The planned Galleria 115 development – touted as an important first step to jazzing up College Boulevard – has hit another snag. But the Overland Park City Council remained committed to its incentives for the project after being convinced that the city has nothing to lose if the deal falls through.
A lawsuit filed last week over the closing date of Sprint Corporation land at 115th Street and Nall Avenue was the “thousand pound gorilla in the room,” said Councilmember Dave White, as the council discussed technical additions to an agreement that would give developer Ken Block a break on sales tax paid on some of the project’s expenses.
The dispute is over the office and retail portion of the 37 acres in the project. According to published reports Block and Sprint disagreed over what types of businesses could locate in the development. The suit asked for a delay in the closing deadline.
The deal is still in negotiations, said John Petersen, lawyer for the developer. “There is every intention of this party to move forward and close on that ground,” he told a council committee.
Council members previously got behind the Galleria project in hopes that it will bring some night life and retail to the area around the convention center. The College Boulevard corridor suffers from fast-moving traffic and pedestrian-unfriendly atmosphere, according to a recent study commissioned by the city. Getting people out of their cars and into nearby businesses is now one of the city’s top priorities.
The $252 million project would bring multi-family residences, retail and office buildings and a pedestrian walkway to the convention center.
Lawsuit is ‘fly in the ointment’
Councilmember Paul Lyons at first wondered whether the council should delay further action because of the legal dispute. He and some other council members questioned whether the city will end up getting the entertainment area they hope for if Sprint imposes too many restrictions on retail.
“I want to try to avoid a situation where we end up providing incentives for something we really weren’t that particularly interested in,” he said.
But Petersen said the issue is about office use, not retail or entertainment. Once the sale goes through, the developer is bound to build the agreed-upon plan or lose tax incentives that make the development feasible, he said. The retail is also a must for the developer to collect a special sales tax in the area for development costs.
In the end, council members said they were comfortable with his explanation.
“The fly in the ointment is the lawsuit,” said Councilmember Rick Collins. “But regardless of what happens with that lawsuit, the city is still protected.”
They voted unanimously, with Councilmember Jim Kite abstaining, to go ahead with a change that allows the developer to start building the multi-family phase on land Block already owns. The change is intended to save the company time once an agreement is reached with Sprint.
This was the second major snag for the development. Just three weeks ago, Galleria developers asked for and received a big increase in the sales tax money they can collect from the Community Improvement District in the retail part of the project. The council approved a 1.5 percent sales tax, allowing developers $35.6 million in sales tax revenue.
Originally, the development was to have been a joint venture, with Block doing the residential part and a Dallas-based company doing the retail and office. But Block decided to take over the entire thing after that company dropped out.
After that, the estimated project cost went up – partly because Block upgraded the plans with parking garages and partly because the original estimates were too low given the rocky ground, company officials said.