Shawnee retail developer asking for $12 million in tax incentives
Shawnee Developers targeting the southwest corner of Shawnee Mission Parkway and Maurer Road are seeking $12 million in city incentives for the project.
A 185,000-square-foot shopping center is being proposed for the site, and the Shawnee City Council decided Monday to set a Dec. 22 public hearing to consider the creation of a tax increment financing district (TIF) for the project. The final approval for the TIF amount won't be officially approved until a Feb. 23, 2015, public meeting.
The project developer, SMPW Fund I LLC, is proposing a $49.35 million shopping center on 26 acres near the intersection, according to the staff report. Every other corner of the Shawnee Mission Parkway-Maurer Road intersection has already been developed by big-box retail developments.
The proposal under the city's consideration asks for $9.49 million to come from TIFs. TIFs allow tax revenue generated by a development to be diverted for as long as 20 years to cover certain project expenses. Included in that figure is $7.18 million to come from diverting all property tax revenue generated by the improvements and $2.31 million to come from diverting half of the city's one-cent sales tax revenue collected at the shopping center.
The developers also are asking for the creation of a transportation development district (TDD), according to the report, which would include an additional $2.47 million to be raised through the project via a half-cent sales tax surcharge that would be collected at the new center. A TDD allows a sales tax surcharge to be collected from shoppers at the development for up to 22 years and would be used to pay for the developers' costs.
The developers are also seeking industrial revenue bond financing, which would allow them to receive a sales tax exemption on construction materials.
During the city's Oct. 27 City Council meeting, City Manager Carol Gonzales and other officials declined to identify who was behind the proposal and what the project entailed as the developers had not yet released the information themselves.
But the staff report, issued on Nov. 5 by Gonzales, includes some new details. The principal partners of SMPW Fund I are Dan Carr and Rick Baier, both of the Kansas City-based CBC Real Estate Group. The proposal includes a 100,000-square-foot retail space, a 50,000-square-foot anchor retail business and seven pad sites totaling 35,000 square feet. Construction is to be completed, according to the report, during a three-year period, from 2015 through 2017.
Gonzales' staff report released Monday was dated one day before the Nov. 6 Johnson County Board of Commissioners meeting, in which the board approved another public investment in the shopping center site.
Commissioners voted 4-3 to approve a contract sewer district for the 26 acres and to cover the estimated $1.15 million cost of extending wastewater service to the area. Shawnee agreed to use city economic development funds to pick up the $115,000 cost. In doing so, Shawnee became the first Johnson County municipality to make such a payment.
Some residents in the area have opposed the development of a sewer district because they like the natural landscape currently in the area and feel that the city has held back information from them.
Don Lysaught, an attorney who lives on Bell Road, spoke at the Nov. 10 City Council meeting and accused the city of knowing much more about the development than it let on. Otherwise, he claimed, the city was making promises on investments in something it either knew nothing about or was keeping from the public.
"It's not that we are opposed to development, we just want to know what is going in there and what the potential benefits are to the city and the citizens," Lysaught said.
Council member Jeff Vaught reacted to some citizen criticism that the city was giving away tax money for this project while at the same time asking the citizens to increase the city-wide sales tax. He said he "takes objection" to that claim.
"If we do nothing, we won't have any property to develop," Vaught said. "If we do provide incentives and it develops, then part of that goes back to the developer but over and above that goes back to the city and the citizens."
Gonzales said after the meeting that nobody in the city knows who the potential tenants are, affirming that the approval of a TIF district is just the first step in many as the city considers this project.
"There's a lot of due diligence required because of the TIF process," Gonzales said.
The development partnership's legal representative, Curtis Petersen of Polsinelli PC, did say at the Nov. 10 meeting that the partnership is on a tight schedule for getting tenants' contracts but would not elaborate on who those tenants might be.
"There is a very specific tenant situation that backs all of this," Peterson told the council.
Gonzales told the council that a public hearing is required to be held before the council can approve a TIF district and that the meeting had to be schedule on Dec. 22 because of the time constraints the developers are working under.
Council members Michelle Distler, Mike Kemmling and Dan Pflumm expressed concern with the scheduled date being just days before the Christmas holiday.
"I don't like the fact that this is so close to Christmas," Distler said. "The purpose of a public hearing is to give the public the opportunity to be heard."
Several residents in the area adjacent to the proposed development said that they wouldn't be able to attend the meeting on Dec. 22 and requested that the council postpone it. The council voted 7-1 in favor of keeping the date with the only vote against coming from Kemmling.
To be presented at the Dec. 22 meeting are the results of a $22,000 economic impact study. The city agreed at the Oct. 27 meeting to pay for the study in an agreement with the developers to be fully reimbursed.