$19.3 million handout for luxury apartments no way to solve Wichita’s housing crisis | Opinion

You can’t cover as many City Council meetings as I have without developing a pretty high tolerance level for absurdity.

But this week’s council action to subsidize the building of apartments and a hotel by the Arkansas River, adjacent to Riverfront Stadium, has exceeded even my threshold.

The council will be giving up $19.3 million in diverted taxes and capital improvement funds to help the developers, Overland Park-based EPC Real Estate Group, make as much as they think they ought to for building a 150-unit luxury apartment complex, a 155-room hotel, a 260-space garage and 10,000 square feet of retail space.

About $11.3 million of the project budget will come from diverting future property taxes away from paying for the stadium and toward paying for the private developer’s private project.

Part of that public money will go toward shoring up a planned parking garage so it’s strong enough that luxury apartments with a rooftop pool can be built on top of it. Then, the city will buy the garage, consuming another $8 million of taxpayer money.

Oh, and I almost forgot, the city gave the developers the land for the project essentially for free — prime riverfront real estate for a dollar an acre.

Let’s put pencil to paper: The project is estimated to cost $110 million to complete. Of that, $19.3 million is city subsidies — plus the land, and who knows what that would have been worth if the city just sold it outright?

So, City Hall is paying at least 17.5% of the cost of the project, to ensure EPC can earn at least an 8.5% return on its investment.

How that works, I have no idea.

A little background: When city officials decided to spend $75 million to build a new stadium to replace the aging Lawrence-Dumont Stadium and attract a minor-league baseball team, they threw in an extra cookie for the team, four acres of riverfront land to be developed into a “baseball village” that was supposed to be mainly restaurants and shops.

The idea was that the sales tax from the village would help pay back the cost of the stadium, which was largely funded by Kansas STAR bonds, which essentially allow cities to borrow against a project’s future sales taxes to pay for public improvements.

The team changed hands, but the extra land didn’t, and then it did, and the original baseball village concept morphed into a project that was mostly a hotel and office space. The apartment house is the latest mutation.

Wichita does this kind of stuff all the time. What makes this project especially egregious is it’s being portrayed as making some kind of headway in the city’s housing crisis.

The switch from office to residential was evangelized Tuesday by Jeff Fluhr, president of Downtown Wichita, the private organization that acts as the city’s economic development office.

“This project is a very critical and timely next step in the development of the riverfront,” Fluhr told the council. “If you look at the residential, as we talk about the biomedical campus in our downtown, which will also break ground in 2024, we now have, as a result of that project and other demand, anywhere between 4,000 and 5,300 residential units that we need over the next five years.”

Since the COVID-19 pandemic, there’s a glut of empty office space downtown. But last year, Fluhr was cheerleading just as hard when this was an office project.

“This project helps us build a market demand that is there in office,” he said then. “We are backfilling space (downtown), but we also need new product like this to be able to offer to companies that are here, but also those that we are trying to attract.”

He called it “a critical next step in the development of our downtown.” That’s almost the same wording he used at this week’s meeting, so apparently the “critical next step” is whatever the developer happens to want to build at any given time.

And who’s this “we” who “need” this that he keeps talking about?

It isn’t me, and probably isn’t you either.

The majority of “we” who live and work in Wichita won’t ever be able to afford to live in the ballpark-adjacent apartments.

EPC has already built another tony apartment house nearby, the 225 Sycamore building. According to apartments.com, the rent for a two-bedroom unit there runs from $2,182 to $3,739 a month.

Assuming a similar price structure, that would make the units in the ballpark development affordable housing for people making between $87,000 and $150,000 a year.

This, is in a town where the median household income is about $56,000, and where a third of residents — including 57% of Black Wichitans — can’t even afford $850 for an ordinary two-bedroom apartment, according to a consultant’s report at a council workshop last year. They have to either spend a high percentage of their income on housing, cutting into other necessities such as food and transportation, or settle for lower-cost substandard housing.

The consultant also reported there are 51,000 families who could qualify for subsidized housing, and 7,000 who are actually getting it.

That’s the real housing crisis this city needs to solve.

So far, City Hall has dedicated a measly $5 million in American Rescue Plan Act money to affordable housing. Meanwhile, they’re selling off the city’s public housing stock to developers and privatizing that.

I guess we the people do get the deed to another downtown parking garage. City staff and council members ballyhooed that the ballpark-adjacent garage will be publicly owned, and could be made available for public parking.

I’m not sure how that works either, since the development has 305 apartments and hotel rooms that will have first call on parking spaces, of which there will only be 260.

And by the way, when’s the last time you ever heard of anybody coming to Wichita who couldn’t find a hotel room?

Also, so long river view, it was nice seeing you.

The city expects to get $39 million from the project’s increased property taxes over the next 20 years, to pay down part of the stadium debt. But it’ll take a while, because developers get paid first.

Basically, Wichita got rolled again.

The city needs tax increment revenue to pay off the stadium without having to raise property taxes elsewhere.

Developers know that, and can leverage it into generous concessions from City Hall in exchange for agreeing to build something for their own profit

This is the last time you’ll see this kind of thing happen. Until the next time.