Shovels struck dirt Wednesday afternoon on the seventh Kansas City area office complex for fast-growing Cerner Corp., a huge $4.45 billion project intended to house 16,000 new Cerner workers within the decade.
Both Missouri Gov. Jay Nixon and Kansas City Mayor Sly James extolled the project’s long-term economic impact. Nixon went so far as to label it the “largest economic development project in Missouri history” based on the amount of money it will cost and the number of jobs it will create.
The government leaders attended the cold, wind-buffeted groundbreaking along with dozens of Cerner representatives, project participants and civic boosters.
Cerner’s $4.45 billion, 10-year plan to redevelop the former Bannister Mall site in south Kansas City includes about $1.75 billion in public tax subsidies. The redevelopment area — previously known as the Three Trails Project — is moving forward under the official name of the Trails Campus. The plan also includes the former Benjamin Plaza.
The Trails Campus calls for 4.7 million square feet of construction in 16 buildings on 290 acres. That compares with the Sprint campus in Overland Park, which has 3.9 million square feet in 17 office buildings on 200 acres. It had a projected $920 million price when it opened in 1999.
In square footage, the buildings on Cerner’s new campus will be quadruple the size of Bannister Mall.
Cerner, a leading health information technology company, already has about 10,000 associates at six locations in the metro area. It has been hiring an average of 300 associates a month. It has more than 16,000 associates worldwide.
Cerner president Zane Burke emphasized that the projected head count on the new campus represents new jobs, not relocated ones, “jobs we hope to fill with a homegrown, Kansas City workforce.”
Burke said the company’s development also is projected to spur 370,000 square feet of nearby retail and restaurant development as well as a hotel. About 4,500 construction jobs are expected to be associated with the project.
Carol McClure, co-chair of the Southern Communities Coalition, which has been fighting to reclaim the area’s economic vitality since the mall’s demise, said: “We’ve been working for about a decade for something like this. This is fantastic news. Along with the Oxford on the Blue plan and NorthPoint’s plans for the area, south Kansas City is taking off again.”
The Trails Campus is one of two massive redevelopment projects proposed for south Kansas City. The other, Oxford on the Blue, is a 344-acre, mixed-use biotech office park and housing plan for largely vacant land north of 87th Street between Interstate 435 and U.S. 71, just west of the Cerner property. That project is led by James E. Stowers III and has a 25-year timeline to build out.
The NorthPoint project, designed for light industry, also is between Bannister Road and 87th Street on a reclaimed quarry property.
Taking into account $1.75 billion in public tax subsidies, Cerner isn’t going it alone to redevelop the former Bannister Mall and Benjamin Plaza locations. The final price for the project calls for $2.32 billion in construction costs and $2.12 billion in carrying costs.
One ordinance passed this summer by the Kansas City Council provides for $773.8 million from tax increment financing over 23 years. The incentive would capture all the incremental increases in property taxes and half of the economic activity taxes generated by the project.
Another ordinance provides for $317 million in “super TIF” that captures the other half of the project’s economic activity taxes. Together, the TIF arrangements will allow Cerner to pay for project development costs instead of paying taxes.
The Kansas City Council also has approved property tax abatement, zoning and planning changes for the Oxford on the Blue project.
Occupancy of the first Cerner building is expected by the end of 2016. Over time, the project is designed to include 10 Cerner office buildings, two data centers, a service center, a training and conference center, and a health clinic and day care facilities for associates.
JE Dunn Construction and Gould Evans Architecture are part of the development team.
Cerner, which posted 2013 revenues of $2.91 billion and net earnings of $398.4 million, is celebrating its 35th year in business. In honor of the anniversary, it donated 35 dogwood trees to Kansas City, with seven of them destined to be planted on Cerner campuses.
Paul Gorup, one of three Cerner co-founders, said the founders 35 years ago couldn’t have dreamed of the scale Cerner has now reached.
“But we were lucky to pick the right industry, the right solutions and the right people with strong work ethics that allowed us to grow in Kansas City,” said Gorup, who now serves as the company’s chief of innovation.
James thanked Cerner for having the “vision and guts” to make development decisions such as the Trails Campus. He said it would be a “pivotal and catalytic development” to encourage other development critical to the tax base in Kansas City.