The developers of a controversial, nearly $2 million Independence Avenue retail project met with Pendleton Heights residents on Tuesday, July 10, though the two sides remain at odds on a project that has received steadfast pushback from community stakeholders.
An 11,000 square-foot retail development has been proposed at Independence and Prospect, in a lot made vacant by a tragic October 2015 blaze that claimed the lives of KCFD firefighters John Mesh and Larry Leggio. That same fire destroyed a previous mixed-use development – both retail and residential – that once stood at the northeast corner of the intersection.
Neighborhood leaders in Pendleton Heights oppose the project because it does not provide the second-floor housing that neighborhood leaders would prefer. However, the developer behind the project said during the July 10 meeting that second-floor apartment units would not be economically feasible without requiring rent of $590 for 300 square-foot studios, $916 for 510 square-foot one-bedrooms, and $1,122 for two-bedroom units that would average 645 square feet.
Though M.A.C. Corp’s estimates for turning a profit on new residential units might have seemed high to some in attendance, M.A.C. Corp President and Senior Project Engineer Robert Andrew stood firm behind his statement that second-floor apartments were not economically feasible.
“We can’t go out there, nor would any of you, and build a property with no return on investment,” he said.
Attendees also questioned M.A.C. Corp’s figures related to typical market rate housing in the Northeast. M.A.C. Corp’s research suggested that market rate in the area is $0.94 per square-foot for one-bedroom units and $0.67 per square-foot for two-bedroom units. At $0.67 per square-foot, one attendee took the 645 square-foot projection for two-bedroom units at the site to infer that market rate was being estimated at a minuscule $432 for area two-bedroom units.
Given a chance to clarify after the meeting, M.A.C. Corp Assistant Project Manager and Engineering Technician Eric Solomon said that the market rate estimate for area two-bedroom apartments was actually derived from a collection of larger units (1,000 to 1,200 square feet) located on Prospect, Montgall, St. John and Maple, which averaged a monthly rent of $.063 per square foot and topped out at $0.67. Those two-bedroom apartments charged between $600 and $800 in monthly rent, depending on size.
Andrew estimated, however, that the developer would need to charge $1.60 per square foot in order to meet the minimum return on investment required by the project’s lender.
“The $1.60 per square-foot rent was based on getting a minimum return on investment that the lender would feel comfortable with in order to finance that project,” Andrew said.
What’s more, Andrew indicated that the property owner – BA Properties, LLC, a group that also owns the Bao Anh Jewelry store at 1835 Independence Avenue – has no interest in taking on the challenges of apartment management. The issue of second-floor residential units was a popular topic at the meeting, but M.A.C. Corp is ultimately operating at the behest of the property owner.
“Their response was, ‘No, we really don’t want to be in the apartment business,’” Andrew said.
At the July 10 meeting at Kansas City University – held during the Pendleton Heights monthly neighborhood meeting – 1st District Councilman Scott Wagner served as a moderator as M.A.C. Corp answered questions from neighborhood residents.
The first question came from John Bordeau, who asked M.A.C. Corp what the project budget is, and how it’s being financed. Andrew offered up an estimated price tag of $1,984,000, and revealed that the project was being paid for through traditional bank financing. Andrew conceded, however, that the estimated project costs haven’t been updated to reflect the recent tariffs proposed by U.S. President Donald Trump.
“We’ve had a $25,000 increase in steel costs as a result of those tariffs,” Andrew said. “We haven’t updated it, but it’s approximately $2 million.”
Mary Cyr, Director of Northeast Alliance Together (NEAT), also questioned Andrew. Cyr, who testified against the project on behalf of the Northeast’s six neighborhoods during a June 20 Planning, Zoning and Economic Development committee meeting, asked Andrew why the property owners weren’t pursuing low-income tax credits for the project.
“It’s competitive, and there’s X number of dollars allocated for those incentives, and your timing has to be perfect,” Andrew responded. “It just didn’t seem applicable to what we were doing.”
The planned 11,000 square-foot structure conforms with the Independence Avenue overlay district, the Pendleton Heights historic district, and Kansas City parks and boulevards standards. It includes more than 30 parking spots, a stormwater detention basin, a front-facing patio, solid wood fencing along the north end of the property and a fully-enclosed trash area surround by a brick wall. Developers are also intent on constructing a monument in honor of Mesh and Leggio, the fallen KCFD firefighters.
Solomon described how the floor plan would be laid out.
“We have up to nine units proposed for this building,” said Solomon. “The average size is about 1,500 square feet.”
Certain tenants wouldn’t be allowed at the development, including adult media stores, day labor agencies, taverns or night clubs, smoking lounges, payday loan stores, pawn shops and plasma center. Target tenants include businesses that offer frozen yogurt, pet grooming, bike sales, dry cleaning, tax prep, and physical activities like yoga or martial arts. M.A.C. Corp told attendees that it has already identified prospective tenants that include a coffee shop, a boutique retailer, a diner/ice cream shop, an Asian/sushi restaurant, a beauty supply store, and a computer/electronics store.
“You have to have compatible and complimentary tenants,” Andrew said. “We don’t want to directly compete; we want to complement other tenants in the area.”
Solomon and Andrew wouldn’t reveal the names of potential tenants for the site, but suggested that at least some prospective businesses have signed letters of intent, should the project eventually be approved by the City Council.
That scenario is no formality, it should be noted; now more than a year removed from gaining approval from the City Plan Commission, the project was held by the KCMO Planning, Zoning and Economic Development committee last month. At the time, committee members suggested that the developers needed to do more to convince surrounding neighborhoods to embrace the project.
“If the community does not embrace a project, then the project doesn’t happen,” said 1st District Councilman Heather Hall during the June 20 committee meeting. “If it does happen, then it’s not successful, because the community will not shop there.”
Neighborhood residents who hold out hope for residential units at the site may still apply pressure on City Council members who reside on the Planning, Zoning and Economic Development committee to reject the proposal. That said, the project developers have previously indicated that BA Properties, LLC has no intention of selling the property, even if their current proposal is rejected.
“For the foreseeable future, she’s not looking to sell the property,” Solomon said of Anh Le Duong, who represents the ownership group. “It’s basically a giant pit in the neighborhood that isn’t doing anybody any good. The longer this plays out, the worse it is for everyone.”
If BA Properties, LLC truly is willing to play the long game – by simply holding the property as a long-term investment even without a retail development on site – then the site could remain vacant for years to come.
The proposal will go back before the City Council’s Planning, Zoning and Economic Development committee on July 25.