Kansas City landlord wants Waldo taxpayers to foot bill for repairs at retail center
A Kansas City landlord wants taxpayers to help fund needed maintenance and repairs at his Waldo shopping center.
The owner of the Romanelli Shops is asking the Kansas City Council to approve a special 1 cent sales tax on goods and services at the shops and restaurants at Wornall Road and Gregory Boulevard. The full Kansas City Council is expected to vote on the issue Thursday.
The owner says he needs the funds because of problems with the 1.3-acre shopping center’s roof, wiring and HVAC systems.
But the request for a new Community Improvement District that benefits a single owner has raised eyebrows in Waldo, which is already home to a wider CID that officials say benefits a variety of businesses in the area.
“I feel like a community improvement district is designed to improve the community for all, not just a single owner of property,” said Becky Beck, the chairwoman of the board that oversees the existing Waldo CID.
The half-cent CID currently in place has funded security officers and crews that clean up trash in Waldo’s retail core. It also funds business promotions and disperses grants for storefront rehabilitation. Beck said taxpayers shouldn’t have to pitch in to help a single property owner.
“What I’m concerned about is this notion that single owners of a property can create their own community improvement district for their own benefit to fund their own renovations, construction, maintenance or whatever,” said Beck, who noted she was not speaking on behalf of the Waldo CID organization. “If you’re a property owner, you’re supposed to do that anyway.”
The Romanelli Shops take up nearly the entire block, stretching from Louie’s Wine Dive to Betty Rae’s Ice Cream. The property also includes a dentist office, a hair salon, District Pour House + Kitchen and The Classic Cookie. The shopping center is owned by G Palen Investments LLC, a company registered in Minnesota.
Reached by phone this week, David Palen with that firm declined to comment on the project.
“I don’t do interviews,” he said. “It’s just not me.”
To win council approval, Palen commissioned a blight study on the property. That report concluded that Romanelli has “insanitary or unsafe conditions” and “conditions which endanger life or property.”
He expects the CID to bring in $70,000 to $78,000 per year over the first five years. In a report to the city, he projected costs of needed repairs at about $2.5 million.
Kansas City got its first CID in 2002, but since then dozens have been created all across the metro from Zona Rosa to downtown to the Red Bridge Shopping Center. City officials said there were 63 CIDs in Kansas City as of this week.
Yet they are sometimes criticized for their lack of transparency: taxpayers may not know when they enter or leave a special taxing zone. And with a patchwork of CIDs across the city, the exact sales tax rates can vary across the area.
In August of last year, Missouri State Auditor Nicole Galloway issued a report showing that the state’s 400-plus CIDs had burdened taxpayers with an additional $2.2 billion in costs. Galloway said the current framework lacks accountability: cities approve CID requests, but state law does not require local governments to evaluate whether a district is in the best interest of the public.
She said districts can “form with vague purposes and time frames and can change their purpose after being established.”
Steph Deidrick, spokeswoman for Galloway, did not want to comment on the proposed CID in Waldo, but he did reiterate the auditor’s position that the current framework for CIDs needs a legislative “overhaul” next year.
“While she recognizes CIDs can serve a useful purpose for economic development, she also believes the current state laws governing CIDs need to be improved,” Deidrick said. “Specifically, changes need to be put in place so that conflicts of interest and self-dealing can be avoided while allowing for greater oversight and enhanced transparency.”
That lack of transparency is what bothers Felix Milman, co-owner of Romanelli Optix, a luxury eyewear store that has operated at the center for more than 15 years. Once established, tenants and taxpayers will have no say in how the collected funds are used.
“Is he actually going to use it to make improvements?” he said. “That’s what I’m more concerned about.”
A year and a half into new ownership, Milman said his building is plagued by a leaky roof, sewer smells, and heating and cooling malfunctions. In the parking lot out back, he frequently sees rats and trash.
But Dan McCall, a partner in District Pour House, said Palen has already made some improvements to his restaurant. And he said the new owners have supported the business.
“They are local people. I see their faces. They come in to eat,” Milman said. “It’s been uplifting.”
But businesses here already charge sales tax of 11.1% on goods and services, said Leslie Stockard, who purchased The Classic Cookie cafe at the north end of the center in 1998. And she’s worried about adding an additional 1-cent tax on customers even if the building needs work.
“I think it definitely needs improvement,” she said. “But I’m not sure why I should pay for it. I pay good rent to occupy the space, and I don’t quibble about it.”
In an Oct. 23 committee meeting, Councilman Brandon Ellington was skeptical of the landlord’s request.
“It sounds like you guys are just trying to pass a CID to rehab a building that wasn’t maintained,” Ellington said. “I think you all are actually stretching the intent of what CIDs were meant for.”
Palen told that committee that he negotiated the price down on the shopping center based on its condition. But he said he didn’t know the depth of the problems until after his March 2018 purchase. He described the previous owner’s maintenance fixes as “Band-Aid solutions.”
“We knew it was going to be an investment,” he said. “We didn’t imagine ... that the mountain would be so high.”
He said that he has lived in the Waldo area for 13 years and is committed to keeping local businesses at the retail center.
“This is an investment in the neighborhood,” he said. “And that’s our value system that’s driving every decision we make here.”
Councilwoman Andrea Bough, who represents the area, said she voted to approve the CID out of committee because she believes the new tax will help maintain the shopping center. She said the Romanelli Shops tout “iconic if not historic value,” and she doesn’t want to see it torn down and replaced with a modern development.
“This new owner did not create the blighting conditions,” she said. “He did not let the property go into disrepair, and the tenants are supportive of this, so I will vote in favor of it.”
But she said she does want to see more analysis of the city’s CIDs. She is working on a policy that would “would put some parameters” on the special taxing zones.
“What is more concerning to me is the layering of the CID sales tax because there’s an existing ½-cent sales tax and there’s going to be another 1-cent sales tax,” Bough said. “I think what is really important is that we develop a policy as a city that includes maybe a cooperative agreement with the CID so that there’s more control in the way that the CIDs operate and are used.”
The Star’s Allison Kite contributed to this story.
This story was originally published December 19, 2019 at 5:00 AM.
