Developer reaches land deal with Sprint, only to run up against unhappy OP council

Kansas City developer Ken Block last Friday managed to buy property from Sprint that seemed to let the long-awaited Galleria 115 project move ahead, only to learn on Monday night that the Overland Park City Council is unhappy with the current plans for the mixed-use development.

Council members did little to conceal their disappointment with Galleria 115, located near 115th Street and Nall Avenue, particularly when they learned that it would consist of three drive-through restaurants.

One council member called it a “bait and switch,” accusing the developer of coming up with a stripped-down version of the mixed-use project after obtaining public incentives.

The Overland Park Council last year approved a community improvement district for Galleria 115, which initially charged an additional 1 percent sales tax that the developer could use to pay for certain project costs. Block later sought, and received, an increase in the CID sales tax rate to 1.5 percent, which would generate $35 million for the developer.

“I believe the thing we voted the incentives on was something, quote, something special,” said council member Dave White. “...This is nothing. Nothing.”

The Galleria 115 project consists of 548 residential units, more than 200,000 square feet of retail, a four-story office building and space for entertainment. The project was at one point a joint venture between Block Real Estate Services and The Retail Connection, a Dallas firm. The Retail Connection later dropped out of the project, leaving Block to forge ahead.

An attorney representing the developer may have goosed up the Overland Park City Council’s expectations when he described Galleria 115 in glowing terms during a council meeting last year, comparing it to Town Center Crossing in Leawood at 119th Street and Roe Avenue and saying the project would include “the hottest leisure, entertainment, go-to place after hours, lets-go-hang shopping center in all of Johnson County.”

The Overland Park City Council seemed to think the current plan before them is something less than what had been described.

“I guess I’m sitting up here a little perplexed — I know Mr. Block has brought some very, very high quality projects to this city and other cities around us, and that is in the back of my mind,” said Overland Park Mayor Carl Gerlach. “I guess I agree with many of you that this one just doesn’t look like a Block project.”

Block, who was not at Monday’s meeting, declined to comment on the Overland Park City Council’s comments about Galleria 115. Bob Johnson, a lawyer representing the development, sought to defend the project.

He said Block has had to pick up the project after its joint-venture partner left the project, and has had to contend with unforeseen challenges with the development site. Johnson was quizzed about tenants, but Johnson said he could not disclose their identities.

“It’s not the intention of Mr. Block to pull a bait-and-switch,” Johnson said.

Johnson’s defenses of the project seemed to have little effect on council members.

“How many times are we supposed to act as your shock absorber for your internal business dealings?” said council member Faris Farasatti.

“If I could vote to rescind the CID, I would because I think we’ve been misled and I think you’ve taken advantage of us,” White said. “And I’m sorry but three drive-through restaurants along Nall Avenue by all of this great office stuff cheapens the whole thing.”

Instead of rescinding the CID, the Overland Park City Council voted to send the project back to the planning commission for its meeting in November.

It was dour news for Block just days after closing on purchasing land from Sprint for the Galleria 115 project. Block took Sprint to court in September after a disagreement over the sale agreement surfaced.

In the lawsuit, Block claimed Sprint sought to limit potential retail uses at the Galleria 115 project to “urgent care, freestanding emergency rooms, real estate brokerage offices, and mortgage and securities offices.” Block interpreted the agreement to suggest that Sprint was only forbidding leases to Sprint competitors like AT&T, Verizon and T-Mobile.

We worked though the issue which was simply clarification on the uses on the site; and it is worked out,” Block said.