Mayor Christal Watson cast the deciding vote Nov. 12 to keep the Unified Government negotiating with the developer of Midtown Station, the proposed $1.15 billion redevelopment of the former Indian Springs Mall site. The resolution comes with an ultimatum. If the two sides have no development agreement by Apr. 30, 2027, the UG will end the developer’s award.

The measure needed six votes, but commissioners split 5 to 4. Watson supplied the sixth after telling the developer Erik Murray she still had doubts about how the project would be paid for.

A divided vote and a deadline

Commissioner Melissa Bynum (At-Large District 1) made the motion and Commissioner Carlos Pacheco (District 5) seconded it. Commissioners Chuck Stites (District 7), Jermaine Howard (District 1), and Evelyn Hill (District 4) joined them. Commissioners Phil Lopez (District 6), Andrew Davis (District 8), Bill Burns (District 2), and Christian Ramirez (District 3) voted no. Commissioner Andrew Kump (At-Large District 2) was absent.

Watson said residents feel the weight of taxes and have told her they are skeptical of the project. “In my heart of hearts, I want this project to work, Mr. Murray,” she said before casting her vote in favor.

She said she had favored giving the project another chance earlier this year, and she asked both sides to bring the matter to a close. “Because at the end of the day, it will be on me. It won’t be on anyone else,” Watson said.

During her remarks, Watson said she believed Murray had opposed a recent sales tax measure. Murray said he had not, and Watson apologized publicly.

The resolution as drafted set no deadline. Bynum, who chairs the Economic Development and Finance Standing Committee, added one after about two hours of presentations and questions. “There’s got to be an end date,” she said. Davis then asked what would happen to Eastside’s award if the date passed without a deal, and Bynum amended her motion to terminate it in that case.

“Either we’re moving forward or we’re not,” Bynum said.

The committee had forwarded the resolution Nov. 2 on a 5 to 2 vote. In June the same committee voted 4 to 1 to terminate the award, and Watson sent the matter back for more work.

What the developer proposes

Eastside Innovation won the right to negotiate for the UG-owned site in October 2024. Its partners are Arnold Development Group and Keystone Community Corporation.

The plan calls for 2,117 homes, 697 of them income-restricted, built in five phases opening from 2031 to 2037. It also includes about 223 thousand square feet of commercial space led by a grocery, a 167-room hotel, a Keystone innovation district, a solar array, and 70 megawatts of battery storage. The first phase would cost $378 million and include 609 apartments, half of them income-restricted.

Murray, a Wyandotte County native, made an impassioned case over more than 20 minutes. “As a kid who grew up shopping at Indian Springs Mall, I take this project personally,” he said.

Murray said Eastside has agreed to pay the UG’s $6 million appraised price for the land in five payments. He said the UG spent $24 million to buy and clear the site, which now produces no tax revenue. He argued the first phase alone would more than repay that sum over 30 years.

Consultant finds a thin margin

Andy Struckhoff, president of PGAV Planners, presented a feasibility study that Eastside Innovation commissioned to support the ongoing negotiations. He said the state’s STAR bond district for the new Chiefs stadium includes the Indian Springs site. With the bonds no longer available to Midtown Station, Eastside responded to the change in financing by cutting 107 thousand square feet of commercial space and enlarging the battery component. Costs also rose $88.5 million.

Eastside is asking for tax increment financing, or TIF, that would capture 100 percent of new residential property taxes in the first phase, 95 percent in later phases, 90 percent on commercial property, and 75 percent of local sales taxes. UG staff have held to 75 percent across the board.

Struckhoff said the developer needs an 8.5 percent return to attract financing. The developer’s request yields just under 8.6 percent. The UG’s position yields 8.3 percent.

The two positions also divide the new taxes differently. Under the developer’s terms, about $264 million would go to the project and $90 million to local taxing bodies during the TIF periods. Under the UG’s terms, the split would be about $207 million and $146 million.

Struckhoff said developers of comparable projects typically put in cash equity equal to about 35 percent of costs. Eastside’s plan shows 4 percent. Another 21 percent would come from opportunity zone investors and about 26 percent from the sale of federal tax credits. A federal housing loan of $444 million would cover most of the rest. Local incentives make up about 8 percent.

Several pieces are not yet secured. Struckhoff said the opportunity zone designation awaits federal approval, and a capacity purchase agreement with BPU for the battery storage is not final. Murray confirmed that Eastside has no guaranteed investors yet. He said the opportunity zone program opens Jan. 1, and Eastside must raise the money after the UG approves a deal.

“How do we explain this to our community?”

Watson pressed Murray on the size of the request. “You are asking for a TIF for every phase and essentially that’s a tax break. And while I do recognize there is some revenue, how do we explain this to our community?” she said.

Murray said the TIF would be pay-as-you-go and would draw only on taxes the project itself creates. “The incentive here appears bigger because the project is bigger. The project is feeding itself. We are not taking a single dollar out of the UG’s general fund,” he said.

He made the same point in his presentation. “We’re not asking for the government to guarantee any of these bonds. We’re not asking for a single dollar from taxpayers,” he said.

Pacheco noted that the return falls to 8.2 percent if BPU declines to buy the battery capacity, below the developer’s own threshold. Murray agreed the margin is thin, calling the project “tight but viable.” Pacheco also asked whether the developer’s revenue projections account for the cost of police, fire, and street maintenance. Chief Financial Officer Shelley Kneuvean said staff have not calculated those costs.

Davis asked whether any single project had drawn opportunity zone investment on the scale Eastside needs, and whether a federal housing loan that large had a precedent. Murray said the totals span five phases and promised to send examples.

Ramirez worried about raising money in an unsettled national climate. He said “we don’t know what that future is going to look like.”

“For us to sit here paralyzed means that the site sits vacant for another decade,” Murray answered. He said every project in the country faces the same market risks. “We cannot continue to leave the eastern half of our county underdeveloped and disinvested,” he said.

Bynum said she wants what the project offers. “I like 600 units of housing. I like a grocery. I like the retail. I like the hotel,” she said. But she asked repeatedly what happens if one financing source falls through.

Murray’s answers grew more forceful as the questioning neared its third hour. “With all due respect, we continue to overanalyze and overthink this deal and I don’t understand why. I’m not asking for a check from you,” he said.

He ended with a plea. “We’ve got to stop talking ourselves out of it. I don’t know what else to say. I’m not asking for much. I just want an opportunity to do this in my community,” he said.

When Bynum repeated her question, he pointed to how his team reworked the plan after losing STAR bonds. “Failure is not an option. Sitting on a vacant site is not an option,” he said.

Staff turnover hinders negotiation progress

Murray blamed delays on staff turnover, naming five UG officials who handled the project in about 20 months. He asked for one staff member with authority to negotiate and said a deal could be done in six months.

Todd LaSala, the UG’s outside counsel, said four months is aggressive and assumes quick agreement on key points. He said the sides remain apart on the TIF percentages and that he needs direction from the commission on where to land. He added that he is confident the UG’s legal costs have passed the $30 thousand the developer deposited. He said the developer will probably need to pay more.

Murray objected, telling commissioners “you asked for a staff member and you got a lawyer.”

Acting Chief Counsel Wendy Green said staff could discuss business terms with Murray but lawyers would stay involved. “In no world would I ever advise this governing body to reach a legal agreement without a lawyer involved,” she said.

The resolution directs staff to negotiate between the UG’s 75 percent position and the developer’s request.

After the vote

Ramirez and Murray each posted about the vote on social media the next day.

Ramirez wrote that his no vote came down to the financing plan. He said a large share of the private money depends on equity that must be sold in the market. “In the volatility of this economy, I could not in good conscience or faith support a project where a large portion of funding is based on interest rates and the performance of the market,” he wrote.

He said he will keep advocating for investment in historically disinvested areas but wants the project to stand on its own merits. “I hope our staff and the developer can come to the table and develop a meaningful development agreement for this part of our community,” he wrote.

Murray thanked Watson and the five commissioners who voted yes. He wrote that he remains optimistic but is concerned that heavily subsidized projects in the western part of the county win quick, unanimous approval while projects in the east stall. He again cited staff turnover and called on residents to keep speaking up.

He closed by turning to the April deadline, writing “let’s go get this development agreement done.”

Radio system and industrial bonds

Commissioners voted 9 to 0 to finance a replacement emergency radio system through a 15-year, $12 million lease-purchase with Motorola Solutions. Kneuvean said signing by Nov. 20 saves $898 thousand. Police, fire, public works, and water crews use the system. BPU shares it and pays 25 percent of the cost.

The commission approved industrial revenue bonds for two buildings under construction at Turner Logistics Center, up to $48 million for Building 6 and $35 million for Building 8. Each passed 8 to 1, with Lopez opposed. The bonds carry out a 2019 development agreement with a 10-year tax abatement. The developer will make payments in lieu of taxes starting in January.

Two bond issues for Advanced Materials & Catalysts, formerly Ecovyst, passed 9 to 0. They total $5 million and cover new equipment at the company’s Kansas Avenue plant.

Commissioners also named County Appraiser Matthew Willard the UG’s voting delegate to the Kansas Association of Counties conference in December.

Consent agenda and closed session

The consent agenda passed 9 to 0. It included a resolution of intent to issue up to $8.5 million in bonds for a 31-unit Crystal Ridge housing project at Leavenworth Road and I-435. The bonds provide only a sales tax exemption on construction materials. Doug Bach was appointed to the Golf Advisory Board.

Sitting as the Land Bank Board of Trustees, commissioners approved one property transfer and options on 31 single-family homes, eight multi-family units, and four commercial units.

Early in the meeting, the commission met in closed session with its attorneys for about an hour. Bynum’s motion listed two subjects, the legal implications of the appointment selection process and the UG’s options on a proposed economic development project. Commissioners announced no action afterward.

Announcements

Watson will give her first State of the Government address at 11 a.m. Tuesday, Dec. 1, at Memorial Hall. Ticket information is on the UG website.

Howard will host the November Innovation Lab on small business development from 5 to 8 p.m. Wednesday, Nov. 18, at Rosie’s Dance Academy, 1712 N. 10th St.

The Mayor’s Christmas Tree Lighting Festival is Friday, Nov. 20, at Memorial Hall.