Port KC may award tax breaks for $55M apartment project, despite St. Louis developer's murky record
The Port Authority of Kansas City forged ahead with a $55 million apartment project at Berkley Riverfront despite concerns raised about the project’s developer.
The Port Authority's development committee voted 5-1 on first round approval of financing for St. Louis developer Lux Living’s proposed 251-unit apartment project on Monday. The vote followed a discussion about the due diligence the Port Authority, or Port KC, conducted on Lux Living and its chief executive Victor Alston, both subjects of recent news articles about their business practices and legal issues.
Kansas City Council member Kevin O'Neill voted against the project.
On Tuesday, O'Neill told the Midwest Newsroom he has concerns about Lux Living’s business practices in St. Louis. He said stories of tenants moving into unfinished units and Lux Living’s legal issues has given him pause.
"Lux has had a rough go of it and I understand that sometimes when people start, they grow fast and things get lost and shuffled around and bad things happen," O'Neill said. "But I just don't want another cheap apartment complex in the city that's built poorly."
Others criticized Lux Living at Monday’s meeting, as well.
Kansas City Public School District policy strategist Kathleen Pointer called various news reports about Lux Living "incredibly concerning" and reiterated concerns about the length of the tax exemption — 25 years — that the developer sought for the riverfront project.
On Monday, the Midwest Newsroom published a report about how Lux Living did not disclose in a questionnaire provided by the Port Authority the existence of Alston’s 2017 settlement with the Securities and Exchange Commission. That settlement resolved allegations, which Alston did not admit or deny, of accounting problems at Ixia, a California network company he ran until 2013. The SEC ordered Alston to pay a $100,000 fine and banned him from serving as a director or manager of a public company for five years.
The report also found the developer did not disclose recent lawsuits in response to another question in the Port Authority’s application form.
Council member Henok Tekeste raised concerns about the findings of the Midwest Newsroom investigation.
Port KC lawyer Brian Rabineau said Lux Living wasn’t required to disclose the lawsuits or the SEC settlement and ban.
Rabineau said the reporting “brought to light” a need for more aggressive vetting in the disclosure process.
“Since then our development application has been updated to be much more granular,” Rabineau said. “If this project was coming forward to day that is something that would have been disclosed or required to be disclosed — but at the time it was not.”
A recent article in the St. Louis Post-Dispatch described tenants of Lux Living’s St. Louis apartment building, The Hudson, complaining about living in unfinished apartments, as well as maintenance and security issues.
Alston could not be immediately reached for comment.
Krishan Purvis, senior development manager for the Port Authority, said on Monday he traveled last week to St. Louis with Port Authority chief executive Jon Stephens to tour Lux Living’s properties.
"We didn't have any evidence to substantiate the claims that were made in those articles," Purvis said. "We did not see any of that on site — in any of the properties we were at — at all."
However, he said that didn't make the reports false and noted there were complaints by tenants noise and unfinished units.
Purvis said Lux Living officials admitted to making mistakes at The Hudson when they moved tenants into unfinished units, adding the developer was trying to "professionalize" its business practices.
Rabineau said the agency would take steps to protect itself by adding rules into the development agreement with Lux Living. He said the new rules will allow the port authority to intervene if complaints and issues arise at the development.
Lux Living could have its tax exemption pulled if issues were to persist, but Rabineau said that would be a bad outcome for all parties.
Even so, O'Neill said he remained concerned with the amount of workers Lux Living pays a prevailing wage. Furthermore, he said he's unsure that a developer with Lux Living's reputation can build a building that will last.
"I'm still not sure I trust that developer," O'Neill said. "It disappoints me when I find developers don't want to pay people on the job. They want to get all of their pay from the city and don't want to pay a prevailing wage to the workforce."
Purvis said Lux Living’s sister company that constructs its projects, Big Sur, pays 60 percent of its construction workers prevailing wage rates. The other 40 percent are non-union workers.
Purvis said Port KC also asked Lux Living about any labor disputes, but the developer didn’t have an immediate answer.
Several St. Louis labor unions regularly criticize Lux Living and Big Sur Construction, alleging Alston's businesses pay below the prevailing wage as well as poor construction and maintenance of their buildings.
John Kahrhoff, a representative wit the St. Louis electricians labor union, sent a letter on the union’s behalf urging Port KC to further investigate Lux Living and Big Sur's business practices ahead of Monday's vote.
“It is important to the working families in your community that you have all the facts when making your decision,” the letter read, noting the ongoing issues between Lux Living and five labor unions in St. Louis.
Jackson County Community Mental Health Fund Bruce Eddy said while he supports Lux Living's project and the possibility of affordable housing at the riverfront, he's concerned Port KC's vetting process is amounting to too little, too late.
"I don't oppose the project, I think it's great to have affordable [housing]," Eddy said. "I appreciate the post hoc work but that was based on a bunch of bad press."
This story comes from the Midwest Newsroom, an investigative journalism collaboration including IPR, KCUR 89.3, Nebraska Public Media News, St. Louis Public Radio and NPR.
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