Money lines the path of each crane and dirt mover that's transforming Kansas City.
Perhaps no other business in town has benefited from the building boom as much as the J.E. Dunn Construction Group. As I write this, J.E. Dunn's blue signs grace the construction sites of the Kauffman Center for the Performing Arts, the Federal Reserve Bank and the Power & Light District.
A company with local roots, J.E. Dunn has become one of the largest commercial contractors in the country, with revenues of $2.6 billion in 2006. Its offices stretch from Seattle to Orlando.
So why does it have to act like the lunch pal who breaks out a calculator whenever the bill arrives?
Kansas City is the land of milk and honey for contractors these days. Boosters say there's a $4 billion makeover going on in downtown alone. Yet J.E. Dunn's actions suggest a child unhappy that his Christmas presents can fit into a single room.
In May, J.E. Dunn sued a subsidiary of the Bernstein-Rein ad agency in a cost dispute over the construction of a ritzy development west of the Country Club Plaza. J.E. Dunn alleged that changes to the project had increased its costs by $22 million.
The suit reportedly caught ad man Bob Bernstein by surprise. Speaking to The Kansas City Star, Bernstein intimated that J.E. Dunn had opted for the prissy route by going to court instead of asking for a meeting. "[I]f I've underestimated something and it comes out a lot more than what I thought it would, I'll sit down with my client and try to work it out," he said. (Construction continues while the two sides "arbitrate confidentially," according to a Bernstein-Rein spokesman.)
Then, in August, we found out that J.E. Dunn was upset with the cost of the land on which it wants to build a new headquarters — with lots of help from taxpayers.
The city is condemning property for the East Village redevelopment northeast of City Hall. East Village is to be anchored by J.E. Dunn's new home. As part of the process, a judge must appoint a panel of commissioners to set prices on the land the city will take. The East Village panel said that the site of the future J.E. Dunn building — what is now a surface parking lot — was worth $70 a square foot.
The figure shocked J.E. Dunn officials. Company Chairman Steve Dunn told the Star that the price was "outrageous." The city agency assembling the land — which Dunn has agreed to pay for — is appealing the panel's decision.
J.E. Dunn was quick to play the Mayflower card. The August 14 Star story warned that the company would look elsewhere for its headquarters if the $70-a-foot price stood.
Here's what's galling: Isn't increased property value a good thing? Isn't that an objective of propping up all this development with tax-increment financing?
J.E. Dunn has benefited enormously from TIF, which subsidized the construction of the new H&R Block headquarters, the Plaza Colonnade and the new IRS Building — all built by J.E. Dunn.
So what happens when (thanks to TIF, if you listen to some people) things start to look up in Kansas City? The Dunns complain.
By my rough calculation, J.E. Dunn will have to pay $7 million for the parking lot, if the $70-a-square-foot appraisal stands. But the company will make nearly that amount when it surrenders its current headquarters for another phase of the East Village redevelopment. J.E. Dunn is getting less land in return, but its new building will sit on a more desirable piece of real estate. The city has also agreed to buy a second J.E. Dunn building on Charlotte for $4 million.
Even-steven? Not for the Dunns, who seem to think a good deal can always be made better. Just stamp your feet.
Recently, I've learned of a third major Kansas City project in which J.E. Dunn appears to have looked out solely for No. 1.
The company, in a joint venture with Turner Construction, won the job to manage the renovation of Arrowhead Stadium. Jackson County taxpayers are paying most of the costs associated with that $375 million project.
J.E. Dunn and Turner entered into what's known as an "at risk" agreement. With these contracts, the construction manager — in this case, Dunn and Turner — commits to quality, time of delivery and cost; in exchange for that certainty, the client — here, the Chiefs — pays more money.
The Arrowhead contract recently changed. The construction manager has been reclassified as an agent. In these arrangements, the construction manager generally doesn't guarantee construction costs or on-time delivery.
A Chiefs official says the change was made with a deadline in mind. (The Arrowhead renovation is supposed to be finished by December 31, 2010, according to the agreement between the team and the Jackson County Sports Authority.) Chiefs Senior Vice President of Administration Bill Newman tells me in an e-mail that the team "made a business decision to absorb the risk so we could move the project along in a timelier manner."
The Chiefs are responsible for cost overruns, so if they want to absorb risk, more power to 'em.
But from what I've gathered, J.E. Dunn has left the joint venture, and I don't think it's because the company developed a sudden aversion to football.
By leaving the joint venture, J.E. Dunn seems to have put itself in an unbeatable position: It will be able to bid on job packages it was paid to craft.
One person who works in the construction industry tells me that allowing J.E. Dunn to bid on Arrowhead work is "highly questionable."
J.E. Dunn officials did not comment on the company's intentions. Mike White, a lawyer for the sports authority, suggests that Dunn won't have an unfair advantage because contractors bidding for the same jobs would have "equal" access to the plans and specifications. He adds: "We are researching this to determine if there [is] anything in statutory or case law impinging on the issue."
Alone, these episodes don't amount to much. Taken together, they paint a picture of a company with a me-first attitude.
That's fine, I suppose. But at the same time, J.E. Dunn brags about its "commitment" to the city. Committed people don't threaten to storm off every time things don't go their way.
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It's called business, people! JE Dunn is where it is today because of smart business decisions. Why would you expect them to pay an unfair price for land? That's not smart business. Scenario: You have $10 million. The house you want to purchase is listed at $2 million, but is only worth $1 million. Would you pay the asking price just because you "have the money"? Of course not. That's a bad financial decision. It's not fair to hold JE Dunn to a higher ethical standard than the one you hold yourself to.
It's called business, people! JE Dunn is where it is today because of smart business decisions. Why would you expect them to pay an unfair price for land? That's not smart business. Scenario: You have $10 million. The house you want to purchase is listed at $2 million, but is only worth $1 million. Would you pay the asking price just because you "have the money"? Of course not. That's a bad financial decision. It's not fair to hold JE Dunn to a higher ethical standard than the one you hold yourself to.
JE Dunn's "by any means necessary" attitude on one hand and their "grease the wheels" approach has had the folks of the Greater Kansas City area fooled for years. Open your eyes. JE Dunn became so big by feeding off the tax dollars of Kansas City residents while building all the schools in the Kansas City School District. Over 95% of TIF projects are awarded to JE Dunn. Now they are using TIF to get themselves a new and larger headquarters. It is corporate welfare making them rich and powerful in this city. Be wary of the monster you created and are continuing to feed. Yes, they give to charity. But...if I give $100,000 to ABC charity and then I build their building and make $1,000,000 in profit I don't think that is really charitable giving. It is a good strategy to have an employee on every board in town and to resign your position so you can build their project. I would like to see them give to a cause when they don't benefit either financially or by being given the opportunity to manipulate others. Then talk to me about all the great things they do.
JE Dunn's "by any means necessary" attitude on one hand and their "grease the wheels" approach has had the folks of the Greater Kansas City area fooled for years. Open your eyes. JE Dunn became so big by feeding off the tax dollars of Kansas City residents while building all the schools in the Kansas City School District. Over 95% of TIF projects are awarded to JE Dunn. Now they are using TIF to get themselves a new and larger headquarters. It is corporate welfare making them rich and powerful in this city. Be wary of the monster you created and are continuing to feed. Yes, they give to charity. But...if I give $100,000 to ABC charity and then I build their building and make $1,000,000 in profit I don't think that is really charitable giving. It is a good strategy to have an employee on every board in town and to resign your position so you can build their project. I would like to see them give to a cause when they don't benefit either financially or by being given the opportunity to manipulate others. Then talk to me about all the great things they do.
Why should JE Dunn not act like the lunch pal who breaks out the calculator? Just because they are a large company who make's money doesn't mean they should be expected to pay more than other businesses or absorb certain costs. They are in the business to make money. The same with their headquarters. When they were first in negotiaions with the city, the city anticipated land valiues at about $35 per square foot. When the commission came back last July with land values at about $70 per square foot, of course they are going to balk at that, any good businessman would.
Why should JE Dunn not act like the lunch pal who breaks out the calculater? Just because they are a large company who make's money doesn't mean they should be expected to pay more than other businesses or absorb certain costs. They are in the business to make money. The same with their headquarters. When they were first in negotiaions with the city, the city anticipated land valiues at about $35 per square foot. When the commission came back last July with land values at about $70 per square foot, of course they are going to balk at that, any good businessman would.
Why should JE Dunn not act like the lunch pal who breaks out the calculator? Just because they are a large company who make's money doesn't mean they should be expected to pay more than other businesses or absorb certain costs. They are in the business to make money. The same with their headquarters. When they were first in negotiaions with the city, the city anticipated land valiues at about $35 per square foot. When the commission came back last July with land values at about $70 per square foot, of course they are going to balk at that, any good businessman would.
Why should JE Dunn not act like the lunch pal who breaks out the calculater? Just because they are a large company who make's money doesn't mean they should be expected to pay more than other businesses or absorb certain costs. They are in the business to make money. The same with their headquarters. When they were first in negotiaions with the city, the city anticipated land valiues at about $35 per square foot. When the commission came back last July with land values at about $70 per square foot, of course they are going to balk at that, any good businessman would.
I have something to add to defend the Dunns on their new piece of land. Other developers are screaming that if Dunn pays $70 then they won't be able to fund their proposed developments. Rising property value is good, but not overnight. It can drive out other developers. We must not be so quick to judge.
I have something to add to defend the Dunns on their new piece of land. Other developers are screaming that if Dunn pays $70 then they won't be able to fund their proposed developments. Rising property value is good, but not overnight. It can drive out other developers. We must not be so quick to judge.
If the JE Dunn family does not want to pay the price of building in KCMO, why don't they just move their headquarters to JOCO. Everyone already knows the "bought" the Applebees building in Lenexa.
Kudos to the Pitch for standing up to JE Dunn and the 1st Irish Family of Kansas City. However I do ask if David Martin likes to swim, maybe with the fishes ~ concrete is cheap for the Dunn family....
If the JE Dunn family does not want to pay the price of building in KCMO, why don't they just move their headquarters to JOCO. Everyone already knows the "bought" the Applebees building in Lenexa.
Kudos to the Pitch for standing up to JE Dunn and the 1st Irish Family of Kansas City. However I do ask if David Martin likes to swim, maybe with the fishes ~ concrete is cheap for the Dunn family....
So this is an Article that says a private business is trying to make money? This is news? I suppose the pitch would just like JE Dunn to do all of this work out of the kindness of their heart.
So this is an Article that says a private business is trying to make money? This is news? I suppose the pitch would just like JE Dunn to do all of this work out of the kindness of their heart.
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