KC wins big after Bannister Federal Complex closing

Kansas City not only won the bureaucratic equivalent of a street fight over federal jobs at the soon-to-close Bannister Federal Complex, it kicked butt.

That according to a man very familiar with the ways of Washington: former U.S. Sen. Kit Bond of Missouri.

Despite fierce competition from other cities nationwide and a shrinking federal budget, Kansas City not only kept all the federal agencies and thousands of jobs that were at the massive former World War II defense plant slated for demolition in 2016, it reaped hundreds of millions of dollars in new spin-off development.

All told, well over 6,500 full-time federal jobs that were at the Bannister complex have been retained in Kansas City, and at least $1.5 billion has been invested in new facilities in an important local economic saga that has played out over the past decade.

“That was a very difficult effort, because everyone wants those agencies,” Bond said. “When (other communities) see one of those transferring, all the guns and knives come out for it.

“We worked hard to make sure we won. All of these were challenges.”

The recent announcement that the National Oceanic and Atmospheric Administration will keep its 83-person operation in the area was the final chapter of a Bannister saga that began in 2002.

That’s when Bond helped launch an effort to relocate the Internal Revenue Service operation then at Bannister to a huge facility on West Pershing Road. It opened in 2006 and also provided a big boost to nearby Union Station, then bleeding red ink.

The IRS processing center kept 3,000 full-time jobs in Kansas City and several thousand more seasonal positions. Following the IRS out of Bannister were the National Archives, U.S. Department of Agriculture, General Services Administration, NOAA and the biggest of all, the National Nuclear Security Administration nuclear weapon parts operation run by Honeywell.

And for good measure, the community held onto a Marine Corps information technology center at 2306 E. Bannister Road, next to the main Bannister complex in south Kansas City, keeping at least 450 good jobs in Kansas City for 30 more years.

“I’m not aware of any other example of a World War II facility that started with 20,000 employees to win a war, then transitioned to a 5 million-square-foot federal facility with 10,000 employees and a dozen different agencies, that’s now being redeveloped and at the same time relocating virtually all the employees in the same area,” said Jason Klumb.

“It’s unprecedented.”

Klumb, the regional administrator for the GSA, the federal government’s landlord, grabbed the Bannister baton from his predecessor Brad Scott, who worked closely with Bond and other civic leaders when it became clear 10 years ago hat the clock was winding down at the plant that opened in 1943 to make warplane engines.

It wasn’t only federal bureaucrats who fought the fight for Bannister.

The story involved local and federal elected officials, including a mayor who served in the Marines, Chamber of Commerce heavyweights and even a technician at the NOAA who called City Hall to remind officials not to forget her operation.

“As a citizen, I felt it was fair and right that Kansas City should have the chance show it was a great place to stay and do business,” said Laurie Hines, who repairs radar equipment for the National Weather Service. “I was the person who notified the City Council we were not part of the discussion.”

Kansas City Mayor Sly James traveled to Washington a few times to lobby officials to keep the Marine Corps information technology center in his city. A strong play was being made by New Orleans for the facility and its well-paying jobs. James was not shy about using his cred as a Marine.

“It’s always great for one Marine to talk to another,” the mayor said.

The battle for Bannister also involved some unorthodox tactics on the two biggest deals, the 1.1 million-square-foot IRS facility and the 1.5 million-square-foot National Security Campus housing the Honeywell nuclear weapons parts plant at Missouri 150 and Botts Road.

With Washington balking at the huge upfront cost of developing new replacement facilities for the IRS and National Nuclear Security Administration, local business leaders, with the help of Bond, offered to develop the projects privately and leased back to the government on a long-term basis.

Scott described retaining the Honeywell project as a “miracle.”

Its estimated $550 million price tag was opposed by Washington budget officials. New Mexico was fighting to have the Kansas City operation transferred there. And peace activists opposed spending more on nuclear weapons. What’s more, financial hurdles led to a failed initial bid that almost derailed the endeavor.

“The NNSA had never executed a build-to-suit deal of this kind,” Scott recalled. “The Office of Management and Budget said the federal government was out of money, and it was evident they were not going invest in a new facility.

“Kit Bond fought long and hard to keep and preserve those jobs, which offered an opportunity for a significant, long-term commitment to the community. ... The most difficult thing that could have happened was the bid bust.

“Our demise was being cheered inside and out, but the team led by Senator Bond gave us a chance for another opportunity. They rounded up the money and put us over the top.”

The Honeywell project is being developed by CenterPoint Properties of Chicago and Zimmer Co. of Kansas City, and is scheduled to be fully operational by late summer.

The upfront cost, including construction, relocation and equipment, is about $1 billion. But because of the private lease deal, the complete tally over 20 years has been estimated at $4.76 billion. More than 2,100 well-paid jobs are being retained as a result.

And because the facility was built privately, it will yield property taxes for the first time. Although much of the initial revenue is going toward paying for road and infrastructure improvements, the Grandview School District will receive $1.4 million annually in new revenues.

“I think it’s a huge accomplishment,” said Kevin Breslin, attorney for CenterPoint.

“It’s a real credit to the congressional delegation that worked hard to keep these agencies in the Kansas City area, and equally the huge contribution of Jason Klumb and his colleagues at GSA.”

Klumb executed the Honeywell project first conceived by Scott and Bond, a Republican. GSA administrators are political appointees, and Klumb, a Democrat, was appointed by President Barack Obama after Scott, a Republican named by the Bush administration, was given his walking papers.

But with Kansas City one of only 10 regional GSA offices — its district includes Missouri, Kansas, Nebraska and Iowa — both administrators continued the tradition of fighting to preserve that status.

“At every opportunity, those of us in appointed political positions were cheerleaders for our community,” Scott said.

“Kansas City has a lot of advantages. We have an organized and collegial civic leadership that reaches out to our congressional delegation to keep these agencies in Kansas City.”

While the National Security Campus was the biggest private project in terms of construction dollars, the spin-off related to the IRS processing center had greater civic ramifications. That’s because a tax-increment financing plan created for the IRS project embraced its next door neighbor, Union Station.

The $370 million IRS project included the renovation of the historic Main Post Office and construction of three new annexes. Union Station got a 1,500-space garage that it shares with the IRS, and the tax increment financing spun off by the project paid for a pedestrian bridge spanning the railroad tracks between Union Station and the Crossroads district.

The entire deal led to an estimated $2.5 million in annual new rent to Union Station. The developer of the IRS project was a subsidiary of DST Realty.

“There is no question that as a result of that IRS investment, it had a tremendous influence on helping Union Station,” said Mike Haverty, who was Union Station’s board chairman at the time.

Bond described the IRS deal as the “flagship” project that made it easier to get the privately developed Honeywell project done.

“One of the tough things was to convince the authorizing subcommittee to do a lease,” he said. “The staff kept shooting it down.”

Also joining the IRS in the Union Station area was the much smaller National Archives Central Plains Region office and its 25 employees. The office, which is the repository of nonmilitary federal records collected in Missouri, Kansas, Iowa and Nebraska, covers 170 years of regional history.

They range from the profound — the landmark 1954 U.S. Supreme Court decision in Brown v. Board of Education — to the whimsical — letters from Buffalo Bill Cody recruiting American Indians for his Wild West Show. Other items include Harry Truman’s draft card, slave receipts and “enemy alien” documents that German-Americans were required to carry during World War I.

The National Archives office relocated from Bannister into 44,000 square feet in the Union Station freight annex. Lori Cox-Paul, its director, said the facility is celebrating its fifth anniversary at its new home this spring.

“It’s been great for us to be at this location, because we’re centrally located and easier to find, and we’re in the heart of other cultural attractions,” she said. “We have two wonderful exhibition galleries that change every six months, and there’s also a huge public program space we never had at Bannister.”

The final piece of good news for Union Station was the decision in December by the GSA to relocate its 900 employees from Bannister to leased space in Two Pershing Square, an office building next door to the historic terminal.

Although local officials originally had hoped the federal government might build new offices downtown for the workers, the lease was hailed nonetheless. The GSA is expected to take occupancy at the end of the year.

Both the NOAA and the USDA operations are more industrial.

The agriculture department’s Animal and Plant Health Inspection Service employs 30 people and plans to relocate to an a new building at the CenterPoint-Kansas City Southern Intermodal Center at the former Richards-Gebaur Airport.

The NOAA operation supports the National Weather Service by providing parts and repairing weather-forecasting equipment, particularly radar, from 120 weather stations around the country. The operation is officially know as the National Logistic Support and Reconditioning Centers.

Employees manage an inventory of 2 million parts valued at more than $30 million. Over the years, the technicians have mastered the unique skills needed to maintain generations of electronic equipment dating to the 1940s. They repair everything from 10-ton radar assemblies to circuitry so small a microscope and dental tools are necessary.

And the work is vital. For example, the NEXRAD radar equipment the workers maintain is the same gear that provides early warnings for tornadoes and tracks their path.

Although NOAA officials in Washington conducted an objective review of prospective locations for relocating the facility, it was a relief to the local staff when it chose to remain in Kansas City. The agency has begun a search for 217,000 square feet of space in Kansas City.

“One concern about moving out of Kansas City is that while we can train people in their job, it takes years to bring people up to speed,” said Chuck Maples, director of the National Reconditioning Center.

Now that new homes have been found for all the Bannister agencies, the next big job will be the demolition, cleanup and redevelopment of the site. The NNSA has chosen CenterPoint to be its “preferred partner for planning,” and the firm is negotiating a final acquisition agreement.

That transfer is expected to occur after Honeywell and the GSA are out of the old defense plant late next year.

Right now, the estimated price tag for demolishing the building, cleaning up the 300-acre site and preparing it for new development is $175 million.

By late 2017, all that should remain of the original Bannister Federal Complex will be the separate building housing the Marine information technology operation.

“It’s been a bistate, bipartisan effort to maintain the operations of all these agencies in the metropolitan area,” Klumb said. “The administration of NOAA did a comprehensive search is the most cost-effective place to continue their mission.

“The great advantage we have is what Kansas City had to offer.”

• Internal Revenue Service processing center: The new center opened in 2006; 1.14 million-square-foot project on West Pershing Road; 3,000 full-time employees, up to 5,000 additional seasonal jobs; its cost was $370 million.

• National Archives Central Plains Region office: Relocated in 2009; 44,000 square feet at Union Station freight annex; 25 employees; $10 million.

• National Nuclear Security Administration nuclear weapons parts facility operated by Honeywell Federal Manufacturing Technologies; Fully operational late this summer; 1.5 million-square-foot campus at Missouri 150 and Botts Road; 2,100 employees; total upfront cost, including moving and equipment, about $1 billion.

• U.S. Department of Agriculture Animal and Plant Health Inspection Service: To be completed this year; 100,000 square feet in new building at CenterPoint-Kansas City Southern Intermodal Center; 30 employees; $4 million.

• General Services Administration: To be completed this year; 140,000 square feet at Two Pershing Square building, 2300 Main St.; 900 employees; lease valued at $49.8 million over 20 years.

• Marine Corps information technology center: new 30-year lease extension announced 2013; 2306 E. Bannister Road; 450 employees.

• National Oceanic and Atmospheric Administration: Expecting to relocate in 2015; 230,000 square feet at site yet to be determined; 83 employees.

This story was originally published March 10, 2014 at 10:08 PM with the headline "KC wins big after Bannister Federal Complex closing."