It’s off to the races for an $83.4 million office building that Fidelity Security Life Insurance Co. has proposed for a headquarters relocation near Crown Center.
The Kansas City Council voted 11-1 Thursday afternoon for a $9.7 million incentive package for the 11-story tower that the longtime local insurance company sought to build at Main Street and Grand Boulevard, south of 27th Street. Councilwoman Ryana Parks-Shaw opposed the package.
According to the incentive approval, Fidelity Security Life will not receive public funding until the City Council approves the final design.
To that end, before the vote, Councilman Eric Bunch successfully amended the incentive measure with nonbinding language that officials will “carefully consider” the building’s effect on policy goals and the community before signing off on design or rezoning.
Bunch said he found it frustrating that the council did not give such consideration to the design for the building at 1400 Baltimore Ave., originally meant for Waddell & Reed Financial Inc., which also saw its incentive request approved.
Fidelity Security Life looks to anchor about two-thirds of the 27th and Grand building, or 100,000 of its total 153,800 square feet, and move 300 employees from its 3130 Broadway offices, where it has resided for 50 years. Those offices are about three-quarters of a mile from the vacant 2.6-acre Crown Center site, which Fidelity Security Life intends to buy from Hallmark Cards Inc. for $6.93 million.
The balance of office space is to be rented out at $45 a square foot, thought to be a new market high and potential boon for out-of-market companies in need of Class A space on a fast timeline.
A number of Union Hill residents and local taxing jurisdictions, including Kansas City Public Schools and the Kansas City Public Library, had pushed back against Fidelity Security Life’s incentive request. Several objections centered around the 400-space parking garage bundled into the first five stories.
Bunch said the Fidelity Security Life proposal exemplifies the city’s need to discuss how development projects requesting to build new parking can come up with space-sharing strategies.
“There are literally thousands of parking spaces within two blocks of this project, and here we are, incentivizing a project with 400 parking spaces,” he said, later adding, “This is a good example of where, if we had started a lot earlier, I think we could have had some really serious conversations.”
Fidelity Security Life won a 15-year property tax abatement — at 70% for 10 years and 30% for five years — and a sales tax exemption on construction materials. A financial analysis from third-party consultant SB Friedman Development Advisors found incentives necessary to make the project viable but noted that a shorter 10-year abatement would have “a minimal impact on returns.”
Parks-Shaw reiterated that finding Thursday afternoon and expressed concern “that we continue to incentivize big business and not (allocate) dollars to our taxing jurisdictions on behalf of our students, and those … needing the mental health levy dollars and the library.”
Although Fidelity Security Life has not publicly raised the possibility of moving away from Kansas City, Councilman Lee Barnes Jr. said during a committee meeting earlier this month that companies looking to build new offices always have the opportunity to do so elsewhere.
Also requested as part of the deal are $3 million in state incentives through the Missouri Works program.
Because the offices remain under design, SB Friedman recommended that the city check in at the project’s completion, so incentives can be “recalibrated” if design costs end up lower than originally projected. Fidelity Security Life has consented to clawback provisions based on capital investment and annual payroll targets to be outlined in a city agreement.
Pending city approvals, developer VanTrust Real Estate LLC could break ground in October and complete construction in 22 months.
© 2023 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated January 24, 2023) and Privacy Policy (updated January 24, 2023). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American City Business Journals.