Tonight at 7:00 pm, Kirkwood’s Community Land Trust is holding a meeting at Kirkwood United Methodist Church featuring Farrell Carfield, executive director of the Webster Groves Community Land Trust. If you care about Kirkwood remaining a place for middle-class families and ensuring that the people who keep it running can afford to live here, I’d encourage you to attend.
In the spirit of permanent affordable housing, today feels like the right time to float a related idea I’ve been chewing on for a while: A revolving loan fund in support of workforce housing.
When Double Eagle started angling for Chapter 100 tax abatement on the old public works site, I was ready to argue the Council should tell them no. That project is now moving forward without the abatement, which I think, on the whole, good news (despite my reservations about some of the specifics).
But digging into Chapter 100 I started to get excited. Kirkwood possesses a remarkably powerful set of tools: tax-exempt bonds, the ability to exempt publicly owned property from basically every tax under the sun, and a surprising amount of publicly owned land. What if, instead of using those tools to sweeten a private developer’s deal, we used them to build housing for the people who teach our kids and staff our fire stations?
The Problem
A first-year Kirkwood teacher with a bachelor’s degree makes $48,365 under the district’s 2026–27 salary schedule. Housing is considered “affordable” when it eats up no more than 30% of your income, which works out to about $1,200 a month in rent. Meanwhile, a one-bedroom in one of Kirkwood’s newer buildings will run you north of $1,800, and two-bedrooms regularly clear $2,500.
So the people we trust with our kids largely can’t afford to live near them. The same goes for many of our police officers, firefighters and city staff. That’s bad for them, obviously, but it’s also bad for Kirkwood. It makes recruiting and retaining good people harder, it puts more cars on the road at rush hour, and it hollows out the sense that the people who serve this community are part of it.
What I Do for a Living (Briefly, I Promise)
For my day job, I work at the Center for Public Enterprise (CPE), a think tank that helps state and local governments stand up programs like this one. Most of CPE’s housing work has been on something called a revolving loan fund, or RLF, a model first popularized in Montgomery County, Maryland, a well-to-do suburb of D.C. that faced a lot of the same pressures Kirkwood does.
The basic idea goes like this:
- A public entity issues bonds. Because they’re government bonds, investors don’t pay federal income tax on the interest, so the public borrows more cheaply than a private developer can.
- That money funds construction of new apartments, filling the most expensive slice of a project’s financing at a much lower cost.
- Once the building is finished and full of tenants, the project refinances into a long-term (lower interest rate) loan and pays the fund back.
- The fund then lends that same money out again for the next building. Hence, “revolving.”
In exchange for that cheap money, a share of the units carry below-market rents. The market-rate apartments in the same building help pay for them.
At CPE, we’ve laid out a few different ways a city can play this game depending on its size and capacity (our work in Green Bay, Wisconsin looks a lot different than our work in Columbus, Ohio). On one end, the public just lends money to private developers. On the other, the public actually owns the buildings and hires out the construction and management. As I’ll explain, despite its very small size, I think Kirkwood actually belongs closer to that latter end of the spectrum.
A Full Tool Shed
Here’s what makes Kirkwood an unusually good fit. We already have most of the ingredients lying around:
Public land: The city and the Kirkwood School District own a meaningful amount of property, including thirteen undeveloped acres owned by the district off Dougherty Ferry Road near Lindeman. Land is one of the biggest costs in any housing project, and a long-term ground lease means the public never has to sell it, thus ensuring permanent affordability.
Cheap financing: Both the Kirkwood Housing Authority and the city’s Industrial Development Authority can issue revenue tax-free bonds to cover the most expensive part of construction financing with low-interest debt.
Tax exemption: This is the part that made Chapter 100 so powerful, and so concerning when a private developer was asking for it. Publicly owned property doesn’t pay property tax, and materials used to build public projects are exempt from sales tax. The building could still make a modest payment in lieu of taxes so the library, fire and other taxing districts get something. There’s also a nice symmetry here: since the school district collects the lion’s share of property taxes, most of the “forgone” revenue would effectively be the district investing in its own teachers.
Cross subsidization: Market-rate apartments sit alongside the teacher units, and the profit earned from their rents help cover the cost of the discounted ones (since we’re basically just trying to break even).
Now, when I first sketched this out, I sort of assumed free land, expansive property and sales tex exemptions, and low-cost construction financing would be enough to make partnering with a private developer viable. But mostly, it isn’t. Kirkwood market rate rents feel expensive compared to the surrounding region, but in reality they’re only barely high enough to cover the cost of new construction. If you hold some of the units at below-market rents, the property simply can’t generate enough income to cover the 6% to 8% return a private investor is looking for.
If a public entity owns the building, however, you no longer need to generate that 6-8%. Rents only have to cover the mortgage, operations and a healthy reserve.
Who Runs It?
The natural candidate is the Kirkwood Housing Authority. Right now, KHA is a small operation that essentially runs one building: Kirkwood House, the 100-unit, six-story affordable senior apartment building at 385 S. Taylor. Taking on a new mixed-income development would require the considerable expansion on institutional capacity.
But statutorily, state law gives housing authorities all the tools they’d need to fill such a role. KHA can issue bonds, form affiliated corporations, partner with other public and private entities, and own and operate housing, as long as at least a fifth of the units go to lower-income households. In a teacher project, that requirement is easy to meet: entry-level teachers, paraprofessionals, custodians and bus drivers fit naturally.
Targeting school and city employees also solves one of the more annoying administrative problems with affordable housing: verifying that tenants actually qualify. When the employer already knows your salary, that gets a lot simpler.
As for capacity, KHA wouldn’t have to do it all on day one. A sensible path is to hire an experienced property management firm for the lease-up years, embed KHA staff alongside them, and hand the keys over once the building is stable and KHA has hit some clear performance benchmarks. Each new project then grows KHA’s portfolio and its staff, rather than starting from scratch every time.
“Isn’t the City Broke?”
Fair question! Kirkwood’s budget: Famously not in the best shape and the city just had its credit rating downgraded. The last thing the city needs is a KPAC or A-Mrazek sized liability on their books.
The good news is that this model doesn’t require one. Under Missouri law, housing authority bonds are not a debt of the city. That has to be printed right on the face of the bonds, and they’re repaid only from the project’s own rents. If a building underperformed, bondholders’ only recourse would be the building itself, not City Hall. The school district, which owns the land and benefits most directly, would carry most of the public risk and most of the reward. The city’s main jobs would be rezoning the property and being a good partner.
Why Stop at One?
The real promise of a revolving fund is that it revolves. Every dollar that comes back, whether it’s a repaid construction loan or surplus rent after the bills are paid, can go out the door again. Once Kirkwood had the machinery in place, a couple of next projects suggest themselves:
- Kirkwood House. KHA’s existing senior building could be renovated or expanded using the same fund, giving the authority a way to reinvest in the housing it already runs (and which is incredibly popular to the point of having a wait list to get in) instead of waiting on federal dollars that may never come.
- City-owned parking lots. The city infamously owns two surface parking along Jefferson Avenue, as well as several more scattered throughout Downtown. If the city doesn’t want to sell them for market-rate development, the lots could host mixed-income apartments, adding residents, foot traffic and customers for downtown businesses in the process. (Regular readers know I have opinions about surface parking downtown, but mark my words: these parking lots will be obsolete within five years given the coming rise of driverless cars.)
The Montgomery County experience tells us that each of these projects would be a little easier than the last: the legal documents already drafted, the staff already trained, and the fund a little larger.
Where to Go From Here
Now there are still a ton of questions about how this might actually work, but if the school district, KHA and the city are curious, here are some potential next steps:
- Gauge interest from the school board and KHA’s commissioners
- Bring in real legal and bond counsel with expertise in Missouri housing authority statutes to judge legal and fiscal viability
- Study potential sites. The 13-acre KSD-owned property at Lindeman & Dougherty Ferry has a lot of appeal, but is also one of the more environmentally sensitive regions of Kirkwood. Building lightly and environmentally consciously will be the only way the community supports this thing.
- You’d also likely want to bring in someone with some underwriting experience to run some real numbers. My back-of-the-envelope math suggests public ownership closes most of the gap that sinks a private deal, but I’m not really a math guy and someone should do some real modeling.
- Most importantly, you’d need to begin to talk to the community to see if there’s any actual desire for this thing, or I’m just talking out of my ass again.
Kirkwood spends a lot of energy reacting to what private developers want to build. This would be a chance to decide what we want to build, for the people who make this town work, on land we already own. That seems worth at least a conversation.