Vacant downtown KC office tower with controversial history will finally have new tenant [The Kansas City Star]

Kansas City Star (MO)

Blue Cross and Blue Shield of Kansas City announced plans Friday to move the company’s headquarters into the city’s newest, but vacant, downtown office tower.

The relocation comes as the company looks to house its growing workforce, according to a Friday statement.

“We have been a part of the Kansas City community for almost 85 years,” said Justin Unell, a spokesman for Blue Cross and Blue Shield of Kansas City. “We need a workplace that will evolve with us as we drive change to advance affordable access to healthcare.”

The company provides health insurance to residents on both sides of the state line. It calls itself the largest not-for-profit health insurer in Missouri and the only not-for-profit commercial health insurer in Kansas City.

The insurer will move less than a mile from its current offices on Main Street near Union Station. It will now occupy a heavily subsidized 18-story, $140 million tower at 1400 Baltimore Ave. The 15-year lease will allow the firm to house its 1,400 remote and office employees.

Building intended for Waddell & Reed

The office tower was designed for Overland Park’s Waddell & Reed, but was actually built and owned by a private developer called 1400 Baltimore Owner LLC.

Jackson County property records list executives from various companies controlled by Financial Holdings Corp. as being involved with 1400 Baltimore Owner LLC. Financial Holdings is an umbrella firm of companies, including the Americo Life insurance firm, controlled by the Merriman family.

But those plans fell apart after Waddell & Reed was purchased by Australia’s Macquarie Group while construction was ongoing.

The new tower was hotly contested by the Kansas City Council and downtown neighbors.

Officials announced the move after Kansas and Missouri governors agreed to end their long standing practice of employing tax incentives to lure companies across the state line for moves that do not create new jobs for the region.

State and city officials justified the move by saying Waddell & Reed was grandfathered in, as it had planned to hop the state line long before the Missouri-Kansas truce.

In December 2019, a divided City Council approved $35 million in local incentives in the form of a six-year, 75% tax abatement followed by nine years at 37.5%, a sales tax exemption on construction materials and a redirection to the company of earnings and utility taxes.

The company also won up to $62 million in incentives from Missouri for relocating jobs to the state.

Added together, the incentives made up about 70% of the overall project costs, though the company was required to move positions to Kansas City before those incentives kicked in.

Future of the tower

It’s unclear what, if any, incentives Blue KC will receive for its move.

City officials and officials with the Missouri Department of Economic Development could not immediately be reached for comment.

In 2020, downtown residents balked at the design of the tower, which they said was too focused on cars and provided a lackluster experience for pedestrians in the heart of downtown.

Backers of the project said the new luxury tower would help increase office rents in downtown Kansas City, which has seen many new apartments developed but relatively few office projects in recent years.

An attorney previously said Waddell & Reed would pay a rent of at least $40 per square foot — well above the norm for downtown or any part of the metro.