$356K in taxes unpaid on stalled Mission Gateway. Some officials want a new developer
The much delayed Mission Gateway — now just hulls of two structures and a few concrete posts rising from the mud — has hit yet another snag: The developer of the huge mixed-use project failed to pay hundreds of thousands of dollars in property taxes.
The tax delinquency jeopardizes public financing of the project that was viewed as crucial to getting it completed. It’s also left many city officials even more distrustful of the developer — and wishing someone else would come in to finally finish the job, even if that means completely changing the project.
Many members of the Mission City Council do not expect Tom Valenti of New York’s Cameron Group to complete the $225 million project — planned to include an entertainment complex, hotel, retail and food hall — by the deadline in December, or at all.
“At this point, with the latest notice of default, the latest delays and lack of communication, it’s pretty clear to me now the developer can’t get it done,” said Councilwoman Sollie Flora, who is running for mayor this fall. “Ideally, I’d like to see the developer move on, sell the project and let us deal with someone who is committed to being a trustworthy partner.”
The City Council learned late in May that the property owners are delinquent on more than $356,000 in annual real estate taxes. Failing to pay puts them in default of the city’s redevelopment agreement, which offers a bundle of incentives for completion of the work. The developer has 60 days to pay the taxes.
Johnson County officials confirmed the delinquent taxes. Mission City Administrator Laura Smith did not respond to multiple requests for comment last week.
If the taxes are not paid, several council members said they will terminate their agreement, essentially leaving Valenti back at square one, without any city subsidies.
Valenti purchased the Mission Gateway property in 2005. A decade ago, as residents were growing increasingly frustrated with the lack of progress on the project, Valenti made a pledge to city officials.
“You know, it’s taken a long, long time,” he said during a 2011 news conference. “I remember someone at one of these previous meetings was recounting the history of my development experience. And they were saying that my one major development project outside of New York City took 16 years, and hopefully this one won’t take 16 years.”
“I promise you now, it’s not going to take 16 years. It’s only six. It’s not that bad.”
Now it’s been a full 16 years since he bought the former Mission Mall site at Shawnee Mission Parkway and Johnson Drive and knocked it down.
Valenti said he was still pursuing financing to complete the project, but declined to answer The Star’s questions.
Even if he can pay the delinquent taxes, Valenti still faces a looming deadline at the end of this year to complete the project. If he does not meet that deadline, he would once again be in default of the agreement.
Valenti could ask for an extension in hopes of hanging on to the tax incentives. But some city officials said they are tired of waiting.
“I will not support (extending the redevelopment agreement),” said Councilwoman Arcie Rothrock, who is running for mayor against Flora. “I feel like he has exhausted options with myself.”
The unpaid taxes are just the latest in a series of setbacks the developer has faced in the past year. Work was finally underway on the site — with concrete rising from the vacant ground for the first time — but then the COVID-19 pandemic brought construction to a halt.
As workers left the site, two major funding sources were put on hold. Then at least a dozen construction liens were filed on the property last year, claiming invoices went unpaid to contractors and suppliers. Those claims are now wrapped up in a Johnson County lawsuit.
Now the fate of the entire project is once again up in the air. The partially built parking garage and entertainment complex have sat exposed to the elements for nearly one year, and some city leaders question whether the structures will need to be torn down.
And with the mayor’s seat and several council positions up for election in November, the ill-fated Mission Gateway is already a major talking point this campaign season.
Residents have continually called for the city to hold the developer accountable. But city officials have said they were hamstrung because the developer owns the land. Now the City Council’s leverage lies in the development agreement.
But even if the city terminates its agreement, there’s no guarantee anything will happen at the site.
After years of disappointments, council member Kristin Inman said she doesn’t want to extend the agreement beyond this year.
“This has gone on for an exceptionally long time,” she said.
Like many others, Inman was encouraged last year as walls were going up at the construction site. But she’s not sure Valenti will be the one to finally finish it.
“I’m always hopeful that he can go forward with the project. On paper, it’s a wonderful project,” she said. “There’s just so much bad luck there.”
So close, yet so far
Sitting at the confluence of Shawnee Mission Parkway, Johnson Drive and Roe Avenue, the site of the former Mission Center Mall was perfectly poised for redevelopment.
But the property sat vacant for years after the shopping center met the wrecking ball in 2006. Earning nicknames like “Mission Mudhole,” it became the target of constant criticism.
Valenti has floated several ideas but faced continued challenges. Those included the collapse of capital markets during the Great Recession and community backlash to several iterations of the plan, like building a Walmart, which was once planned as the anchor retail tenant.
The future of the site was looking up when developers proposed a mixed-use project with food, retail and entertainment, which was welcomed by many city officials.
The developer had secured a lease with Cinergy Entertainment to build a 90,000-square-foot complex with 10 movie theaters, a bowling alley, zip lines and more. The company wanted to open in summer 2020, pushing up the development schedule.
Also in the works was retail, apartments, a 200-room Marriott Element hotel and a 40,000-square-foot food hall curated by celebrity chef Tom Colicchio.
Mission city officials finally had something to celebrate last year as work began on a portion of the development. The bones of a parking garage and the bright, white walls began to rise out of the ground.
But then the coronavirus pandemic brought work to a halt.
As workers left the site, two major funding sources were put on hold. City officials announced that one of the developer’s private lenders, Cottonwood Management, was putting its $60 million in financing on hold. Without the funding secured and final loan documents in hand, the city would not go to the market to sell an estimated $28 million in special obligation bonds.
Several liens were filed on the property last year. And now the property owner, Aryeh Realty LLC, is behind on some of their annual real estate taxes, said county spokeswoman Lori Sand.
The site has sat largely untouched for a year.
Valenti has been behind on his taxes before: He owed more than a year’s worth of property taxes in 2017, when the City Council entered into the development agreement to get the long-stalled project moving.
To help fund the development, the city approved tax-increment financing and created a community improvement district, which would impose a 1-cent sales tax at Mission Gateway. With none of the project completed, the property has yet to generate any tax revenues.
TIF, CID and other tax revenues were pledged to repay $28 million in special obligation bonds the city planned to issue. The developer also would receive the surplus revenues after the bonds are paid in full, which in 2017 were estimated to be about $8.4 million over six to eight years.
City officials argued that the agreement protects taxpayers and the city’s budget. The city isn’t on the hook to pay off bondholders if the project goes under, for example.
It’s not the first time the developer has struggled to complete a project. In 2014, Syracuse University in New York terminated its contract with Cameron Group to build a $20 million bookstore and fitness center, news outlets reported at the time.
The university cited construction delays and the company’s failure to secure construction financing as reasons for ending the project.
It took 16 years for Valenti to get the Palisades Center, a shopping mall in New York, approved, built and operating, according to the local newspaper in 2008.
Valenti has continually said he is dedicated to completing Mission Gateway.
Cinergy spokeswoman Traci Hoey would not say whether the company remained committed to the project.
“It’s up to the developer right now,” she said, “and we will evaluate all options as they are presented.”
Officials with Colicchio’s Crafted Hospitality did not respond to multiple requests for comment.
City ‘held hostage’
Some City Council members are still happy with the concept for the site, optimistic that retail, an entertainment center and food hall would boost growth in the Johnson Drive area, where many small businesses struggled over the past year.
“I think that Cinergy and the food hall are a very good direction. Something along those lines with an entertainment district sounds enjoyable. I know that with the loss of Mission Bowl, residents have really missed that entertainment,” Rothrock said. “If something popped up along those lines I think it would be welcomed with arms wide open.”
Both Rothrock and Flora said that along with improvements to streets and parks, concerns about the future of Mission Gateway are dominating conversations as they knock on doors and campaign for mayor.
“I still think it’s a good project in terms of the component pieces,” Flora said. “Ideally, they could sell the project to someone who could complete that. I don’t see this developer being able to get it done because there haven’t been any signs pointing to that.”
Mayor Ron Appletoft has yet to file for reelection. He did not respond to requests for comment.
Whether it’s the same plan or something new, many city officials expect it will take a new developer to get the job done. And some council members are now pondering an entirely different future for the partially built site.
“If I win the lottery, I’ll buy that sucker up and build a veterans community center on it with a dog park for the kids,” Rothrock said.
But ultimately, city officials say the direction of Mission Gateway is outside of their control. If the council finds the developer in default, the project’s future will likely be determined by investors, said Councilman Ken Davis.
“We’re certainly not going to take ownership of the property,” he said. “There’s no way we can do that.”
Davis said the developer had been untrustworthy, making multiple promises that were not kept. But he said there’s little the city can do until a new developer takes over.
“At this point, I am not prepared to say one way or another how I am going to respond to it,” he said. “But we’ve been watching this for over 15 years without going anywhere. We have limited options in terms of what we can do until the ownership is changed.”
No matter what happens to the site, officials said they are ready to move on from the tribulations of Mission Gateway being a primary focus of the city.
“It has been so long that you have neighbors, business owners and residents held hostage by this situation,” Rothrock said. “It’s purgatory. We’re just waiting.”
