Archive for Tuesday, August 28, 2012

Council members support industrial investment

August 28, 2012

Shawnee’s City Council Committee, which includes all eight council members, has signaled its support for city investment in road and utility extensions to make a proposed new industrial park more attractive to developers.

Following an Aug. 21 update on the Shawnee Eco-Commerce Center, a 422-acre project along the Kansas River west of Kansas Highway 7 and 43rd Street, several committee members voiced support for the investment, and no one spoke against it.

“Now we can go to the development community with a strong message,” said Andrew Nave, executive director of the Shawnee Economic Development Council.

Industrial development is currently the “hot” sector in the regional commercial development market, with more than 3 million square feet of industrial deals — the equivalent of about 6,000 jobs — looking for area development sites to land in, Nave said.

With Shawnee’s largest industrial site, Perimeter Park, nearing capacity, he added, the city doesn’t have many “shovel-ready,” or fully developed, sites to show prospective tenants. And despite its many pluses, the Eco-Commerce Center site currently faces too many challenges to convince a developer to buy the land and get it ready to build on.

Those challenges include the fact that the acreage has 15 different owners and requires about $10 million of investment in road and utility extensions.

But if the city agrees to cover part of that infrastructure cost and can help control the land assemblage through property owner discussions and, perhaps, options, the city should be able to score a developer and a piece of the industrial development action, Nave said.

All council members agreed that the Eco-Commerce Center was the best site for getting in the game, and Ward 4 Councilman Jeff Vaught voiced strong support for the project.

“Go big or go home,” said Vaught, who chairs the Council Committee and works in commercial real estate. “This is an opportunity to do something huge. ... This is something that can be our legacy as a council.”

Vaught added that the city of Lenexa had pursued a bold vision in creating the Lenexa City Center development, which recently lured the 600-plus-job headquarters of Perceptive Software away from Shawnee.

No one is recommending that Shawnee purchase land, as Lenexa did for the City Center project, as part of its support for the Eco-Commerce Center. However, potential incentives presented during the Aug. 21 committee meeting included $1.4 million to pay half the cost of extending 43rd Street into the site, $520,000 to extend a 12-inch water main and $340,000 to cover 10 percent of the cost of sewering the 209-acre first phase of the project.

The potential incentives also include 10-year, 60 percent property tax abatement for owners of buildings constructed in the project. But city finance director Maureen Rogers, who helped build a rate-of-return model based on the potential incentives and other assumptions, said the model showed the city’s return would turn positive after 10 years and reach 10 percent by year 20.

The city’s upfront costs for the project would be covered through the landfill impact fees that were renegotiated with Deffenbaugh Industries last year. The increased fees, which are being phased in, will net the city an average of more than $3 million a year over the next 30 years, and the City Council has determined that the revenue should be split roughly equally between economic development efforts and street maintenance.

Nave said the Eco-Commerce Center project emerged a few years ago through discussions with Holliday Sand and Gravel Co. about its sand extraction from land now designated as the second phase of the project.That effort will lead to the creation of a 144-acre lake and enough excavated soil to bring 213 acres of adjacent ground out of the 100-year flood plain. The first phase is not in the flood plain.

According to Nave, the first phase would yield about 1.8 million square feet of building space, with the second phase expected to yield about the same.

In addition, the second phase would allow the expansion of the city’s Riverfront Park to include the lake, trails and other amenities.

A key to making it all happen, Nave said, will be convincing current landowners to sell at the necessary raw land price of about 50 cents a foot, which would allow prepared sites to be marketed at $2 to $2.50 a foot.

Those who build on the sites will be required to meet sustainable or “green” construction standards requiring applications such as energy-efficient roofs, geothermal heating and cooling, and solar and wind power.

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