Development

Planned Cerner campus at Bannister Mall site would be the largest KC office development ever

Updated: 2013-08-18T00:57:25Z

By KEVIN COLLISON

The Kansas City Star

Move over Sprint. Cerner Corp. is proposing the biggest office development in Kansas City history on the former Bannister Mall site.

According to an application filed with the Kansas City Tax Increment Financing Commission, the booming health care technology giant is planning a 4.5-million-square-foot campus covering 251 acres, to be built in 14 phases. When completed in 2024, it would be valued at $4.1 billion.

By comparison the Sprint campus, completed over three years in 2003, totals 3.9 million square feet and covers 200 acres in Overland Park. The total square footage of the Cerner plan also equals 3½ One Kansas City Places, the city’s tallest skyscraper at 42 stories.

The documents filed this week with the TIF Commission flesh out the bare-bones Aug. 1 announcement by Cerner. It stated that the firm was pursuing an office campus on the Bannister Mall property, now called Three Trails Crossing, that ultimately could employ up to 15,000 people.

That would be 15,252 to be exact, according to the TIF application. The city development agency will consider the application next month.

The inch-thick document says Cerner employees would work in a “high-tech, integrated office campus, including complementary retail space, a fitness center, a child-care facility and other workplace amenities.”

In the application, Cerner is seeking substantial tax incentives, about $1.2 billion if the office project is completely built out. But Cerner also proposes to invest $2.9 billion of its own resources. That breaks down to a 70-30 private-public split.

The $1.2 billion would come out of the new taxes the development would generate. The money would go to the project for eligible development costs, as is the case with other tax-increment financing agreements.

Local and state governments would still net about $446 million in payments in lieu of taxes over the life of the TIF plan.

The Three Trails site covers a once-thriving retail area northeast of Interstate 435 and Bannister Road in southeast Kansas City. The troubled Bannister Mall shopping center was demolished in 2009. Its redevelopment is seen as critical to reversing what has been the economic decline of that area of the city.

Cerner officials declined to comment Friday on the TIF application, referring to the original announcement that stated that the company’s “significant growth necessitates that we plan now to accommodate our future space needs.”

The TIF application and financial assumptions are based on the full build-out of the plan. There is no suggestion the development would be scaled back if Cerner failed to achieve its growth projections.

Cerner chairman and CEO Neil Patterson and vice chairman Cliff Illig already own 221 acres of the Three Trails property through an entity called Cerner Property Development. The plan calls for Cerner Corp. to buy that land by the end of the year if the necessary approvals are received.

The breakdown of the development calls for it to be built in 14 phases beginning in the fall of 2014. The first phase calls for 578,500 square feet of new construction, including two office buildings and a service center. It would accommodate 2,260 employes.

When fully completed in 2024, the development would include 11 office buildings totaling 4 million square feet; a 75,000-square-foot “Cerner Kids” day-care center; two data centers, a service center and 370,000 square feet of retail.

Parking would be provided on acres of surface lots. No garages are included in the application.

The master development plan prepared by Gould Evans indicates that the retail buildings, a boutique hotel and a grocery store would be on the south edge of the development near Bannister Road.

The development also would be expected to provide jobs for 2,800 construction workers with an estimated payroll of $203.7 million through all 14 phases.

In addition to the development, Cerner has agreed to divert $8 million to a fund to help improve the surrounding neighborhood, according to testimony this week at City Hall.

At a meeting of the Kansas City Council Planning, Zoning and Economic Development agency Wednesday, officials said the neighborhood improvement fund would be administered by an advisory committee and is essential to reinforcing the area around the planned Cerner development.

“The improvements to revitalize housing are essential to the success of the Cerner project,” said Councilman John Sharp. “If retailers come, they want to know if its a stable and revitalized neighborhood.”

Sharp also said the Cerner development would “turn the area around and be a great plus to the city.”

According to a city analysis of the proposed Cerner development, the wages paid to employees there would be equal to or greater than the average wage paid in Jackson County and would include full benefits.

“Additionally, the proposed development of office space will improve the overall appearance and bring desirable and positive attention to an area of the city greatly in need of redevelopment and revitalization,” the analysis stated.

Cerner’s growth has been accelerating in recent years, and the firm now employs 9,000 people in the metropolitan area, part of a total global workforce of 13,000 employees.

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 U.S. and abroad.

The firm just formally opened a new office project in western Wyandotte County that is expected to accommodate 4,000 new employees over the next couple of years.

Its other major facilities are the headquarters campus in North Kansas City and an operation in the former Marion Labs complex near the proposed Three Trails development.

Just this week, Forbes magazine included Cerner as one of the top 100 innovative companies in the world, ranking it 13th.

The plan, step by step

The proposed Cerner office development would be built in 14 phases beginning in 2014:

First phase: 578,500 square feet including two office buildings and a service center, 2,260 employees

Second: 286,056-square-foot office building, 1,291 employees

Third: 250,417-square-foot office building, 1,116 employees

Fourth: 370,000 square feet of retail space

Fifth: 75,000-square-foot daycare center, 80 employees

Sixth: 318,900-square-foot office building, 1,291 employees

Seventh: 368,272-square-foot office building, 1,467 employees

Eighth: 120,000-square-foot data center, 100 employees

Ninth: 439,924-square-foot office building, 1,467 employees

10th: 475,410-square-foot office building, 1,643 employees

11th: 305,573-square-foot office building, 1,291 employees

12th: 362,530-square-foot office building, 1,467 employees

13th: 399,509-square-foot office building, 1,704 employees

14th: 120,000-square-foot data center, 75 employees

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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