By Jerry LaMartina
A proposed $110.6 million mixed-use residential, retail and restaurant development in the largely vacant and decaying Westbrooke Village Shopping Center took another step forward at the Shawnee City Council’s Monday night meeting.
The council passed an ordinance to establish a tax-increment financing (TIF) redevelopment district at the site, on the northeast corner of 75th Street and Quivira Road, for the proposed Westbrooke Green development. The ordinance included a finding of blight at the shopping center.
Ward 1 Councilman Dan Pflumm and Ward 2 councilmen Eric Jenkins and Mike Kemmling opposed the ordinance.
The council also approved two resolutions: one to hold a public hearing on Dec. 18 to consider adopting the TIF project plan, and one to hold concurrent public hearings on Dec. 18 to consider creating a community improvement district (CID) and levying a CID sales tax. Jenkins and Kemmling opposed the resolutions.
The developer would spend about $85 million on the project and seeks about $25.5 million in city-approved public funding. The public financing contribution would comprise $19.5 million in TIF for 20 years and $6 million from a CID, which would levy a 1.5 percent sales tax on businesses in the district for 22 years.
TIF is public financing tool by which a developer of a blighted property is reimbursed for eligible development and infrastructure costs using the increment of new property or sales tax revenue generated by the development.
The developer also seeks to use $3.2 million in proceeds from industrial revenue bonds for sales tax exemption solely on construction materials.
The developer is MP Westbrooke North LLC, a joint venture of Mission Peak Capital, based in Kansas City, Mo., and New York City, and Extell Development Co., based in New York City.
Westbrooke Green would occupy about 32 acres and contain about 529,500 square feet, with:
- 11 commercial buildings for office and retail use — 10 new and one existing — containing about 108,500 square feet
- five new multifamily apartment buildings with about 530 luxury units
- amenities including structured and surface parking, street parking, garages, an open courtyard space, a town square, an amphitheater, an outdoor dining area, landscaping, lighting, utilities, storm water improvements, water features, sidewalks and walkways, and streets and drives, according to the project plan.
The average rent for a roughly 800-square-foot apartment in the development would be about $1,100 a month, P.J. Ventola, managing director of Mission Peak Capital’s development team, said before the council meeting. New retail space would lease for $19 per square foot, and existing retail space would lease for $13 per square foot.
The developer bought the land in February for $3.1 million, Ventola said. Construction is planned to start in 2018 and be completed in 2019.
Council rift over use of public finance incentives
A philosophical divide about using public incentives for economic development became evident during the council’s discussion of the project.
“We’ve raised taxes the last two years because we didn’t have enough money to meet expenses,” Jenkins said. “In the last year since then, we’ve had two projects presented to us that total over $200 million, and these projects will not bring one cent in revenue to our community. So as (we have) additional expenses from year to year, how are we going to pay for those expenses other than going back and raising taxes on the homeowners in this community?”
Jenkins said he wasn’t opposed to the project itself or the use of TIF in certain cases but to the amount of city incentives being considered for it.
“Can we just continue to give everything away and receive nothing in return as a community?” he said. “That’s about our only asset, really, is developable property in this community, and that’s where we derive our revenue, that and taxes. … I don’t see how this is sustainable and how we can make ends meet.”
Ward 3 Councilwoman Stephanie Meyer said she thought there was “a fundamental disagreement on the council about economic development.”
“I would argue strongly against the classification that we’re just giving away blanket tax abatements and that we’re not doing anything to help the citizens,” Meyer said. “One of the biggest concerns that we have is the level of property taxes that we all pay … The best and most effective way to lower citizens’ property taxes is to broaden our business tax base. In order to broaden our business tax base, we have to bring additional businesses into the community. In order to do that, the reality of it is we have to do some level of economic development. …
“I hate the classification that we’re looking at economic development as it is as a tax giveaway,” Meyer said. Addressing Jenkins, she said: “That is absolutely untrue, and I will fight you on it every time you say it.” Later in the meeting, she said she thought it was “reckless and dangerous to be putting out those complete misstatements of fact about economic development.”
Ward 4 Councilman Brandon Kenig said that economic development also positively affects “neighborhoods and areas around it.”
“We will continue collecting the taxes we’re collecting today,” Kenig said.
Ward 3 Councilman Jeff Vaught said the city was “not giving away $25 million of taxpayer money that’s sitting in the bank doing nothing.”
“(The developer is) going to create $25 million of revenue through their efforts … which would otherwise come to us in property tax and sales tax,” Vaught said. “It’s a necessary evil. Corporate welfare happens everywhere, massive amounts of it. If we’re going to compete with neighboring cities who on every side of us (are) passing incentives and doing deals like this, then we have to.”
Jenkins said that tax abatements also decrease funding for public schools, the parks and recreation department and libraries.
During the meeting’s public comments segment, Shawnee resident Ray Erlichman said that Westbrooke Green “is probably something that needs to be done.”
“My problem is the percentage of those (tax revenue) increases that would be going to the developer,” Erlichman said. “I’m not saying get rid of the TIFs. But you’re going to have an increase in city services (resulting from the development). Property and sales taxes will stay flat.”
A long-blighted shopping center
Westbrooke Village’s construction was completed in 1989. Its former anchor tenant, Dillons grocery store, closed several years ago. The shopping center has suffered from vandalism as recently as a few weeks ago, including broken windows and graffiti, Ventola said.
The existing businesses in the shopping center — Fantastic Sams Cut & Color, Mi Pueblito Meat Market, Quivira Liquor, Pizza Street and Starbucks — would be allowed to continue operating on the redeveloped site, he said.
The city’s TIF policy, established in February 2006 and revised in February 2014, and Kansas statute authorize the use of property or sales tax revenue generated from a redevelopment project to reimburse the developer for site-improvement and other costs. The city’s TIF policy also establishes the criteria and process for establishing a TIF district and for considering its project plans.
The city’s TIF policy requires that consideration of a TIF district must be made using the “but-for” principle, which means that the council must consider whether a development wouldn’t be financially feasible but for a TIF district.