Kansas City malls: A dying breed?
Unified Government Commissioners balked at details of a $140 million redevelopment plan at the former Indian Springs Mall in Kansas City, Kansas, particularly a fire-sale price of city-owned land where a mixed-use project has been proposed.
Indian Springs Mall at Interstate 635 and State Avenue followed similar enclosed malls into the retail graveyard and was bought by the Unified Government of Wyandotte County/Kansas City, Kansas, for $8.4 million in 2007 before it was demolished.
In its place, an affiliate of Scavuzzo’s Food Service Company is proposing what’s called KC Foodie Park. It’s a four-phase development that starts with a warehouse distribution building for Scavuzzo’s, followed by new shops along State Avenue for what’s generally described as retail, restaurant and entertainment development. The next phase is additional commercial development and finally a new office building that would serve as Scavuzzo’s corporate headquarters.
But members of the Unified Government Economic Development & Finance Committee tabled a vote on KC Foodie Park at their meeting Monday night after pointing out that a development proposal calls for the UG to sell 50 acres to the developer for $400.
“I’d like to know what room do we have in terms of the sales price of this land,” said Brian McKiernan, 2nd District UG Commissioner. “It has been vacant, but it’s in prime land in a prime location.”
Jim Walters, UG Commissioner for the 7th District, compared the bargain basement price for the Indian Springs site to what developers paid for land at Turner Diagonal near Interstate 70 for a $155 million logistics park.
“Do you know anything about the land value for the warehousing that is being built a couple miles west at the Turner Diagonal?” Walters asked UG economic development director Katherine Carttar.
“It’s more than $400,” Carttar replied.
“If they can pay market rate for land and develop a warehouse on spec and expect to make money, why would we give this valuable piece of Wyandotte County away for $400?”
Carttar and Polsinelli attorney Curtis Petersen, representing Scavuzzo’s, said KC Foodie Park is no comparison to what’s going on at Turner Diagonal.
“We were very aware when looking for a company to partner with as we develop this property that it would not just be an industrial park,” Carttar said. “This really needed to be a mixed-use site providing direct benefits to the neighbors. Particularly with retail in the situation it’s in currently, that’s a tougher sell than you would anticipate.”
Sale price wasn’t the only concern.
Walters pointed out that the development agreement spelled out generous deadlines for completing the various phases of the project, with one element — the office building — conceivably opening in 2031 while still accruing incentives.
The project is calling for tax increment financing, which allows the development to receive all new property taxes on the 50 acres to pay for certain development costs. KC Foodie Park also calls for a community improvement district that would allow the development to recoup an additional 1% sales tax on purchases within the development.
All told, public incentives account for 14% of the overall $140 million project cost.
“I have to say that reading this development agreement, the project described here is not nearly as exciting as the project that we have been presented over the past several months,” Walters said.
Petersen attempted to counter Walters’ skepticism.
“Scavuzzo’s is putting all their eggs in this basket,” Petersen said.
He said the lengthy timeline would ensure that developers could find good tenants for the retail property.
“We don’t want to just take the first tenant that can probably pay rent,” Petersen said.
He added: “It if was an easy process, somebody would have probably approached you with pretty pictures and probably already done it.”
The UG has had trouble finding a way to re-imagine Indian Springs since the mall met the wrecking ball.
In 2017, an affiliate of Kansas City real estate firm Lane4 Property Group proposed the development of a “flex-tech” business park — office space combined with light industrial and distribution warehouses. But UG officials at the time soured on the idea, saying that the former mall site called for a more prominent use.
UG Commissioners at Monday night’s committee meeting did not appear inclined to cast the Scavuzzo’s project aside. But they wanted a month to go over details that they had questioned.
“Because it’s a public-private partnership, we are similarly making a big investment in this project,” McKiernan said. “And I think it’s incumbent on us to take a breath and slow down and thoughtfully consider all aspects of this deal.”