Lee’s Summit approves studying TIF for Summit Place shopping center

rpulley@lsjournal.comDecember 25, 2013 

The Lee’s Summit City Council agreed to walk a little farther with RED Development to explore using tax-increment financing to help finance construction of a new shopping center.

The council voted 6-2, with David Mosby and Brian Whitley voting no, to approve an ordinance that creates an agreement with RED that puts $50,000 into escrow to pay for studies the city will ask for regarding the TIF.

City Manager Steve Arbo said the applicant — represented by Jeff Haney, executive vice president of RED Development — also wanted a sense of the practicality of moving forward because it would be very costly process. Arbo said that by voting for the escrow account, the council was not committing itself to final approval.

Also at meeting was Steve Rich of Townsend Capital, the landowner for the proposed Summit Place site which is north of the Summit Technology Campus. Townsend Capital also owns 140 acres to the east and south, where it is working on additional projects.

The Planning Commission heard the shopping center plan and recommended approval, Haney said.

He said RED’s SummitWoods Crossing is 100-percent occupied and that Summit Fair is nearly 95-percent occupied, and the company still has prospective tenants which would like a Lee’s Summit location.

“The problem has been figuring out how to finance this and get the deal done,” Haney said.

He said RED already has spent more than $500,000 on the project, but cannot get there with private financing alone.

The company is asking the city to extend the Summit Fair TIF to include more area, so it can put $18.5 million into the Summit Place Site. The plan also includes a one-cent sales tax in a Community Improvement District.

The developer would issue bonds to be repaid by the TIF and the city wouldn’t assume any risk, Haney said. He said between $2.5 and $ 3 million would be for public improvements, like widening Ward Road.

Haney predicted the return to the city would be $1.1 million in additional sales tax annually during the life of the TIF and $3.35 million after the TIF is dissolved. The third-party studies are to confirm those estimates.

“We’re really excited about another opportunity to partner with the city,” Haney said.

Councilman Brian Whitley was skeptical of the request, asking if there was so much demand, why is it hard to get financing.

“Is there purchasing capacity in Lee’s Summit to support all of that supply?” Whitley asked Lee’s Summit Finance Director Conrad Lamb.

Lamb said that is the purpose of the independent studies, to answer those kinds of questions. He said he couldn’t give an answer without knowing what retailers RED plans to bring to the new shops.

Mosby said he would be hesitant to support the TIF.

“I don’t see enough skin in the game on your part,” Mosby said.

Council member Ed Cockrell said he wouldn’t vote for incentives for housing. He warned RED that in the end the council will split on the issue. He said there’s an election coming where RED might be working with as many as four new people on the council, including the mayor.

Haney said RED hopes to finish the TIF negotiations and get it approved by March, before the elections.

Council member Bob Johnson said he will want to know exactly RED will be using the $18.5 million to build, asking if it would include costs like a parking lot, and shrubbery. Haney said his company realized Johnson doesn’t like parking lots.

“I love them, I just don’t want (the city) to pay for them,” Johnson said, laughing.

Haney said RED would be asking for help with infrastructure like retaining walls and a cavernous box culvert.

Johnson said he’s like to see housing in the area, perhaps some kind of mixed-use of office and multifamily housing.

Johnson said he actually favors the project, but wanted to see details of how the TIF money is to be spent.

Rich, of Townsend Capital, said it wouldn’t be part of the shopping center deal, but he is open to the concept for other land he owns nearby which would served by Ward Road, which the TIF would be improving.

He said he’s working on a plan for that land to include a hotel, maybe senior housing, and an office building, and he’s also working with University of Central Missouri on its Innovation Campus, so maybe could include some housing for students.

“It’s a jigsaw puzzle,” Rich said.

Councilman Derek Holland said, “Lee’s Summit has never had a problem building housing, what we need is commercial development.”

Council member Allan Gray said he thought RED’s proposal is a good project and that adding condominiums or multifamily in the area is a good idea.

“This seems to be a project that is ripe for that,” Gray said.

Rich said that since 1999 when the renovation of the Summit Technology Campus was completed, he’s been working on subsequent development of land to the east.

He said that there had been a number of Fortune 500 companies looking to build, and considered the Kansas City region, but not Lee’s Summit.

“We’ve been really hitting against a brick wall, never getting to the short list,” Rich said. He said he hopes to make progress to scaling back and offering smaller office buildings.

Holland asked Rich, “What are we lacking, what can we do as a city?”

Rich said his company had more success at Summit Technology Campus with more “back of the house” projects, like call centers, than headquarters like Corporate Woods. But he said Lee’s Summit’s accessibility and demographics should be more attractive. He said he’s been successful in projects around the nation, and wasn’t sure he could answer that question.

“I know what it takes to work, and I don’t know what Lee’s Summit is missing,” Rich said.

The market crashes of 2007, he said, of course stopped everyone.

Cockrell said he sees another “big box” in the proposed site and that he questions if it will be “upscale.”

Kathy Hofmann said she didn’t think Lee’s Summit could support even ritzier, upscale stores, but could us a greater number of choices so that people didn’t need to spend outside town.

“I have no problem taking this forward,” Cockrell said. “But I’m spending your money, which is an easy decision.”

Holland said that in all good conscience, now was the time to vote no if a council member couldn’t support the TIF.

“We might argue around the edges, but this is a great project,” Holland said.

The council’s vote of 6-2 for an agreement to study the TIF only sets up the third-party studies. The council would still have to vote on an ordinance for expanding the TIF.

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