What’s next for Cerner’s Bannister development after standstill with Kansas City?
After a standstill with Kansas City, it’s unclear what exactly Cerner Corp. has planned in the way of much anticipated retail development on its massive Innovations campus off of Bannister Road.
The health care IT company’s 290-acre campus, which stretches from 87th to 95th streets immediately east of Interstate 435, was conceived under the premise that it would help spur a revitalization of South Kansas City. The company built on the site of the old Bannister Mall, which fell into a state of blight after its closure.
Aside from bringing up to 16,000 jobs to the area, Cerner pledged to create a retail development near the corner of I-435 and Bannister Road. A major selling point for neighbors in the area, those plans have been up in the air since the company sought to change its tax incentive agreement with the city.
Cerner did not respond to multiple requests for comments from The Star.
Still, some projects are in the works: the city planning department has been notified of plans to build a Taco Bell and a Hampton Inn at the site.
But the longstanding lack of progress on the retail front has irked some neighbors, who say Cerner’s massive development has brought little benefit to the area, while it has sucked much-needed tax dollars away from the city and schools. With few local options, neighborhood leaders say they’re forced to travel to neighboring cities to enjoy a sit-down meal or run to a store.
In 2013, the Kansas City Council awarded Cerner $1.63 billion in tax increment financing, an incentive program that diverts tax revenues back to developers. The 23-year deal was and remains the nation’s largest TIF award, according to incentive watchdog Good Jobs First.
Cerner recently sought its fourth amendment to its tax incentive agreement with the city. It wanted to remove the retail development portion of its plan and hand that piece of the property over to other owners.
In addition to building 3.7 million square feet of new office space, the health care IT company had committed to building a 300,000-square-foot conference and training center, 249,000 square feet of retail, a 240,000-square-foot data center, a 170-room hotel, a medical clinic and a day care center.
In recent months, the company told city officials they struggled to find developers willing to participate in the project because of the strings attached to the incentive award. To qualify for the TIF incentives, the project must meet certain goals like paying workers a prevailing wage and hiring a certain number of minority- and female-owned businesses.
Dave Frantze, a local development attorney representing Cerner, told the TIF Commission in December that “sometimes those parties either don’t have the willingness or the ability to do that.” He said national developers use the same contractors and design teams across the country and said the TIF Commission and its rules were “a big unknown.”
Frantze said Cerner wanted to sell off just the retail portion of its wider Innovations campus to private developers. Those retail developers would prefer to forgo the potential tax incentives rather than work under the confines of the current agreement with the city, he said.
About 3,000 Cerner employees work in the two towers currently open on the Innovations campus. The company expects to bring another 3,000 jobs when two more buildings open this year.
Frantze said that critical mass of employees has made retailers more interested in opening up there.
City Councilman Lee Barnes, a member of the TIF Commission board, said he didn’t buy the argument that rules on hiring minorities and women were too burdensome.
“Why did you come in and kind of proclaim that you were going to do retail and now it’s better for someone else to do that?” Barnes asked.
Scott Siemers, a vice president at Cerner, said the company originally believed it could complete the retail development in 2013, but professed “total ignorance” about the complications involved. He said the area is more likely to see retail development without the incentives and their requirements.
“Frankly, in our discussions with various other developers we’ve been educated,” he said.
Siemers said the company is not in the business of developing commercial real estate.
“That is not our expertise,” he said. “That is not a business we’re going in.”
When TIF Commission board members asked about possibly writing restrictions into land sale agreements that required or barred certain kinds of developments, Siemers objected.
“From our perspective, frankly, once we sell that piece of property we’re done,” he said. “So I’m really concerned actually with your approach that somehow you’re going to tie it back to Cerner when I’ve sold it to an independent third party and I can’t control what they do.”
Yet he did say the company planned to add some covenants on any land sales and be thoughtful about what kinds of developments it invited in.
“We look at this as our front door. So frankly were not going to do anything that is going to be anti-neighborhood or anti our campus,” he said.
Members of the TIF Commission board were critical of the company’s request to be excused from the retail development.
Board member Jim Staley said the wide Cerner development was “sold as a benefit to the community.”
“Are we now releasing them of the obligation to bring in some of the public benefits they promised?” he said.
The board discussed the proposal in closed session for over an hour. Shortly after reconvening, it held the issue over to its Jan. 14 meeting to seek more details from the company.
By that time, though, Cerner officials realized they had little chance of success.
Heather Brown, executive director of the TIF Commission, said the company emailed the agency and withdrew its request for a change, saying it didn’t believe it could reach an agreement.
But what that means for the future development is unclear.
Cerner’s tax incentive agreement is sliced into 16 phases. The phase that includes retail development was slated to be completed in 2022, according to the agreement.
The company’s incentive award is then given based on the progress of each individual phase, said Wesley Fields, attorney for the TIF Commission. That means Cerner could theoretically complete its office developments and receive incentives for that work, without building out the retail portion.
“They can go forward with any of the projects they want,” Fields told The Star. “They have to demonstrate compliance before receiving reimbursements.”
He said Cerner had to notify the TIF Commission before selling any land. And any future buyer would be bound by some provisions of the company’s development agreement with the city.
Alissia Canady, a former councilwoman representing South Kansas City, said the current arrangement leaves surrounding neighborhoods in a state of limbo.
“I think good news would be them announcing they’re going to put something commercial there on the site. Anything short of that is kind of just them delaying. It’s not good or bad. It just is.”
Canady, the chairwoman of the TIF Commission, said residents in the area view Cerner’s employees more as visitors than as members of the community. With easy access to the interstate, most zip off to other parts of the metro at the end of every work day. When they are there, employees have little reason to leave the gated campus, which contains a food court, a fitness center and a health clinic.
“That neighborhood’s worked really hard to work with Cerner in anticipation of something awesome going in as a trade off,” she told The Star, “because they pretty much put an island in the middle of the community.”
Even after cutting several hundred jobs last year, Cerner is the area’s largest private employer with some 14,000 workers spread across several campuses in the Kansas City area.
Kansas City Development Management Division Manager Joe Rexwinkle said Cerner’s proposed commercial development is so far limited to the Hampton Inn and Taco Bell planned for the campus.
He said the company’s development agreement does not require the addition of retail.
“It merely allows it to be built,” Rexwinkle said in an email. “There are no terms or contracts I am aware of that require them to build any of it.”
Former Kansas City Council member John Sharp, who is now president of the South Kansas City Alliance, said he was unaware of Cerner’s attempts to sell off some of its land. But he said the neighborhood is eagerly awaiting the addition of new stores and restaurants.
He said there are currently no sit-down restaurants in the portion of the Hickman Mills school district that sits within Kansas City limits. That forces many people to drive to Lee’s Summit, Belton or Kansas-side suburbs to shop or dine.
“I’d sure like to do some retail shopping or go to a sit-down restaurant in my own community,” Sharp said in an interview. “It’d be nice to keep that tax revenue in Kansas City. Also, for a community to remain viable you need not only housing and jobs but you need good retail services.”
