Bellmont Promenade takes a step forward at Shawnee City Council

The Bellmont Promenade project is moving forward after the Shawnee City Council on Monday approved a new agreement with the developers and tweaked a long list of public incentives.

Council members voted 7-1 to accept the redevelopment project plan, the latest in a string of deals going back five years to bring development to the southwest corner of Shawnee Mission Parkway and Mauer Road. Council member Mike Kemmling cast the lone no vote.

Bellmont Partners LLC, led by Legacy Development, proposes building a 26-acre project that would include 165,000 square feet of retail space, 35,000 square feet of restaurants and a separate mixed-use building on the south half of the property that would feature more than 10,000 square feet of commercial and office space and 249 apartment units.

The total project is expected to cost approximately $99 million.

To help pay for it, the developers are asking the city to authorize $19.5 million in special obligation bonds upfront. These bonds would be repaid through a combination of tax increment financing, or TIF, and a community improvement district, or CID.

Under the TIF, the developers would retain 90 percent of future property tax gains over the next 20 years. Bellmont Partners would also keep all revenue generated on the property by the city’s general 1 percent sales tax during that time.

Under the CID, the city would levy a special 1.6 percent sales tax on the property for up to 22 years as well as collect CID assessments of $265,000 a year. A previous version of the CID set the sales tax at 1.3 percent.

Finally, the city would also issue so-called industrial revenue bonds that the developers could use to pay for construction materials, furnishings and other purchases and avoid an estimated $1.3 million in sales taxes.

Jeff White with Columbia Capital, the city’s financial adviser, said that while the city would authorize all of the various bonds, the developers and not Shawnee taxpayers would be responsible for paying them off.

Light added that if the developers were unable to make bond payments or if the entire project collapsed, it would not affect the city’s credit rating — although it could hurt the city’s reputation when it sought bond investors for future projects.

Given the property’s difficult history, the city is requiring Bellmont Partners to make a number of requirements that the project will actually get built this time. For example, the developers must personally guarantee they’ll complete at least 110,500 square feet of retail space on the north side of the project.

Light said that even if the developers built nothing else, the initial amount of guaranteed retail space would likely generate enough property and sales taxes to pay off the bonds on time.

The developers also must provide the city with signed leases from prospective retail tenants with contracts to actually open for business before the city will sell the bonds later this spring. They must also meet other requirements before they can begin selling outparcels and restaurant pads to third-party developers. Legacy has already said it plans to sell the mixed-use building with the apartments to Bach Homes.

Council member Stephanie Meyer said she was still concerned that the guarantees applied to retail space and not the apartments or restaurants.

“When I talk to my constituents, the things they talk about is they really want the restaurant part of it. We’ve talked about how there’s not really high-end non-single-family housing available,” Meyer said. “Certainly the retail is a part of it, but I feel like the multi-family and the restaurant piece are so really critical to what makes this development really unique.”

Greg Musil, an attorney representing the developers, said his clients plan to have a purchase agreement with Bach Homes before the bonds are sold and that they must have contracts to build the project in order to get the revenue needed for streets and other public infrastructure in the project.

“Everyone is aligned to get that done,” Musil said.

If everything goes to plan, he estimated the developers would begin construction later this year and complete the first 145,000 square feet of retail by the end of 2020. The remainder of the project would be built by the end of 2021, he said.

Both Musil and the city’s consultants noted that Monday’s vote was just the first of many in the coming months as the two sides hammer out the remaining wrinkles in their development agreements, get financing approvals and determine if they can find enough investors willing to buy the project’s bonds. Ultimately, the council members could decide not to sell the bonds if they don’t like facets of the eventual deal.

“This is not a final step,” Musil said.

But resident Kris Durbin told the council that was a “dangerous path” to take.

“If you’re OK with not having any idea what’s going to go in this thing and understand that you might have to make some difficult decisions later and pass those decisions because that’s the only way to finish this project and pay back your bond holders, then vote yes,” Durbin said. “But that’s a pretty big risk to take.”

▪ In other business, the council voted unanimously to acquire by eminent domain 20.6 acres at 18570 Johnson Drive for a potential central operation hub for the city’s Parks and Recreation Department. The site currently holds a 30,000-square-foot warehouse.

Melissa Sherman, an attorney representing the current landowner, Wayne Development, claimed that the city was trying to acquire the property to prevent Wayne and partner Republic Services, which specializes in waste management, from opening a hauling business on the site.

Sherman said the city had a chance to buy the land but showed no interest until after Wayne purchased the site last summer for $3.5 million. She said the proposed business would create 145 jobs and represented a “multimillion-dollar” investment.

“From the start of Wayne Development’s meetings with the city, the message from the city was ‘We don’t want you here,’” Sherman said.

After the meeting, City Manager Nolan Sunderman declined to comment about the purchase, citing the potential litigation.

This story was originally published February 26, 2019 at 10:11 AM with the headline "Bellmont Promenade takes a step forward at Shawnee City Council."