The Kansas City Council voted Thursday to settle a lawsuit over the failed Prospect North development in Clay County for $6 million.
The lawsuit sought damages of up to $20 million over allegations that the city was to blame for the development’s demise.
“We’re cutting our losses,” said Mayor Sly James, who had no role in any of the city’s decisions more than 10 years ago to get involved with the development.
The money for the settlement will come from capital improvements sales tax dollars.
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Prospect North, also known as Renaissance North, was once envisioned as an 80-acre mixed-use and residential development at Missouri 1 and Maplewoods Parkway, near Maple Woods Community College. The City Council approved a tax increment financing deal for Prospect North in early 2000, but it then endured a host of setbacks.
A bridge had to be redesigned, some elements of the original mixed-use project had to be scrapped, and the original experienced developer withdrew for health reasons.
The remaining developer and the city then haggled over who would pay for public improvements to get the project off the ground.
From 2001 to 2004, the city issued and guaranteed $13.2 million in bonds for the project — for which taxpayers are on the hook for about $1 million in annual debt service at least until 2021.
The suit from Prospect North LLC and other plaintiffs alleged the city still did not fulfill its obligations under cooperative agreements and doomed the project to failure. Some public and private improvements were made on the site, but for years it was mostly just a weedy, blighted patch of land.
James said the City Council decided to settle now rather than risk losing millions more at trial. He said the city is also putting tax increment financing policies in place to avoid these types of costly claims in the future.
Although Prospect North failed, Councilman Scott Wagner, who lives in the council district that includes the site, said about 30 homes have now been built and people are living there, so ultimately, it will produce some tax dollars to pay back part of the debt.