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$15 million Citadel settlement advances

Kansas City taxpayers would spend more than $15 million to resolve lawsuits over the failed Citadel Plaza development, under an agreement that gained tentative approval Wednesday.

The City Council’s Finance and Governance Committee endorsed a settlement of several lawsuits involving creditors for the development, which was first proposed about 15 years ago at 63rd Street and Prospect Avenue.

The measure goes to the full council today for final passage.

Full details of the settlement won’t be released until after today’s vote. Brian Madden, attorney for plaintiffs Citadel Plaza LLC, declined to comment Wednesday, pending the full council vote.

But City Attorney Galen Beaufort and City Manager Troy Schulte told the committee that they think the settlement is in the city’s best interest.

Developers of Citadel Plaza had sued the city for breach of contract, alleging the City Council had reneged on an agreement to provide $20.5 million to jumpstart the shopping center project in late 2008. In preparing for trial, city officials had countered that they did not provide the money because the developers had failed to meet certain conditions.

The case had been slated to go to trial this fall, and council members had expressed frustration that, even if the city won at trial, it would not get clear title to the land or the development rights. The trial was then postponed to allow the parties to negotiate a settlement.

Beaufort said the proposed settlement would allow the city to gain clear title to about 70 percent of the land in the original Citadel Plaza tax increment financing district. The $15 million represents about 70 percent of that original $20.5 million. The settlement also would allow the city to then seek a new developer to finally get something positive going in the location, which has become a blighted, weed-choked tract since development stalled.

Schulte told the committee that the settlement would allow the city to resolve the complex litigation and move forward with development of an important corridor.

Along with the $15 million, the city would likely spend an additional $3 million to acquire the rest of the land in the TIF district and fix remaining environmental contamination. To raise the money, the city expects to issue about $20 million in 20-year bonds, with an annual debt service of about $1.7 million per year.

Spending that general fund money on Citadel means it is not available for other basic services. But Schulte said the city hopes to recoup at least some of that money with new revenues from future development at the site.

The city does not currently have a new developer identified, and it is not guaranteed the site will be developed.

Council members Cindy Circo and Michael Brooks, who represent the council district that includes Citadel Plaza, said it is one of their top priorities to bring economic development to a corner where neighbors have suffered for too long from blight and dashed expectations.

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