The Prairie Village Finance Committee on Monday declined to advance a public finance incentives package proposal negotiated by city staff and representatives of First Washington Realty for the redevelopment of Corinth Square South, instead saying that the governing body would need to review the specifics of the deal in detail before deciding if they were interested in making a counter offer.
First Washington appeared before the Prairie Village City Council last month to pitch its vision for redeveloping a portion of the shopping center the sits south of 83rd Street, a proposal that called for new retail, restaurant and office space along with a multi-story parking garage. The project would require the demolition of the building that houses the Mission Road Antique Mall, which has announced it will be closing next year.
At that August meeting, the Bethesda, Mary.-based real estate company indicated to the governing body that to make the project profitable enough to pursue, it would need public finance incentives in addition to the existing community improvement district at Corinth, which provides revenue to the developer via a 1 percent sales tax. In discussions with city staff and the city’s financial advisor, Jeff White of Columbia Capital, First Washington suggested that the additional public incentives come under a “sales tax reimbursement agreement” (STRA), which would “take the form of a rebate of City-collected sales taxes resulting from incremental new retail sales on the Project following renovation,” according to a memo prepared by White.
The outlines of the package presented to the finance committee on Monday showed First Washington would have been eligible for $3.4 million in reimbursements from an STRA. Under the deal, First Washington would have been required to build 35,000 square feet of retail and restaurant space, and 35,000 square feet of Class A office space above 260 structured parking stalls, and would only have been eligible for reimbursements if the project met certain performance benchmarks. A draft of the term sheet outlining the “clawback” provisions is below:
Members of the finance committee — which is made up of councilmembers Eric Mikkelson, Andrew Wang, Steve Noll and Dan Runion — indicated that they were open to further discussions about the prospect of a deal to bring the project to fruition, but had a number of questions about the financial mechanics.
Mikkelson, the committee chair, said there would be a clear benefit to the city of having the center redeveloped in the form of additional property and sales taxes. After the STRA had expired in 2030, the city would realize around $500,000 a year in new tax revenue from the development, according to White’s public cost-benefit analysis.
“On the financial aspects alone, it is compelling,” Mikkelson said. “And we certainly want to encourage our good neighbor and corporate citizen First Washington to continue to invest in these shops. It’s necessary. They’re thriving today, but if you don’t make the investment today that won’t be the case five or ten years from now.”
But Mikkelson and Runion indicated that they had both heard from constituents who were not pleased with the prospect of a more dense development on the site, particularly a multi-story parking structure.
“Most of them do not want a three-story parking garage in Prairie Village,” Mikkelson said about the reaction he’s heard from residents. “That’s something new and that’s something that I’m getting a lot of adverse reaction to. And they certainly don’t want to incentivize it.”
Mikkelson made the motion not to advance the draft proposal presented by First Washington to the full council for further consideration, instead asking that the council be allowed to meet in executive session to review the concept and decide whether it wanted to develop a counter-proposal.