Derby multi-family development seeks tax incentives for affordable housing
A heavily subsidized, nearly $30 million multi-family development in a south Wichita suburb could receive additional tax cuts if the Derby City Council approves incentives next week — even though the developer said he’s building it with or without the incentives.
The sales and property tax breaks would cost city, state, county and the school district just over $3.3 million over 10 years — about $913,000 from Derby, $558,260 from the county, $635,435 from the Derby school district and more than $1.2 million from the state, according to updated number from the city. The development is also receiving about $18 million in tax credits from the Federal and State Low-Income Housing Tax Credit program.
The proposed Stone Creek Development at Triple Creek and Patriot Avenue in Derby is seeking industrial revenue bonds and a 60% property tax abatement for the next ten years as well as construction materials sales tax exemption from the city of Derby.
The project is a multi-family development poised to offer 144 affordable housing units if the incentives are approved on July 14. If not approved, the development would change from a joint apartment/duplex development to only apartments and the number of affordable housing units would go up to 174, reaching the maximum allowable density for the area.
“We want to provide a safe and affordable place for people to call home, and these incentives really further that ability to do so,” the applicant, Shane Pullman, told The Eagle.
One hundred units would target those who make less than $52,140 annually and 44 of the units will be offered to those who make less than $38,600 annually, according to Pullman.
“If you want to have income-restricted, rent-restricted properties to be more affordable, you have to incentivize them to do that,” Kiel Mangus, Derby’s city manager, told The Eagle. “Otherwise, what’s the incentive for the developer to do that?”
According to Pullman, the rent on the affordable housing units would range from $739 to $1,174, depending on the unit.
Twenty-two two-bed, two-bath units would rent for $739; 22 three-bed, two-bath units would rent for $845; 52 two bed, two bath units would rent for $889; and 53 three bed, two bath units would rent for $1,174.
The incentives would mean some oversight through a development agreement, Mangus said.
“The benefit is we can put requirements on the developer, so we can say . . . you have to make sure you maintain the parking adequately, and the trash and the lighting, you have to meet regularly with our police department and talk about public safety issues, and if they’re not meeting the requirements of the pilot, then the incentive can go away.”
The total incentives from Derby would equal $913,237.
“Right now on that lot, the city gets . . . $284 in city property taxes in 2025 so even when the developer’s paying 40% . . . he’s going to pay about $54,000 a year in property taxes, which is about $53,600 more than (the city gets) right now,” Mangus said.
“It’s not about a financial thing, because we’re still going to get more money out of it.”
What happens if the council does not approve the incentives?
The zoning for the now-empty, nearly 6-acre lot already allows for multi-family, Mangus said.
“If the developer wasn’t asking for this incentive for affordable housing . . . they could have got a building permit (and) just started building these units,” Mangus said.
So, even without the incentives, Pullman said building will move forward “no matter what.”
“If we do not receive the incentives, we’ll just have to pivot in a different way,” Pullman said.
The property has already been a concern among some residents, specifically around density in the neighborhood, which is home to Stone Creek Elementary School.
Debbie Ternes has lived in Derby since 1991 and has lived in the Stone Creek neighborhood for the last four years. She said density remains an issue for her, especially keeping in mind the elementary school during peak traffic hours.
“You’re dumping a lot of people off, especially going to work and coming from,” Ternes said. “That’s a lot of traffic right there, and you know, kids walk to school. We believe that that’s too many cars for this area, as far as what the roads are built for.”
While Pullman said he does not view density as a problem, the project has agreed to add an entrance and exit to mitigate possible traffic issues in the neighborhood.
“There wasn’t an immediate concern from any engineers about the traffic flow rate,” Pullman said.
Justin Thull has lived in the Stone Creek neighborhood for the last six years and said he doesn’t see a large apartment complex fitting in with the neighborhood.
“That’s just kind of not the right fit for that area, I think they’re trying to cram a little too much for what that’s really meant for,” Thull said.
Ternes said she also has concerns about granting the incentives.
“Everybody would love to have some kind of tax exemption, (but) that’s not possible,” Ternes said. “Derby is just tired of paying high taxes, and (having) somebody come in do this kind of development and not be putting their share.”
Thull shared similar concerns.
“They’re trying to bring affordable housing, I know that’s important too, but you know, at the same time, they’re getting breaks from the federal government, they’re getting breaks from the state, why do they need the extra . . . from the city?” Thull asked.
Mangus said it’s a balance for the City Council.
“Those homeowners have personal property rights and the developer bought this land with the zoning on it, knowing he could do this and has private property rights. We have to consider that when we go through these processes,” Mangus said.
The city of Derby will hold a public hearing and vote on July 14 at their city hall chambers.
“We want a successful and beautiful product as much as anybody surrounding (the property),” Pullman said. “I think it’s important to note that having local developers, having Kansas Housing Resources, having a tax credit investor, and then especially if we’re granted the city of Derby incentives, there is so many eyes on this project to ensure not only a success but (that) its upkept to the highest standard.”
