Lenexa grants developer key approvals for Sonoma Pointe and Plaza housing and retail project

Sitting just across I-435 from City Center, the Sonoma Pointe and Plaza sites have been undergoing prep work for several months.

The company looking to put housing and commercial developments on the last substantial piece of vacant land inside the I-435 loop in Johnson County got key approvals from the Lenexa City Council on Tuesday.

The governing body gave the green light to tax-increment financing project plans and development agreements for the Sonoma Pointe multifamily residential and Sonoma Plaza retail developments near City Center.

The project includes hundreds of apartment units. Rendering by NSPJ Architects.

Lenexa-based Oddo Development is the projects’ developer. Sonoma Pointe will have about 320 multifamily units in multiple buildings on roughly 29 acres near Loiret Boulevard and 87th Street Parkway. Construction started late last year, Ryan Powell, Oddo Development’s director of construction, said last month. The residential complex is being marketed as Sonoma Hill.

Sonoma Pointe’s proposed 20-year TIF plan would reimburse the developer for eligible costs using up to 50 percent of the increment of new taxes generated by the development, with a maximum reimbursement of $3 million, starting when at least one of the buildings with at least 150 units is completed. After that, the city would be entitled to receive 100 percent of the increment and any balance for the remainder of the 20-year TIF term.

A conceptual rendering of part of the retail component of the project.

During a public hearing on the project at Tuesday’s meeting, Lenexa resident Trevor Keegan (who is running for the Republican nomination for the Kansas 3rd District Congressional seat), questioned whether the project fit the “but for” principle used to consider TIF projects. 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. Consideration is given to whether a development wouldn’t be financially feasible but for TIF.

“I understand what the project is about and why the city wants to do it,” Keegan said during the public hearing. “But I guess I also have concerns because…this project specifically, to me, doesn’t necessarily fit that (but for) definition, that this project would not happen but for the TIF. The project is already in progress, right? So, how does that fit the definition of but for?”

City Administrator Eric Wade responded by saying that “the but for test gives us some guidance in terms of how (we) establish our projects that ask for TIF.”

“I would tell you right now this project wouldn’t be happening without city involvement,” Wade said. “Since I’ve been here, there have been three attempts by developers to acquire the land for development.”

Oddo Development had to pay more than the market rate to one of four owners of the land, is putting in a public road (Maurer) as part of the project and faces utility and topography challenges on the land, Wade said.

Wade added that “getting the quality of development there in today’s world takes some kind of incentive.”

While he acknowledged that there can be a “difference of opinion about whether or not a project needs financial incentives,” Wade said that without public finance incentives, “it would not happen right now in Lenexa, and it would not happen in the quality that we’re expecting.”

Under plans the council approved Tuesday, Sonoma Plaza would be built on nearly 26 acres near Loiret and 87th and would have about 144,000 square feet of retail in multiple buildings. Its proposed 20-year TIF plan would reimburse the developer using up to 40 percent of the TIF increment for up to 12 years for a maximum of $4 million, after which the city would be entitled to receive 100 percent of the increment and any balance for the remainder of the 20-year TIF term. The council also approved the city’s issuance of up to $20 million in industrial revenue bonds for the project.

Last October, the council approved having the city pay an estimated $4.4 million for road improvements for Sonoma Plaza, setting stage for work on one of Lenexa’s last large undeveloped tracts inside Interstate 435. Oddo Development will repay the city in the next 15 years, with interest.

Sonoma Plaza is expected to include a grocery store, senior living facility, several restaurants, a gas station and other components.