Olathe council holds hearing on TIF for Mentum project at former Great Mall site

The Olathe City Council on Tuesday held a public hearing on whether to create a tax increment financing district to financially help the developers of the former Great Mall of the Great Plains site.

The council did not vote on creating the district, but two residents voiced concerns with the city providing such a large amount of public incentives for one project.

“We’re giving them lots of money,” said resident Adam Mickelson. “It’s a lot of give and no guaranteed return.”

Utah-based Woodbury Corp. has proposed Mentum, a $318 million mixed-use development to be built on the old mall site at Interstate 35 and 151st Street. The project would include a 3,700-seat hockey arena, interactive golf range, more than 200,000 square feet of retail and restaurant space, two hotels, offices and 300 apartments.

The developers and city business leaders have lauded the project as a way to add new entertainment and retail uses while filling a 100-acre vacuum left when the mall closed in 2015.

To make the project work, however, Woodbury has requested a number of incentives, including up to $69.5 million in state-approved STAR bonds, a community improvement district sales tax, industrial revenue bonds that help the developers avoid paying sales tax on construction materials and the tax increment financing, or TIF.

The proposed TIF district would allow Woodbury to retain all property tax gains on the site for 20 years, using that money to pay for certain allowed expenses, such as building interior roads and infrastructure on the site. Documents with the application indicated the site would generate an estimated $15.3 million in net TIF revenues during the 20 years.

Details on how the Mentum TIF district would operate are still being negotiated, but developers using TIF typically sell bonds to build their projects, pledging to repay those bonds with future TIF proceeds. Taxpayers can sometimes be on the hook to make those debt payments if the project fails to generate enough revenue.

“I’ve seen over the years a number of government projects run into problems,” Paul Hirth told the councilmembers, mentioning the Kansas City Power & Light District, the Community America Ballpark and the Zona Rosa shopping center, which all had trouble generating revenue. “I’m just asking if (there is) any safety net if for some reason the development doesn’t work out as expected?”

Mickelson criticized Woodbury’s TIF application, which said there was no competition for Mentum, despite the fact that development company Price Brothers is pushing its own $195 million arena and retail complex at Bluhawk in nearby Overland Park.

Some have questioned whether both projects could survive, especially as Bluhawk is also seeking $63 million in STAR bonds, which are paid with tourism sales taxes.

“It just leads to this level of distrust I’ve started to have with this development,” Mickelson said.

None of the council members discussed the Mentum project or responded to the two speakers’ comments.

The council is expected to vote on creating the TIF district at a future meeting.

The council members also will have to vote on a final plan for redeveloping the Great Mall site that would include details on exactly how much the developers will receive in incentives and how they plan to use that money.

This story was originally published March 20, 2019 at 9:59 PM with the headline "Olathe council holds hearing on TIF for Mentum project at former Great Mall site."