KANSAS CITY OPPORTUNITY ZONE INVESTMENT PROSPECTUS KANSAS CITY, MO INVESTMENT PROSPECTUS

KANSAS CITY OPPORTUNITY ZONE INVESTMENT PROSPECTUS KANSAS CITY, MO INVESTMENT PROSPECTUS

Vision Stimulate economic activity and jobs in areas of disinvestment in Kansas City in ways that: 1. Build wealth 2. Increase economic mobility... 3....for residents currently living in the zones 2

Our Process 1. Brought together key stakeholders for dialogue focused on improving the livelihoods of Opportunity Zone residents. 2. Conducted interviews with dozens of practitioners to begin lastmile evaluation of combinations of projects, both operating businesses and commercial real estate. 3. Solicited feedback from local working groups to build deals that meet both community and investor needs. 4. Interviewed investors to bridge the gap between community advocates and capital allocators 5. Resident engagement: communitybased organizations engaged residents both on overarching values for investments and specific deals. 3

Local Goal Use the Opportunity Zone potential to improve: 1. 2. 3. 4. The system of community development: new and innovative financial tools for affordable housing and neighborhood economy, capital pools, and structures Local business growth: an entrepreneurcentered approach to economic development Workforce development: Building wealth for residents through quality jobs and equity ownership The alignment of public, private and civic capital: provide one stop shop process for inclusive projects 4

Timeline November December January February Community feedback Information gathering March April Refined prospectus, community approach, and interactive tools 3/18: Present to national investors May June July Continued resident feedback through mysidewalk tool Development of streetcorner deals June 2627: KC Investor summit and city tour August September Creation of onestop shop for KC; Focus on workforce development and entrepreneurship training. October

Our Zones Zone types: Type one: Industrial Type two: Greenfield project Type three: City street corner 6

Zones Socioeconomic Overview POVERTY MEDIAN HOUSEHOLD INCOME % ED BA+ % SOME COLLEGE % NO HS DEGREE % UNDER 18 % OVER 65 UNEMPLOYMENT 6% 12% $59,344 35% 30% 9% 25% 13% 2.8% 10% 7% 18% $47,489 33% 30% 11% 23% 12% 3.0% 57% 17% 11% 36% $25,004 14% 28% 23% 26% 11% N/A State (MO) 12% 4% 4% 15% $49,593 28% 30% 11% 23% 15% 2.6% US 13% 17% 13% 15% $55,322 30% 29% 15% 23% 15% 4.1% BLACK HISPANIC FOREIGN BORN Metro 13% 9% City 29% OZones (Sept 2018) 7

City Street Corner Residential History and culture in neighborhoods Diverse housing and amenities We are aiming to invest in a dense ecosystem of nearby businesses, properties, and residences with the potential to transform a neighborhood. 8

Focus Area: Historic 18th & Vine Neighborhood 9

Historic 18th & Vine Neighborhood Legacy of vibrant music and arts culture: historic jazz district Historically dense network of locally owned businesses Recent redevelopment traction by public & private partnerships: Negro Leagues Baseball Museum, Gem Theatre, American Jazz Museum 10

Historical Legacy, Local Challenges & Hidden Assets Many focus area neighborhoods have: Lost substantial jobs and residents Significant vacancies Limited economic activity Despite these challenges, the areas also have: Significant public and civic investments Desirable location close to Kansas City s central business district Worldclass connectivity 11

Historic 18th & Vine Street Corner Momentum 10+ neighborhood associations and communitybased groups partnering to revitalize area Low financial investment historically, high vacant property and investment opportunity City contributions spurring private investment New $21M Urban Youth Academy 12

Sample project overview: Historic 18th and Vine Community desires: Mixed affordable housing Infill, not redevelopment Authentic collaboration between community and investors Investments integrated with community needs and desires Support for local wealth building and promoting the social and economic wellbeing, inclusion, and mobility of neighborhood residents 13

Transactions with synergistic effect, versus oneoff deals Keystone Innovation District UNI Townhomes Forest Wheatley Hospital Movement KC City & Street Dept. Buildings 14

Four shovelready real estate projects in the 18th Street Corridor Forest Wheatley Hospital UNI Townhome Project City & Street Dept. Buildings Historically the largest black hospital, and a community hub with a distinguished history. Abandoned for 47 years. New build (60% market; 40% affordable). New build (commercial and green space) requires $3M. Phase 1: $1.5M equity need $500K total equity possible for growth. 21k SF of historic space will be converted into retail/ commercial; chance to build housing. Connects many neighborhood projects. Phase 2: $500K OZ equity to complete purchase of 85 residential & 5 zoned commercial properties Construction is underway. Movement KC Single family housing. 10 market rate homes have been presold. Planning in process. Developer open to OZ equity to move faster. 15

Seven operating businesses ready to take on investment capital High growth tenants not in a Zone and but would move with equity investment Resident Management Public Works Software Open Source AI MBE & Veteran technology repair Main Street tenants Already operating in Zone Communications / Art Destination Restaurant Experience Civil Engineers 16

DRAFT PROJECTIONS A neighborhood investment portfolio One pool of capital, 11 deals in the 18th & Vine focus area, 3 scenarios Gentrification scenario: no Optimal scenario: grant Traditional community grant support, no support, community buyin, development scenario: affordability investment TOTAL CAPITAL $15M $15M $13M Equity investment (properties) $3M $3M $2M Equity investment (companies) $4M $4M $ Debt investment $8M $6.5M $11M Grant support $0 $1.5M $0 % affordable (housing and tenants) 0% 6070% 4050% Return on equity IRR (preoz) 11% 15% 9% Return on equity IRR (postoz) 16% 22% 12% Is this likely to raise capital? Yes, but no affordability Yes, with affordability (needs grants) Existing state: unlikely to raise capital 17

Emerging Transformational Projects Zone Type Project Working Name Streetcorner The Offices at Overlook Streetcorner Prospect Business Corridor Streetcorner Hardesty Streetcorner 31st and Troost Streetcorner Ivanhoe Lead Organization Heartland Commons 18

Emerging Transformational Projects Zone Type Project Working Name Industrial Oxford on Blue Industrial Electric Park Greenfield Martin City Distribution Hub Lead Organization 19

System change for communities Initial lessons learned from Kansas City s efforts: 1. Onestop shop: Cities can provide a portal for entrepreneurs to gain technical support and investors to source deals 2. Demystifying finance. Creating shared definitions of investor ready and community enhancing projects 3. Capital stack: alignment of public and philanthropic incentives with community processed deals 4. Land ownership. Governmentowned property is an asset that can drive equity 5. New institutions. Communities need new financial mechanisms and structures for example, creating a new CDFI with capacity to manage equity vs debt 20

Thank you! Come join us in KC on June 26 and 27 For more information visit kcopportunityzone.com 21