Despite concerns with a weak market for issuing bonds on private construction during the COVID-19 pandemic — and a certain level of disdain from some city leaders opposing public financing incentives — the Shawnee city council last night advanced plans for Bellmont Promenade, a retail and residential development.
Located on 26 acres at the southwest corner of Shawnee Mission Parkway and Maurer Road, Bellmont Promenade comprises of:
- A mix of anchor, junior anchor and inline retail spaces (about 160,000 square feet)
- Two pad sites for restaurant or retail space of (about 10,000 to 12,000 square feet)
- About 31,000 square feet of restaurant plaza space
- About 150 multi-family residential units with residential amenities
No market for bond issuance of project due to COVID-19 economic downturn
Representatives with the Kutak Rock, the city’s bond counsel, noted that there’s no market for bond issuance at this point for the project due to the economic downturn caused by COVID-19. Some councilmembers had concerns about that. However, John Hansen with Legacy Development said they can wait and issue bonds when the market improves.
“There is very good reason to believe that the market will come back,” Hansen said. “No one… can state precisely when and to what degree. Your actions tonight will allow us to be poised and ready to take advantage when the market comes back. There’s always some point at which someone will say this just isn’t going to happen, but we are a pretty optimistic crew over here on the development team.”
Jeff White with Columbia Capital Management, the city’s financial adviser, said there have been no changes to the incentives package; however, there have been changes to the development plan and how the developers plan to implement it.
Financing for the project includes a public incentives package with a 90% TIF property tax, 1% TIF city general sales tax, sales tax exemption for $3 million to $3.5 million in project costs, a 1.6% CID sales tax, CID special assessments, and the issuance of $19.5 million in special obligation bonds. The proposed development has undergone several delays as Legacy Development, the commercial developer, worked through multiple iterations of the residential and retail components. At various stages, neighbors whose properties abut the site have pushed back against the height, proximity and density of the residential/apartment portion.
Meanwhile, the total cost of the development has decreased from $98 million to $80.5 million, while the percentage of the public incentive contribution to the project has increased from 19.9% to 24.2%, according to city documents.
Some Shawnee councilmembers oppose ‘hidden tax’ from community improvement district
Some city leaders who generally oppose public financing incentives raised several concerns with the viability of the project, calling Community Improvement District sales taxes “hidden taxes” not easily understood by the public.
Councilmember Mike Kemmling also said he wanted assurances that the developer would stick with completion of the project, even if the TIF and Community Improvement District failed to generate anticipated revenue.
White said the city will have the right to cause Hawthorn Bank, which is handling the project’s finances, to enforce a completion guarantee for the project once it’s started.
The city council’s actions:
- The council voted 5-3 to approve modifications to the already-approved CID, which ensured that the city’s documentation on public financing for the project match documentation of the current project. Councilmembers Kemmling, Eric Jenkins and Tammy Thomas voted no.
- The council voted 6-2 to levy the CID special assessments for the project. Councilmembers Mike Kemmling and Tammy Thomas voted no.
- The council unanimously approved an amended redevelopment agreement for the project.
- Finally, the council voted 7-1 to authorize bond issuance for the project. Thomas voted no.
Per the development agreement with the city, the retail portion must be completed by the end of 2021, and the rest of the project by the end of 2022.
Editor’s note: This story has been updated to correct an error. Jeff White works with Columbia Capital Management, not Kutak Rock.