Development

Cerner to redevelop Bannister Mall site as office park with as many as 15,000 workers

Updated: 2013-08-02T03:58:28Z

By KEVIN COLLISON

The Kansas City Star

The sprawling site of the former Bannister Mall, a high-profile display of blight in southeast Kansas City, is slated for redevelopment as an office park with thousands of new jobs by one of the region’s fastest-growing corporations, Cerner.

Executives with the North Kansas City-based health care information technology company confirmed Thursday that they plan to acquire 236 acres and are contemplating a huge expansion that could ultimately employ up to 15,000 people.

“Cerner’s significant growth necessitates that we plan now to accommodate our future space needs,” Marc Naughton, Cerner’s chief financial officer, said in a statement.

The Bannister site is close to a Cerner facility in the former Marion Labs complex, which is called its Innovation Campus. The new project would be an expansion of the campus that would occur over an extended period and potentially house 12,000 to 15,000 additional employees upon full buildout, based on Cerner’s growth.

Mayor Sly James described the Cerner announcement as a “great step forward for the former Bannister Mall site.”

Redeveloping what’s known as the Three Trails Crossing region into a Cerner property “will turn that area into a beacon of innovation,” the mayor said. “Cerner is a valuable community partner and I deeply appreciate the company’s commitment to our city. We look forward to working with Cerner to finalize a plan soon.”

Earlier Thursday, a development firm founded by top Cerner executives received approval for $10.7 million in state tax credits. The funds would be used to help build offices on the site of the former shopping center at Interstate 435 and Bannister Road in southeast Kansas City.

The 236-acre project is being pursued by Trails Properties II, a company established by Neal Patterson, Cerner’s chairman and CEO, and Cliff Illig, Cerner’s vice chairman.

A tax credit application for what’s called the Three Trails Redevelopment Project was unanimously approved by the Missouri Development Finance Board. A resolution supporting the application also was introduced Thursday to the the Kansas City Council.

“With this proposed development, we’re on the way back,” said Councilman John Sharp.

“The demolished mall site has been a blighting influence on southeast Kansas City because it’s so visible. Our neighborhood has waited for this for so long that I’m overjoyed, and I know my neighbors are too.”

According to documents filed with the tax credit application, Cerner would purchase the property from Trails Properties.

Gov. Jay Nixon hailed the deal as an important economic development decision.

“My administration will continue to work with Cerner and local officials as plans for this transformative project proceed,” the Missouri governor said.

The former shopping center opened in 1980 and at one time had more than 150 stores and 1.1 million square feet of retail space.

By the 1990s, however, fear of crime in the area and the opening of newer shopping centers began to drain customers. By 2005, only 50 stores remained opened. The mall closed for good in 2007 and was demolished in early 2009.

In 2007, a development deal that would have brought a professional soccer stadium and Cerner jobs to the Bannister Mall property fell through. Kansas City and Missouri offered a $273 million incentive package, but the developer was unable to attract enough retailers to generate the tax revenue to finance the plan.

When the city balked at providing additional subsidies, the deal jumped the border in 2009. The Cerner office complex and the Sporting Park soccer stadium in western Wyandotte County have been major contributors to the economic boom in that area.

Cerner is committed to occupying two office buildings in the Village West area of western Wyandotte County with 4,000 new workers. Patterson and Illig also are co-owners of the Sporting Kansas City soccer club.

But with Cerner continuing to increase employment, officials say they are preparing for the next stage of growth. In 2009, Patterson said the company expected to hire 12,000 additional employees by 2020 and the Bannister site would be a likely spot for expansion.

Last week, Cerner reported that its second-quarter profits were up 15 percent, revenues were up 11 percent and bookings for new business set a second-quarter record. It reported $112.9 million in profits for the quarter and $707.6 million in revenues.

Looking ahead, the company expects third-quarter revenues of $740 million to $770 million and full-year 2013 revenues of $2.95 billion to $3.05 billion.

The health care information technology company has products licensed by about 10,000 hospitals, doctors’ offices, medical laboratories, ambulatory centers, pharmacies and other facilities in the United States and abroad.

Trails Properties, the entity established by Patterson and Illig, has been pursuing the redevelopment plan on the Bannister Mall property for a couple of years.

The new office campus contemplated by Cerner would include on-site day care, a clinic for employees, fitness facilities, food service and a training space. It could also house future data centers as needed.

A portion of the site may also be made available to be developed for retail stores, restaurants or a hotel, according to the Cerner statement.

Trails Properties already has spent $55 million on land acquisition, demolition, cleanup and security. The company owns 221 acres and wants to acquire 15 more acres.

Last February, the Kansas City Tax Increment Financing Commission approved a revised development plan submitted by Trails Properties that calls for a multiphase development that ultimately would build 1.6 million square feet of office space and 1.2 million square feet of retail over the next seven years.

Under the TIF plan, the estimated cost of the first two phases was $197 million, with the developer contributing $75.5 million. The remainder of the redevelopment plan costs would be reimbursed with $121.5 million in future city and tax revenues generated by the project, including $17.8 million in state tax credits.

The City Council resolution is expected to be considered by the Planning, Zoning and Economic Development Committee in mid-August. The TIF Commission also is expected to review a revised plan in September.

The tax credits approved by the state are intended to help cover the cost of cleaning up the Bannister Mall property and making it ready for development.

The Star’s Jason Hancock contributed to this report. To reach Kevin Collison, call 816-234-4289 or send email to kcollison@kcstar.com. Follow him on Twitter at kckansascity.

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