The Prairie Village city council on Monday approved language for a resolution transferring the Community Improvement District agreements that provide public funds for the renovation and upkeep of the Village Shops and Corinth Square, but not before subjecting the potential new owners to a long string of pointed questions about their fitness to manage the centers and their long term plans. The reassignment of the CIDs is now set to come for a final vote at the council’s next meeting, Dec. 1.
First Washington Realty chief investment officer Joshua Brown explained to the council that his company would be purchasing centers through Global Retail Investors, a joint venture between First Washington and the California Public Employee Retirement System (CalPERS). Brown walked the council through the company’s financial position, saying that its $1.5 billion in equity and conservative leveraging put it on very solid financial ground to assume responsibility for the centers. Brown also noted that the backing of CalPERS meant the company would not be looking to flip the properties for a short term gain because CalPERS relied on cash flow from its real estate investments to pay its beneficiaries.
“For us, the long term is into perpetuity. That’s the great news about our relationship with CalPERS,” Brown said. “It could be 15, 20 years [before the properties change hands]. Maybe 30.”
But such assurances were met with some skepticism from members of the council who voted in favor of the CIDs back in 2010.
“That’s what LANE4 told us, too,” said Ward 4 Councilor Laura Wassmer.
Councilor Jori Nelson was among the most aggressive in questioning First Washington, asking at points if the company would be open to giving up or renegotiating the CIDs.
“You just spent the last half hour telling us much money you have,” she said. “I wonder if you would consider relinquishing the CIDs back to the citizens of Prairie Village?”
Brown responded that the company would not consider abandoning or altering the CIDs, and that their attachment to the centers been a consideration in the negotiations for the purchase from the current owners, the Consentino family. He said the company already had plans to invest approximately $6 million in the centers to update the roofs, parking lots and come into better compliance with the Americans with Disabilities Act. Brown noted that the company may or may not submit reimbursement requests for upcoming work to the centers.
“There’s no obligation on our part to use the money,” Brown said. “They way the funds are dribbling in, it will take a very, very long time to get reimbursed.”
Since going into effect in 2011, the Village Shops CID has generated an average of $447,394 per year and the Corinth CID has generated an average of $448,380. Prairie Village City Administrator Quinn Bennion noted in a presentation to the council before the First Washington executives took the podium that total spending on construction projects at the centers had significantly outpaced what had been submitted for reimbursement. At Corinth Square, for example, the city has received $4,193,766.65 in total reimbursement requests since the CIDs began. But building permits filed for work on the centers shows the cost of construction on work there has been more than $11,000,000 – and that figure doesn’t include non-construction costs, like engineering.
At one point Nelson asked the parties to reveal the purchase price for the centers, but attorney Curt Petersen, representing the current owners, said they weren’t prepared to at this point.
“When you have a pending sale in real estate, you never release the purchase price,” he said.
Councilor Eric Mikkelson asked First Washington to provide an audited financial statement to the council ahead of its Dec. 1 meeting, and Brown agreed to do so.
Nelson and fellow Ward 1 Councilor Ashley Weaver were the only two members of the governing body to vote against advancing the reassignment resolution to a final vote.