Development

Major redevelopment of distressed Midtown shopping center gets early approval

A proposed redevelopment project across the street from the Uptown Theater as shown by a rendering.
A proposed redevelopment project across the street from the Uptown Theater as shown by a rendering.

A $55 million mixed-use project that would transform a distressed shopping center next to the Uptown Theater earned initial support from a Kansas City Council committee Wednesday and is on a fast track toward approval.

The Uptown Lofts, planned for Valentine Road and Broadway Boulevard north of the Uptown Theater, would add 223 apartments, revamp the existing shopping center with retail space, a bank and a gym, and continue to provide parking for the theater. The building would have a rooftop terrace with grills, a pool and hot tub and a dog park. Developers could opt to add a boutique hotel in a second phase.

Members of the finance and governance committee approved an agreement Wednesday that allows developers to move forward and seek incentives and zoning approvals for the project. It also settles a dispute between the city and the shopping center’s current owner, Larry Sells, over $2 million the city paid when the shopping center didn’t perform as expected.

“We were headed toward court,” said Kansas City’s finance director, Randy Landes. “That’s where you end up to solve these disputes.”

Committee chairman Scott Wagner said the full city council would hear the proposal Thursday.

Roxsen Koch, an attorney with Polsinelli representing the development group, said developers would seek approval for incentives from the Planned Industrial Expansion Authority on Thursday morning. They plan to appear before the Land Clearance for Redevelopment Authority — a party to the agreement — next week. The community improvement district the shopping center sits in also has to sign off, she said.

Jason Swords, principal of Sunflower Development Group, has said developers hope to break ground between April and June of 2019.

Uptown Lofts.jpg
Developers plan to build a mixed-use project at 3600 Broadway, a decades-old shopping center that provides parking for the Uptown Theater but remains only 40 percent leased. Courtesy of Sunflower Development Group

At one time, the former Valentine Shopping Center — now dubbed the Uptowne Shoppes — housed a grocery store. Sells said over the years about $5 million has been invested in cleaning up the center. The goal was always to find an outside developer to revitalize it, he said in an interview.

“We tried and we went through dozens and dozens of developers, and the timing wasn’t right or the developer wasn’t right,” Sells said. “This time the timing is perfect. The developer is excellent.”

Less than half of the shopping center is occupied. It houses small restaurants, an insurance agency and a comedy club. Political campaigns have rented office space in the center. On the back side of the building down a hill from the street level is a gym.

Developers plan to bring the gym up the hill and put parking in the basement.

While the Uptown revitalization, which began in the 1990s, was a “roaring success,” according to Landes, the shopping center cost the city $2 million. At first, the shopping center had several tenants, including a grocery store, but over time, businesses left. The center didn’t yield enough revenue to pay off bonds the city had guaranteed, so the city made up the gap.

At the end of the bond payment period, Sells could have owned the property again, but the city argued he owes that $2 million.

“To get the deed to the center, the payments have to be made for the back payments,” Landes said.

Sells disputes that.

“The deal was that they wouldn’t look to us to pay those back,” Sells said. “They could get reimbursement if they wanted to from the state.”

Under the agreement, the city would forgo that $2 million, which Landes said may require court action. Sells would be able to sell the center for $3.35 million to the new developers, who would also maintain parking spaces for the Uptown Theater, a key priority for Sells and neighbors.

To make the project work, developers are looking for a sales tax exemption on construction materials, a cut of some types of sales tax and a 25-year property tax abatement. It would be a total abatement for 10 years and a 50 percent abatement for the next 15.

The city council is typically limited to a 75 percent abatement for 10 years followed by a 37.5 percent abatement, but the ordinance exempts properties in continually distressed areas. Landes said that would apply to the Uptown Lofts project.

Uptown Shoppes already sits in a community improvement district where shoppers pay an extra 1 percent sales tax that goes toward site improvements. If the hotel is built, developers could get some revenue from the city’s hotel tax.

Sunflower Development Group is developing the project with Uptown Development, LLC, a partnership between Mike Treanor of Treanor Investments, LLC and Doug Compton of Hawthorne Homes, LLC, both from Lawrence.

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