Development

Kemper Arena redeveloper faces tough questions, but gets good news

The Planned Industrial Expansion Authority on Thursday approved a tax abatement plan for the proposed redevelopment of Kemper Arena into Mosaic Arena, a youth and adult recreational sports attraction in the West Bottoms.
The Planned Industrial Expansion Authority on Thursday approved a tax abatement plan for the proposed redevelopment of Kemper Arena into Mosaic Arena, a youth and adult recreational sports attraction in the West Bottoms.

A $30 million plan to make Kemper Arena — wait, make that Mosaic Arena — useful again took another step toward its redevelopment.

The Planned Industrial Expansion Authority approved a request for a tax abatement and sales tax exemption on construction materials for Steve Foutch’s plan to refashion the old West Bottoms arena.

Foutch hopes to start construction in April to turn the arena into a two-level youth and adult sports facility called Mosaic Arena, named after the St. Joseph health care company that bought the naming rights for Kemper Arena.

Under the expansion authority plan, Foutch gets a 100 percent property tax abatement on the arena and its improvements for 10 years, then a 50 percent abatement for the next two years. Foutch, CEO of development firm Foutch Brothers, will pay property taxes on the land for his project, which will amount to $30,000 a year.

That $30,000 doesn’t sound like much, but it’s more than the land had been paying in taxes, which was nothing, for decades while the city owned it.

Foutch still needs to buy the arena from Kansas City, which is expected to happen in February or March. The city will sell Foutch the arena for a song, preferring to get what became an outdated facility off its hands.

The Mosaic Arena project is shaping up like this: It will consist of two levels, a lower level with 3,500 seats and an upper level with 5,000 seats. There will be 12 basketball courts, a 350-meter indoor track and other athletic and fitness facilities.

It will also include 100,000 square feet of office and health clinic space. SoPro Gaming, a business that builds space for video game aficionados, will lease about 5,000 square feet, according to Foutch.

Foutch predicted the facility will attract significant traffic to the West Bottoms with children and adult recreational sports activities occurring from midafternoon up until midnight on weekdays and sports tournaments on the weekends. KC Crew, an adult recreational sports league company, plans to use Mosaic Arena’s facilities, according to Foutch.

“It will turn around a quiet, tired neighborhood into something that’s quite vibrant,” Foutch said.

Some Planned Industrial Expansion Authority commissioners quizzed Foutch about how much revenue the project stood to make and questioned whether it would be enough for a viable business model. Foutch said his financial pro forma has Mosaic Arena making about $3 million to $4 million a year.

“This is a very risky project,” said David Macoubrie, executive director of the expansion authority. “The property tax abatement has been negotiated with the taxing jurisdictions.”

Foutch acknowledged the project’s risk, noting that similar facilities exist but most are publicly owned while his is a private enterprise.

“There aren’t any other comps like this,” Foutch said.

Between Foutch and Bill Haw, a West Bottoms businessman, there’s $3 million in personal equity in the project, Foutch said. Other financing comes from state and federal tax credits, a bank loan and revenue from a 10-year naming rights agreement with Mosaic Life Care.

Foutch said the arena will employ about 80 full-time workers.

The Planned Industrial Expansion Authority is the final say on tax abatements. The Kansas City Council will have to approve a sale agreement on the arena, which is the last approval needed for the project.

It seems likely the council will support it. Scott Taylor, a 6th District councilman who is chairman of the Planning, Zoning & Economic Development Committee, sent expansion authority commissioners a letter of support for the Mosaic project.

“The proposed reuse will impact the taxpayers of Kansas City as it will save approximately $1 million a year that is currently needed to keep the structure in the City’s possession and avoid demolition costs of $8-12 million,” Taylor’s letter reads. “By turning it over to the private sector, this land will create new revenue for the Kansas City Public Schools.”

Steve Vockrodt: 816-234-4277, @st_vockrodt

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