A Unified Government Committee on Monday night moved a proposal forward that will create fast-food restaurants in the Argentine area of Kansas City, Kansas.
The Economic Development and Finance Committee voted 5-0 to move the $3.3 million project forward to set a public hearing for the expansion of the Metropolitan Avenue Redevelopment District, expected to be considered May 11 at the UG Commission meeting. Also, staff would be directed to negotiate development terms. If approved at the May 11 meeting, the public hearing may be set for June 15.
The location of the project is on the southeast corner, near 21st and Metropolitan, and it is visible from 18th and Metropolitan Avenue, according to officials. Jon Stephens, interim economic development director for the UG, said it is south of the Save-a-Lot grocery store. Also nearby is a Walmart Neighborhood Market, and the South Patrol police station is being built in the area.
Kevin Lee, with Polsinelli, representing Argentine Betterment Corp., said an early site plan shows about about 5,800 square feet of quick-serve restaurant uses on two acres. There would be two separate buildings, he said. One would be a Pizza-Hut-Wendy’s type hybrid restaurant of about 4,000 square feet, and another building would be an 1,800 square foot Dunkin’ Donuts.
Lee said developers have heard from the retailers that this was the site they preferred. It is visible from 18th Street.
The $3.3 million total cost includes the UG-owned parcel and the Kansas Department of Transportation right-of-way totaling $32,000 being donated, Stephens said. Also included in the total cost is site work estimated at $960,000; a building shell cost of $1.23 million, and soft costs of $850,000.
Proposed sources of financing for the project include a TIF property tax increment of $585,905; a TIF sales tax increment of $553,082; a community improvement district sales tax of 1 percent at $302,894; a UG upfront contribution of $500,000; federal grants to Argentine Betterment Corp. of about $1.23 million; and developer equity and other sources at $141,123.
Kathleen Von Achen, chief financial officer for the UG, said the UG issued $1.6 million in general obligation bonds in 2013 for the first project area, which includes the Save-a-Lot. In the second project area, the cost was $3.7 million in general obligation bonds in 2014, including $1 million for road improvements and $2.7 million for a grocery store. There are some undeveloped outlots that exist in the second area, she said.
According to UG information, the UG has collected sales tax revenues of around $250,000 in 2015 and around $300,000 in 2016 from the second project area. The first project area is collecting sales tax of around $50,000 a year.
In revenue performance, the first project area is expected to be paid off in five years and the second in seven years, and is performing very well, she said.
Commissioner Gayle Townsend asked if a $500,000 payment from the UG would zero out a gap fund. UG Administrator Doug Bach said the UG would still have money within that account, and would restructure it in the new budget. There would be some funds left in it this year and other funds would be moved into the 2018 budget.
“As Kathleen went through a pro forma with the developer, within the 20-year time frame, we get our $500,000 back,” Bach said.
Commissioner Hal Walker asked if the development agreement had a continuous operation clause, not that the same operator had to be there all 20 years, but that someone would have to keep operating it. The developer’s representative said they would consider it.
Commissioner Brian McKiernan said one of his concerns had been allayed, because when it was originally discussed, the gap fill was one-way, and it has now been amended. Now it is a funding source that gets repaid, he said. He said the UG should think about what projects in the future should get funded along these lines, or should there be criteria for percentages of the project cost, or should it cost over a certain threshold. Or maybe the UG should decide whether it needs any criteria. If there are criteria, maybe the UG should formulate them, he said.
Commissioner Walker said location was important. Inside the urban core east of I-635, the criteria are different, he said. He would not approve this project out west at The Legends, he added. The challenge is defining what part of the community merits this, he added. He said he would like to have some location criteria.
R.J. Samuels, a resident, appeared in support of the fast-food project.
He said there is only one restaurant in the area, and it is only open on Saturdays and Sundays.
“I just want to thank you for your efforts here,” he said. “I think this is going to be a great thing and I hope it pays off for all of us.”
The project is expected to bring 70 jobs to the area.
Commissioner Ann Brandau Murguia, who is the executive director of the Argentine Neighborhood Development Association, recused herself and did not vote on the matter or participate in the discussion. ANDA has received the federal grant money for the project, will provide the entire grant funds to the project, and ANDA will not receive any of the funds for itself, according to a letter she submitted.