By CAROLYN SZCZEPANSKI
For years, Benni Ewing and Janet Boggess have lived in development purgatory on Park Avenue.
They've tripped on crumbling sidewalks to get in their cars and then swerved to avoid huge trash piles that sat for months on the side of the pot-hole-ridden road. They watched as the Community Development Corporation of Kansas City tore down houses in their neighborhood in a haphazard manner and then left gaping troughs in the ground. They never had any beef with the proposed Citadel Plaza shopping center that was supposedly taking shape, but, as the progress continued to hiccup and the CDC kept them in the dark, their frustrations started to boil.
But the decade-long saga that has been the Citadel Plaza will likely get the go-ahead from the Kansas City City Council tomorrow, paving the way for a huge infusion of public dollars in coming weeks. After years of controversy and setbacks, the council is rolling the dice on what its members admit is a risky development. But, with millions of taxpayer money on the line, they're making sure they protect public funds if the CDC-KC screws up.
The Citadel Plaza envisions turning a weed-choked expanse at the intersection of 63rd Street and Prospect Avenue into 300,000-square-feet of new retail space for specialty shops and restaurants. The project got its start as part of the massive Southtown/31st and Baltimore Tax Increment Financing Plan in 1994 and the Community Development Corporation of Kansas City stepped in to manage it. But, even with millions of dollars from the city and the federal department of Housing and Urban Development, the CDC has little to show for the public investment, aside from a wildly unkempt lot that's made an eyesore of a busy intersection.
William Threatt, the president of the CDC-KC, has said the $90-million project needs more than $40-million in city-backed bonds to get the shopping center off the ground. But the city's finance department and the City Manager's office have been working for nearly two years on a financing agreement that would outline the conditions of that taxpayer handout.
William Threatt, CDC-KC president
The lengthy back-and-forth finally wrapped up this month.
Dan Bagunu, the city's manager of development finance who worked on the agreement, says this deal has plenty of safeguards for the city's $43 million investment. "We were trying to do everything we could to protect the city's interests," he says. "As far as the scope of the city's entire portfolio, it's unique."
The most notable protection is that the city isn't going to sell $43 million in city-backed bonds and hand it all over to the CDC. Instead, they'll dish it out in two installments.
The CDC will get $20 million this fall to acquire remaining properties and get the site cleared and ready for vertical construction. Before they get the second $20 million, though, they'll have to prove their house is in order. They'll have to show that they own all of the properties, that those property taxes have been paid, that environmental remediation is complete, that private financing is in place and at least 55 percent of the retail space is leased. And that's just the short list.
Up until the sale of those second bonds the city will own the site. That means that, if those conditions aren't met and the timeline starts to drag out, the city can give the CDC its walking papers and shop the clean, ready-to-build site to another developer.
Some of the agreement's provisions are inspired by past sins on the CDC's part, which has had plenty of legal issues and a run-in with environmental regulators for mishandling asbestos. For the better part of 2008 the developer had more than $30,000 in unpaid property taxes, many for properties within the Citadel Plaza project boundaries. That bill was paid just last week -- two days before the CDC went before the city's Finance and Audit committee for a critical hearing on their financing agreement.
They've got some other unpaid bills to private entities, as well. In October 2007, Bliss Associates, a local firm, completed property appraisals in the 5900 block of Prospect for the CDC-KC. According to court documents, the CDC-KC never paid the company the $8,200 it owed. The firm sued the CDC, the CDC didn't show up to the May hearing and a judge entered a default judgement ordering it to pay $8,400. As of this week, the CDC hadn't paid up.
The CDC owes a much bigger chunk of change to a Pennsylvania-based real estate company called CCREA LLC. In mid-2007, the CDC signed contracts with CCREA to purchase more than 10 properties in the Citadel Plaza project area for more than $1.6 million dollars. After failing to close on the deal multiple times, CCREA sued the CDC for breach of contract in May. That case is still pending.
Threatt says both those lawsuits will be cleared up "very soon."
At a city council committee meeting this morning, Threatt thanked "all of City Hall" for working with the CDC to finally get the project moving forward. During the years of hammering out an agreement, Threatt often said construction was delayed because city employees were making his project jump through extra hoops. After the meeting, I asked him if he thought the financing agreement asked too much of the CDC-KC, with all the extra provisions.
"No comment," he said caustically.
But neighborhood residents like Boggess are glad the project finally is moving forward -- with plenty of oversight and the option of firing the CDC if they slip up.
Janet Boggess lives next to the proposed development site
"I do think it will bring some jobs to this area and give some people a chance to get out, so I'm in favor of them getting the TIF bonds," Boggess says. "But I feel the TIF [Commission], the city, all these eyes will be on them. They're being watched. So the other times we've just given them the money and turned them loose. Now they're going to have to be held accountable."
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