Tag: Unified Government Commission

Expectations are high for Indian Springs redevelopment

A sketch from Lane4 presented one option for Indian Springs redevelopment.

Window on the West

Opinion column
by Mary Rupert

The Unified Government Commission has re-started the search to redevelop one of the biggest empty places in Kansas City, Kan. – Indian Springs.

A preliminary redevelopment agreement with Lane4 was approved 5-0 at the April 28 UG economic development committee meeting, and is expected to advance May 15 to the UG Commission for further discussion.

But a first UG economic development committee meeting April 7 ended without an endorsement of the effort when Commissioner Jim Walters, whose background includes the Sporting KC stadium project, asked the developer for more specifics when looking at some sketches of options for the former shopping mall property.

“I haven’t given up on a landmark development,” Walters said April 7. “I just don’t see anything here that leads me to believe we’re aiming high enough.”

One of his points was that the property at I-70 and I-635 was a large contiguous urban site that just isn’t found anywhere. He said then he wanted to make sure that they weren’t locked into a lot of small developments that could be placed anywhere.

Walters has since met with Lane4, discussed concepts, and now has voted to approve the project moving forward. At the April 28 committee meeting, he said that after meeting with Lane4, he was on the same wave length, and he looked forward for the property to be a transformational development in the midtown area.

Officials said the options they presented earlier were not intended to be well-developed plans, but were just ideas for going forward with the project. George Brajkovic, UG director of economic development, said at the April 28 meeting that the earlier drawings were intended only to depict mass and scale for potential redevelopment.

At the April 28 meeting, Lane4 officials said they agreed with commissioners that their goal is not to short-sell the property, but to see what its potential is in the market. Lane4 officials said they would like to bring back a project the commission can consider after working on it for a year or so.

Commissioner Walters’ first reaction probably is the same of people all around the community. The community expects a lot from that redevelopment, maybe even a Village East or a Village Midtown. But the project will be different from the old Indian Springs mall, and residents need to expect that, too.

Currently, plans are not set in stone, according to officials, but some mixed use development including retail and residential is expected by the commission.

The UG has owned the 40-year-old Indian Springs mall and property since 2007, and it has been virtually vacant for decades, with some government offices located there. An earlier attempt to redevelop it in early 2009 as a retail area with a look that reminded one of Prescott Plaza did not go anywhere. The economy at that time was still somewhat weak. Another idea that had been suggested earlier for Indian Springs was a big community aquatic and fitness center; however, with its location at the intersection of I-70 and I-635, Indian Springs still remains an ideal retail location, and the commission opted for the retail-mixed use development.

Under the two-year agreement, Lane4 will serve as a exclusive broker and market the property to potential retailers, and it also can seek out developers for other parts of the Indian Springs property.  As the owner, the UG still would have control over what is approved for the property.  The types of tenants, according to the agreement, include categories such as grocery stores, department  stores, junior box stores, small shops, restaurants, banks and other businesses, and possibly senior living, apartments, flex space, governmental facilities, industrial, office or other uses.

“After talking with representatives of Lane4, I have gained lot of confidence in their vision and we can work together very well on the overall development of this property,” Walters said on April 28.

It is a good thing for expectations to be high for the Indian Springs redevelopment project, and the local government is to be commended for not giving up on redeveloping it. Lane4 is in a good position, constantly working with retailers around the metro area, to find good tenants for the property.   It will be a great adventure and a great task to do another excellent development at Indian Springs, and we wish them success.

To reach Mary Rupert, editor, email [email protected].

A sketch from Lane4 presented an option for Indian Springs redevelopment.
A sketch from Lane4 presented an option for Indian Springs redevelopment.

Dunn plans KCK location

The J.E. Dunn construction firm plans an expansion into Wyandotte County.

A company official presented a plan for a 22-acre site with a $9 million investment for an equipment rental facility at 240 S. 65th.  The project was discussed at the Monday night Unified Government Economic Development and Finance Committee meeting.

Kurt Peterson, an attorney with the Polsinelli law firm representing Dunn, said it was a significant expansion from Dunn’s Missouri operations into Kansas.  The site would eventually employ 65 persons, he said.

According to UG information, an 80,000-square-foot facility is planned, and it will consolidate three Dunn logistic divisions on the site.

The rental facility would lease equipment to Dunn’s affiliates and to third parties, Peterson said. Besides the $9 million investment, there also would be about $45 million invested in equipment, he said.

George Brajkovic, UG director of economic development, said the 22-acre site is currently vacant. The property currently pays the local government about $1,600 in taxes. He said the first year of revenues to the UG if the development goes in could be about $90,000 to $100,000. It will be a payment in lieu of taxes.

He said the project is applying for industrial revenue bonds, not backed by the UG, and it will qualify for a 65 percent abatement.

The site is very challenging, a long narrow piece of property with drainage issues, according to Peterson.

The development is expected to be considered by the UG Commission on May 15, and a public hearing will be held, Brajkovic said.

UG adjusts TIF policy

The Unified Government has adjusted its TIF policy after a staff analysis requested by commissioners.

Left with a number of nonperforming residential TIFs after the economic downturn of 2008, the UG has changed the way it handles the financial instruments in the future. The policy was changed at the April 24 UG meeting.

TIF stands for tax-increment financing, a method of government financing of developments. After the recession, Wyandotte County was left with some housing subdivisions that were started and not completed.

In general, the UG staff analysis found the UG’s commercial TIFs were doing better than its residential TIFs.

The staff noticed a trend that some of the older TIFs weren’t performing as well, and commission members had questions why the newer ones were better, said George Brajkovic, director of economic development for the Unified Government. This study of TIFs was initiated at the request of Commissioner Jim Walters. In the past, other commissioners, including Commissioner Ann Murguia, have addressed the subject of nonperforming TIFs.

A comparison showed that residential TIF debt in 2013 was $504,879, and residential TIF revenue in 2013 was $663,483, according to the UG staff report. There are some nonperforming residential TIFs, according to the study, while there also were some that have been successful and were paid off early.

Commercial TIF debt in 2013 was $3,773,879, while commercial TIF revenue in 2013 was $5,356,929, according to the report. The Village West and Kansas Speedway area was excluded from the study.

There are currently no recourse options on the current underperforming TIFs, according to the policy report. But on larger commercial TIF projects, some of the newer policy directives are being used and there are options to address any future downturn, according to the report.

Lew Levin, UG chief financial officer, described some “lessons learned” through the years with TIF projects. These lessons, now being used on TIF projects, have now been put into writing as guidelines for future use.  For example, one is to do feasibility studies  that would account for market fluctuations that might negatively affect revenue generation. Another is to prefer pay-as-you-go as opposed to general obligation bonds.

Also suggested by the policy directives is to require a guaranteed level of payment to insure the performance of the TIF. Another “lesson learned” is that before issuing financing, the property acquisition should be in place or there should be a clear letter of commitment from a bank before reimbursement, and the developer has to build a certain number of units first.

Also, project investment from property and sales tax payments would be minimized, and a sunset provision would be added between district approval and plan approval. In the future, the UG plans to look more closely at developers who were involved with failed TIFs and are proposing a new TIF project.

Among other guidelines are that there would be specific language on noncompliance included, such as options for the local government to take the property if there is nonperformance, according to Levin.

A UG official said a downturn in the market was a reason some of the earlier residential TIFs did not perform.

UG Administrator Doug Bach noted that the UG hasn’t done a single-family TIF development in a number of years, although he would not want to write a policy that says the UG will not do one in the future. He talked about one residential TIF development that was very successful and has paid off its TIF after about 20 years.

Commissioner Ann Murguia said that while she agrees the UG has had significant issues with the residential TIFS, she also agrees that they should not totally be eliminated, as that does not resolve anything and penalizes residential TIF developers who are successful. As a committee, the commissioners thought it was better to come up with other ways to review if a TIF project was a good investment, she said.

Flexibility is the key to being very successful at development, she said. Having the TIF development tool is good, it just needs to be scrutinized to make sure it will perform.

Mayor Mark Holland said the TIF report separated fact from fiction on what caused some TIF projects to fail. He said single-family home projects struggled the most, while multi-family development projects did better and commercial projects did well.

He noted there were two kinds of single-family TIFS – those before and those after the recession. The ones that went through the recession took a beating and the UG did not have the tools built-in at the time, so the UG ended up also taking a beating, he added.

He said the UG needs to make sure it is specific about where things went bad and where the policy can be adapted to be better, if a single-family project comes forward again.