

 

WHEREAS, the State withholding taxes generated by the net new jobs to be located at the Block 124 Office Tower as a result of the AIM Zone, when coupled with the net revenues anticipated to generate from the parking garage, are expected to satisfy 100% of the debt service requirements of the Port KC Parking Bonds, thereby greatly reducing the City’s long-term financial liabilities; and 

 

WHEREAS, to encourage Port KC’s participation in and implementation of the foregoing, the City desires to guarantee the payment of all debt service payments which may be due and owing on the Port KC Parking Bonds plus an annual payment to Port KC starting four years after the closing date of the garage bonds in an initial amount of $225,000.00 per year, which increases to $450,000.00 per year over the following three years and thereafter for so long as Port KC or its affiliate is the owner of the garage, along with all ancillary and administrative costs associated therewith, and those which result from creating and implementing the AIM Zone; and 

 

WHEREAS, pursuant to the Master Development Financing Agreement, Port KC intends to issue the Port KC Parking Bonds and Port KC Tower Bonds needed for this development and to thereafter invest any and all operating revenue Port KC derives from this project into its large multimodal port facility which has been identified as a priority and catalytic project for the industrial redevelopment of 415 acres located along the Missouri River east of I-435 in Jackson and Clay Counties; NOW, THEREFORE,

 

BE IT ORDAINED BY THE CITY COUNCIL OF KANSAS CITY:

 

Section 1. That the City Manager is hereby authorized to execute the Master Development Financing Agreement among the City of Kansas City, Missouri, the Port Authority of Kansas City, Missouri and Power Tower Block 124, LP in substantial form as that attached hereto as Attachment A, Second C.S. for Ordinance No. 190498, As Amended,

 

Section 2. That the City Manager is further authorized to execute any and all other related documents necessary for the City’s performance of its obligations set out in the above Master Development Financing Agreement.

 

Section 3. That the Council reaffirms its direction as set out in Committee Substitute for Ordinance No. 180982, As Amended, that in the event the documents authorized herein are executed and the Block 124 Office Tower and related parking garage are constructed, the public participation share in excess of that required for debt service shall be directed to the Housing Trust Fund and used for the purposes authorized with respect to such Housing Trust Fund, for so long as the City is entitled to receive the same. In the event that the Housing Trust Fund shall not exist or shall cease to exist, the share identified herein shall be directed to the Shared Success Fund.

  

_____________________________________________

  

Approved as to form and legality:

 

 

________________________________

Galen P. Beaufort

Senior Associate City Attorney