The end of Mission Gateway? Johnson County city pulls funding for beleaguered project
The Mission City Council on Monday terminated its redevelopment agreement with Mission Gateway, yanking away millions of dollars in tax incentives the developer argued were necessary to get the project done after nearly two decades of broken promises.
A likely death knell for the stalled project, the council voted unanimously to toss out the deal — its fifth iteration for the long-plagued development — because the property owners failed to pay nearly $450,000 in taxes due in May. The city sent a default notice on May 15, giving the property owners, Aryeh Realty, 60 days to pay up. That deadline expired over the weekend.
“We have been humiliated and disrespected for years,” Thomas Geraghty, a Mission resident and former council member, told the council during its special meeting Monday evening. “We’ve had enough of them (the developers) and we’re ready to move on. … They are spineless. They’ve not even shown up. They don’t answer anything. And we need to kick them out.”
The deal’s termination comes as Mission Gateway faces possible foreclosure. In April, New York’s Metropolitan Commercial Bank filed a lawsuit in Johnson County Court seeking foreclosure of the property, saying the owners missed several mortgage payments. The bank says Aryeh owes more than $25 million in principal and interest, plus other late fees, court costs and appraisal costs. Those debts far exceed the likely value of the property if the bank forced a sale.
The development team did not show up to Monday’s meeting. Officials with that team and Cinergy Entertainment, which is building a complex on the site, did not return The Star’s requests for comment on Monday.
The mayor previously invited the developer to a special City Council meeting to discuss the state of the project, but the development team declined, angering city officials.
“I like many of you are disappointed in this being the outcome,” said Councilwoman Hillary Parker Thomas, the only member to vote against the redevelopment agreement this past winter. “Again, after 18 years, I think Mission residents and businesses have had enough. Mission deserves better. With that said, I am still hopeful for a day where we will see a development on that site.”
Mayor Sollie Flora said Monday that the city is left with no choice but to terminate the development agreement after it has “invested an enormous amount of time and energy toward enabling the developer to achieve a successful Mission Gateway project, all while taking measures to protect the city’s financial interests.
“Unfortunately, Mission’s herculean efforts alone have not been enough. … It takes two for a successful public-private partnership, and the developer hasn’t kept up its end of the bargain.”
It’s not the first time the developer has failed to pay property taxes on time, or violated its agreements with the city since purchasing the highly visible former Mission Mall site at Shawnee Mission Parkway and Johnson Drive in 2005. The property is now cluttered with support pillars holding nothing up and unfinished, bright white structures abandoned years ago as construction stalled during the pandemic.
Still, city officials continued to play ball. Much as they’d like, officials cannot decide what happens next to the property because it is privately owned.
On Monday, City Administrator Laura Smith said the city will continue to work with the owners to ensure the property is maintained. She said the unfinished structures are not yet in poor enough condition for the city to require demolition.
“Currently there is a final development plan that is approved. That in theory could be picked up by a future developer, and that construction could continue,” Smith said.
Mission Gateway is being developed by the Cameron Group, a New York firm run by Tom Valenti, and GFI Capital Resources Group, a New York City real estate finance and management firm run by Allen Gross.
The city’s previous development agreement expired at the end of 2021 after the developer failed to meet its construction deadline. Developers, who say they have poured more than $60 million into the project so far, have blamed the years of delays on a series of misfortunes, most recently COVID-19 and limitations on the bond market.
Before the risk of foreclosure, city officials hoped the project was finally on track. Developers in January told city leaders they had secured the financing to finish the job, though they still needed to secure more than $29 million to fund the first phase of work.
Plans for the first phase of the $268 million project include a 90,000-square-foot Cinergy Entertainment complex, as well as 50,000 square feet of commercial or restaurant space, 370 apartment units and a parking garage. The second phase would include a 200-room hotel and 100,000 square feet of office space or a medical facility.
With new safeguards for the city added to the deal, all but one City Council member voted in favor of a fifth agreement in January. It revised the terms of a 20-year tax increment financing deal and raised the special sales tax collected as part of a 22-year community improvement district from 1% to 2%.
The agreement required the first phase of work to be completed within 46 months after bonds are issued. The city did not issue the $22.5 million in bonds, which would have been repaid with property and sales tax generated on the site. And officials have emphasized that the developers had not received any tax incentive funding.
The agreement required timely payment of property taxes.
But now that deal is out the window, as are hopes for the project’s completion.
Meanwhile the foreclosure lawsuit is ongoing in Johnson County Court. If the property is foreclosed upon, the bank would likely reap any proceeds from a sale, leaving contractors with little to nothing.
Coreslab Structures, for example, says it’s owed roughly $5.5 million from developers. The company was left with 700 custom pieces of concrete ready for the project’s parking garage lying in its Marshall, Missouri, yard, leaders previously told The Star.
The Johnson County Sheriff’s Office would hold a foreclosure sale if ordered to by the court, spokesman Sgt. Matthew Curry previously told The Star.
Includes reporting by The Star’s Kevin Hardy.
