Face-off over 2 hockey arenas proposed for Johnson County: Neither side backing down

Two rival hockey arenas are proposed within 10 miles of each other in Johnson County. And while the developers compete to break ground first, the state of Kansas is poised to make a crucial decision determining the fate of both projects.

One is in south Overland Park, a $400 million hockey arena, multi-sports complex and retail hub at the Bluhawk site, at 159th Street and U.S. 69.

The other is in Olathe, at the former Great Mall of the Great Plains site, at Interstate 35 and 151st Street. The $300 million project, called Mentum, includes a hockey arena and other sports, entertainment and retail amenities.

Some elected officials and residents question whether Johnson County could support one new, gleaming hockey arena, let alone two.

Regardless, neither can proceed as planned without Kansas sales tax revenue, or STAR, bonds — designed to reimburse developers for constructing major tourism attractions. But that program has come under fire, and state officials say its future is uncertain.

It’s up to the state whether the projects get the incentives, determining whether one, both or neither hockey arena is built.

The Olathe project has been stalled due to an ongoing lawsuit that attorneys have said could put the STAR bond approval in jeopardy. Meanwhile, a decision on Overland Park’s plan could come as early as this month.

And like a close hockey game, one project started out ahead, but the other seems to have taken the lead.

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The Mentum hockey arena development has the backing of Lamar Hunt Jr. HOK Courtesy image

Ongoing rivalry

For the past year, Olathe leaders have said the proposal for their city has a competitive edge because of its ties to Kansas City Mavericks owner Lamar Hunt Jr.

His company, Loretto Sports Ventures, is set to run the 4,000-seat multipurpose arena, which would serve as the home base of the Kansas City Youth Hockey Association. The arena would be the headliner of the Great Mall redevelopment, aimed at transforming the 100 acres that housed one of the largest shopping centers in the state until it was demolished a few years ago.

Olathe also got a head start in requesting $69.5 million in STAR bonds from the Kansas Commerce Department, which would reimburse the costs of constructing the roughly $40 million arena as well as infrastructure improvements.

Overland Park green-lit its own project shortly after, requesting $77 million from the state to cover costs related to building the $28.6 million arena and $34 million sports complex at the developing Bluhawk site.

When Olathe applied for state incentives last winter, Mayor Michael Copeland said it was important for the project to get out front, suggesting financiers thought Johnson County could support only one arena.

But the Olathe plan’s developer, Josh Woodbury of Utah-based Woodbury Corp., said the process was slightly “derailed.” The developer and city are stuck in litigation with a neighboring property owner over stormwater runoff issues.

Legato LLC owns 88 acres adjacent to the former mall property, which includes six stormwater ponds that are supposed to be maintained and cleaned by the city. In the lawsuit, Legato claims the city was not transparent in releasing a stormwater analysis, plus alleges the Mentum development will only worsen the runoff issues.

Legato is requesting a permanent injunction and jury trial. Attorneys representing Woodbury are requesting any claims that could affect the issuance of STAR bonds be expedited.

“This litigation has stunted any progress on the Mentum development,” attorneys representing the developer wrote in a court document. “Further delay threatens the survival of the development.”

The attorneys also stressed the need to apply for STAR bonds as soon as possible, and wrote, “Mentum and Bluhawk are competing for the same STAR bonds — only one can be approved.”

Company and city officials refused to comment on the case. Woodbury said he’s not worried about it.

“The judge has ruled the project should be able to move forward,” he said, citing a partial ruling by a judge this summer. “I’ve at least been told parts of the lawsuit are wrapping up.”

Along with the litigation, Olathe had to nearly start fresh in applying for STAR bonds. The city was in the middle of completing a market study to submit to the state. But then the Kansas Department of Commerce asked both Olathe and Overland Park to issue updated feasibility studies that consider the effect of having two similar projects so close to each other.

Olathe has yet to submit its new study. Meanwhile, Overland Park is now well into the process, said Robert North, chief counsel for the state commerce department.

He said the department is reviewing Overland Park’s final STAR bond application. A decision is expected any day now.

Demand for hockey

To keep growing, the Kansas City Youth Hockey Association will need additional ice rinks in the next decade, said President Chris Newans.

The Olathe developer is capitalizing on that need, aiming for the hockey arena to host up to 64 team tournaments each year.

“Hockey is an interstate tourism generator,” Woodbury said. “The arena will draw teams from their region, which includes Nebraska, Iowa, Kansas and Missouri. And my opinion is two sheets of ice (both in his project) is sufficient for the Kansas City Youth Hockey Association’s growth.”

Newans said he has a customer base of around 1,100 young players, an increase of around 300 players since the association started in 2015. The teams play at the Silverstein Eye Centers Arena in Independence, the Kansas City Ice Center in Shawnee and the Line Creek Community Center and Ice Arena north of the river.

Silverstein, for example, attracts more than 290,000 visitors each year, attending sports, concerts and other events, according to a report presented to the Independence City Council on Monday . The 5,800-seat sports and entertainment venue, home of the Kansas City Mavericks, has been said to be the most comparable arena to the two proposed in Overland Park and Olathe.

In a preliminary market study, an Olathe consultant estimated a much higher turnout at the proposed hockey arena. The study estimates 2.2 million people would visit each year, with 685,000 going to the arena, and the rest visiting shops and other planned attractions. Around 738,000 visitors are expected to come from 100 miles or more away.

Developers of Bluhawk in Overland Park expect slightly higher visitor numbers. An early market study, which did not look at the impact of a nearby Olathe facility, projected 3.1 million visitors to the arena, hotels and retail stores. Around 545,000 of those visitors would attend sports events. And around 1.12 million annual visitors are expected to come from 100 miles or more away.

Overland Park’s projection is double the cumulative amount of fans who attended Royals home games this season.

The city, state and developer did not release the more recent market study.

The commerce department’s guidelines stipulate 20% of visitors to STAR bond projects should come from another state, while 30% should come from more than 100 miles away. But the state has no mechanism for tracking those numbers..

Bart Lowen, the Overland Park developer with Price Brothers Management, said he hopes to secure an amateur hockey team as the anchor tenant of its arena, but did not specify any potential leagues.

Lowen argued the Overland Park project has an advantage because its Bluhawk site, southwest of U.S. 69 and 159th, is already mostly redeveloped.

The 277-acre development has new single family homes, a police and fire station, a neighborhood shopping center anchored by a Cosentino’s grocery store and an AdventHealth campus.

The next phase would include restaurants, shops and entertainment amenities, hotels, apartments, plus the 3,500-seat arena and 300,000-square-foot indoor multi-sport complex.

“I absolutely think Johnson County can support an arena. Can it support two? I’m not the guy to answer that question,” Lowen said. “At the end of the day, the arena belongs to the project that has the most sustainability. It’s sustainable because it’s paying back STAR bonds and driving traffic. It’s not just the arena that matters, and that’s where I think Bluhawk is above and beyond.”

KC Premiere — the metro’s largest youth basketball organization with 500 teams hosting 25 tournaments a year — will move a significant chunk of its events to Bluhawk, said Kristen Davis, executive director of the nonprofit and a consultant on the project.

Many of KC Premiere’s athletes live in Johnson County, where the organization rents courts from public schools.

With eight basketball courts that can convert into 16 volleyball courts, Davis said, Bluhawk would become one of the region’s largest sports complexes. In the West Bottoms of Kansas City, Hy-Vee Arena holds a dozen basketball courts. But that venue has struggled financially in its first year since its redevelopment from Kemper Arena.

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A new hockey arena would be built in the Bluhawk development, southwest of U.S. 69 and 159th Street in Overland Park. Rendering courtesy of HOK

STAR bonds criticized

The state’s decision could provide clarity on how many hockey arenas Johnson County could support. But it also comes at a time of heightened scrutiny for the commerce department.

Kansas Commerce Secretary David Toland announced an agency restructuring in September. And last week, the agency announced the hiring of an outside firm to help conceive a new strategy to grow the state’s economy.

The STAR bond program itself has come under fire.

The incentive was created to encourage the construction of unique tourism destinations that pull visitors to Kansas. But the program has been used to subsidize what critics believe are local quality of life projects. The Star in July revealed the state does not track whether developments meet basic state requirements for the program.

Under the process, cities sell bonds to provide upfront capital that a developer can use for project costs. The bonds are paid back over 20 years with the sales tax generated by the development.

One STAR bond project in Overland Park has already failed to meet expectations.

In 2012, Overland Park issued nearly $65 million in STAR bonds for the Prairiefire retail and entertainment development along 135th Street between Nall and Lamar avenues. Prairiefire — whose primary tourism draw is the struggling $27 million Museum at Prairiefire — has paid back only a small amount of the original principal, leaving a $64.8 million outstanding balance after seven years.

Recently, lawmakers have raised concerns about the commerce department’s oversight.

“My sense is that the administration is looking rigorously at all STAR bond projects,” said North, of the commerce department. “That would include these two but certainly other projects that come up. I think there will be a high level of scrutiny and rigor applied to the analysis.”

The developers in both Olathe and Overland Park hope to break ground next year if they receive state STAR bonds. And they both argue their projects will generate significant tourism.

But it’s now up to the state to decide.

North said the commerce department will consider each Johnson County hockey project based on its own merits.

“Because generally speaking there’s never any certainty that any particular project is going to come to fruition,” North said. “These are large projects. They’re complex. There’s lots of moving parts. So every project needs its own level of review and analysis, because we don’t know what’s going to happen with another project.”

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Sarah Ritter covers Johnson County for The Kansas City Star. Formerly a reporter for the Quad-City Times, Sarah is a graduate of Augustana College.
Kevin Hardy covers business for The Kansas City Star. He previously covered business and politics at The Des Moines Register. He also has worked at newspapers in Kansas and Tennessee. He is a graduate of the University of Kansas