Metro North Mall is getting closer to redevelopment, but at a price that the superintendent of schools for Platte County says is not fair.
Michael Reik says his opposition to a Tax Increment Financing (TIF) plan is not about whether or not the developer who currently owns the property needs tax incentives to aid in the redevelopment, but rather about which tax entities are expected to foot the bill, and how that burden is distributed.
A TIF plan recently approved by the city council, as well as the city’s TIF commission, gives the developer tax advantages for 23 years. The TIF plan includes a Payment in Lieu of Taxes (PILOT) agreement that helps some taxing entities recoup the equivalent of 20 percent of what is lost in the deal.
That 20 percent amount is capped at a maximum of $500,000 annually after five years. That PILOT represents more money than the originally proposed TIF, which would have taken 100 percent of the future property taxes.
However, Reik points out the new plan still requires property tax entities like the school district to give up about 80 percent of their taxes, while entities that rely heavily on sales taxes, like the city and county, only give up about 50 percent of their revenues. Proponents of the plan say the numbers work out to be more for sales tax, but since the percentages are out of balance, Reik believes the plan becomes unfair in the long run.
“I acknowledge something is better than nothing, but this is more than the school district crying because we didn’t get what we should have gotten. The city of Kansas City and the school districts need to come together and develop a reasonable approach that is more equitable,” Reik said.
Reik said that $500,000 a year for 23 years is significant. It would be enough to build a new elementary school in today’s dollars. He expects that a new amenity, such as a redeveloped shopping area, will attract new housing, which will grow the schools. The district will need property tax money from commercial properties to serve those needs.
“Residential development doesn’t pay the bills on a child’s education; it has to be supplemented by commercial development,” said Reik.
David Horn, project manager for Metro North Crossing LLC, the company which currently owns the property, said those TIF incentives are a must. “Without the incentives the project is not financially feasible,” Horn said, explaining that the site will require a significant amount of demolition before redevelopment. That kind of work is expensive for a developer, making a project cost much more than it would have in an open field.
The mall closed in April of 2014. Metro North Crossing LLC acquired the property earlier this year and has been seeking the tax plan since then. They are also seeking a Community Improvement District (CID) designation in the area.
“I personally believe as far as the Northland is concerned that this is the premiere site to attract new and unique retail concepts to the area,” Horn said.
Developers are not ready to present any one plan yet for the site.
Macy’s will stay open. It is still “business as usual” at that store, despite the fact that the mall it’s attached to is remaining closed, said company spokeswoman Melissa Goff. The vision for the redevelopment of the space includes some kind of mixed-used development focusing primarily on retail, entertainment and some residential units.
“We’re just getting our hands around what is going to happen there, but we’re getting close,” Horn said.
The same development group is currently finalizing the redevelopment of the Antioch Shopping Center, a development which also received TIF incentives. In the Antioch Shopping Center development, about 400,000 square feet of mall was demolished; the remaining spaces were refaced.
Horn says the redevelopment at Antioch is going well with 100 percent occupancy in the first multi-tenant retail space. The second building is close to 100 percent occupancy. More retail and residential is on the way in that development
While there is no current timeline on the Metro North project, the developer would like to begin demolition in spring of 2016.
While Reik encourages the redevelopment, he wants to make sure the plans keep long-term economic development strong in the whole area. He plans to continue to work on the TIF issue as it affects school districts throughout the metro area.
“I think really it’s just a matter of the city crafting a better direction,” Reik said.
“This is bigger than Metro North Mall,” Reik said. “There are people with Kansas City School District and other districts in the area that feel the same way. We all have concerns, and we all want to sit down and develop a new direction.”