Friday, March 16, 2018

Soccer complex needs $8 million investment from Grandview in order to proceed


by Mary Wilson, mwilson@jcadvocate.com

The developers of Gateway Village are asking the City of Grandview for an investment into the private development before the project can proceed. On Tuesday, March 6, representatives of the project met with the Grandview Board of Aldermen, leaving an $8 million question on the table.

“Basically, we are at the end of our rope, to be brutally honest,” said Greg Cotton, President of PG, LLC, Gateway’s development company. “Hopefully we can move this project that has been a big dream for the past several years into reality. Quite candidly, we’ve heard that there might be some bad blood between the Board and our development group and maybe some deal fatigue setting in. It’s a quarter-of-a-billion-dollar deal, and that takes a lot of time. That’s not the type of partners we want to be.”

Cotton added that his team believes in the power of a public-private partnership. Gateway is asking the City of Grandview to make a contribution into the infrastructure of the development, including roads, lighting, grading, gas and sewers that would in-turn be owned by the city.

In 2016, the Board of Aldermen approved a tax-increment financing (TIF) plan, and while the project scope has stayed roughly the same since then, there have been a few changes. The 250-acre site, owned by PG, LLC, located off of 150 Highway and Byars Road, will feature 15 synthetic soccer and sporting fields, a multi-sport fieldhouse, approximately 400,000 square feet of retail, 540 hotel rooms, 864 new residential units for over 2000 new residents in Grandview, and would bring in roughly 1.8 million visitors annually.

“We had an agreement a year and a half ago, and now you’re asking for something different,” said Mayor Leonard Jones.

Currently, the property generates $1000 per year in property taxes. Over the lifespan of the TIF, Cotton said that the City could see $155 million in projected new tax revenues from the development. PG also estimates around 400 new jobs will be created between the construction of the project and openings associated with the commercial retail and soccer operations.

“This is a project that is fully designed and shovel ready,” said Cotton. “The reason that this project is here is that we, as a development team, are the beneficiaries of a 25-year market-rate lease with Heartland Soccer Association. That is, without a doubt, the most lucrative youth sports contract in the United States. That supports a certain amount of debt repayment.”

All of the money from the Heartland lease has been pledged to repay the private debt that will be incurred to pay for the fields. Heartland Soccer Association requires, according to Cotton, that those fields be opened as soon as possible.

“They want it by the fall of 2018,” said Cotton. “We are under intense time pressure to get that done.”

According to Cotton, every other area soccer complex has been paid for using public funds. Because the market has been accustomed to these developments being paid for publicly, bank underwriters have not seen a private development of this scale.

“What we’re talking about here is the very first live, work, play and entertainment zone complex, truly, in the country,” said Cotton. “We’re calling this Soccer 3.0. It will attract a huge volume of people that are all looking for commercial opportunities.”

The development will be constructed in phases, and the first phase was discussed last Tuesday. The first part of phase one, called project one, includes the soccer field installation and commercial development that is ancillary to the soccer portion of the complex. Approved in 2016, the pay-as-you-go $43.7 million TIF agreement and CID (community improvement district) plan must be pledged to the lending organization in order to repay private debts incurred, according to Cotton.

“The developer, as the plan is situated today, takes 100 percent of the risk of operating this facility,” said Cotton.

After the TIF was approved, the developer was unable to obtain financing on the entire phase one. Multiple lenders suggested that the first phase be broken down into two projects. The construction costs for project one came in around $38.5 million, which included $9.2 million in infrastructure expenses.

“The consensus was, after meeting with 15-18 different lenders, that the city didn’t have any skin in the game up front in terms of real cash,” said Matt Webster, Senior Vice President of George K. Baum and Company, who has served as a financial advisor for the developers. “The banks didn’t really have any interest in lending on the roads and improvements to those roads that would ultimately be dedicated to the city.”

The $9.2 million infrastructure cost was shaved down to $8 million in order for the developer to feel comfortable with the repayment sources, and the banks felt that an infrastructure contribution from the city was vital to financing the development, according to Cotton.

“We are asking the City for $8 million in infrastructure cost improvements, whether built by the city, built by us, or whatever process the city would allocate or create,” said Cotton. “We came to that number from the total infrastructure costs being $9.2 million, then meeting with the banks and our experts and getting the loan to cost ratios to a level that the banks would say yes. This $8 million is critical.”

Cotton said that while the City’s TIF agreement with the developers is a significant investment, underwriters do not view that as a direct contribution into the project. Besides the pressure to complete the fields from Heartland Soccer, the developers are also feeling pressure from the banks, as the predevelopment line of credit has been exhausted. $7 million of the developer’s private funds have been invested into the project as payments continue to be made on that preconstruction loan.

“We were at the end of our rope when we met with the Aldermen last time, and we’re even more now,” said Cotton. “Over the past seven or eight months as we’ve tried to get this project started, that’s real money that has racked up.  $7 million of private investment in Grandview is a significant amount of money. We can no longer afford to continue making those payments.”

With the $8 million ask, the City of Grandview’s total investment into phase one of the project would be around 21 percent, or three percent of the completed development. The total development expense for the entire Gateway Village project is $234 million. The City of Grandview previously suggested that a neighborhood improvement district (NID) be implemented in order to help cover the investment costs the developer was requesting of the city. According to Cotton, lenders viewed this is a developer debt and not equity. In February, the developers received a final offer from the City of Grandview that included $3.7 million of infrastructure costs, which the developer deemed insufficient.

The developers suggested that the City of Grandview carve out portions of funds from other allocated sources to cover the $8 million infrastructure costs. According to the City of Grandview’s economic development director Troy Nash, the city does not wish to incur any new debts for the project and create liability or obligation. Alderman Sandy Kessinger stated that the developer should consider decreasing the already-agreed-upon TIF amount by $8 million, which already included reimbursable infrastructure costs.

“I work at a bank, and I know that infrastructure costs are usually factored in,” said Kessinger. “I think it’s interesting that you say you’ve talked with 20 banks who say they won’t finance the infrastructure. To my knowledge, since I’ve been on the Board, we’ve had a lot of private development projects come across and we’ve never had another company ask us to finance infrastructure.”

Previously, the City has been told that the developer did not wish to change the initial agreement, and that the $8 million infrastructure costs are over and above the agreed-upon TIF plan. Through conversations last Tuesday, the developer has now agreed to adjust the TIF plan accordingly should the City of Grandview decide to fund the infrastructure for the development.

Cotton said that the project is unique and should be considered a community amenity, which will benefit more than the private developer.

“Deron Cherry is giving a gift, in many ways, to the citizens of this city,” said Cotton. “He is putting his own private money where public entities have only put their money before. There are probably 8 million reasons not to do this. We know and we’ve been told that the city can’t afford it since day one. This is a city that prides itself on fiscal conservatism and has managed its budget extremely well over the years, and you should be proud of that. But, at the end of the day, this is a project that doesn’t land in your lap very often. This is an opportunity to create a project that is truly transformative.”

The City of Grandview’s general fund, which has not seen an increase in the last 10 years, is approximately $15 million annually. City Administrator Cemal Gungor said that because the City is responsible for taking care of 26,000 residents who have other needs than soccer fields, $8 million is a scary figure to try and allocate out of that general fund. Ultimately, a decision will be made one way or another by the Board of Aldermen later this month on how they plan to proceed with Gateway’s request.

Thursday, March 1, 2018

Grandview Schools focus on district safety



Partnerships with the community are key to student safety, and the Grandview School District, according to Assistant Superintendent Ann Marie Cook, has a great relationship with the Grandview Police Department. Recently, as part of PREP-KC’s career day activities, Grandview Police Officer Monica Romero talked with students at Martin City Elementary School.

by Mary Wilson, mwilson@jcadvocate.com

With the tragedies in Parkland, Florida, still fresh in the minds of community members, administration from the Grandview School District provided a timely discussion to the Board of Education regarding safety in schools during their regular meeting on Thursday, February 22.

According to Assistant Superintendent of Operations and Finance Ann Marie Cook, the district is still working to utilize bond funding to complete safety enhancement upgrades throughout the district. In the last two years, there have been parking lot improvements and fire alarm system upgrades.

“We have Martin City slated for this summer, which will be the final upgrade or replacement of all the fire alarm systems,” said Cook. “This has been a multi-year project that includes camera systems and intercom upgrades. We’ve done a lot, but we still need to do a lot of things as it relates to safety.”

Over the last year or so, the district has maintained a focus on student reporting, and has implemented security scans and completed staff, student and parent surveys regarding safety.

“Probably the thing I’m most excited about is that the safety committee has really evolved over the years,” said Cook. “It was focused more on doing walkabouts to make sure we didn’t have slip trip hazards and those sort of things, and it really has changed in where we are focusing our efforts. It is now much broader.”

The district is currently in the process of reframing the safety committee, creating what they refer to as “safety silos,” which include physical safety, student safety and staff safety. While there may be some overlap, according to Cook, the intent and desire is to share ideas and implement programs that will ensure safety while students and staff are in the district’s buildings.

“I think this will provide us an opportunity to dig a little deeper and improve some of our practices,” said Cook. “I think we’ve made a lot of improvements over the last several years, but there’s always more that we can and should be doing.”

The district has a strong partnership with the Grandview Police Department and the Grandview Fire Department, which are both part of the district’s safety meetings and conduct various trainings throughout the year. Every year during spring break, Grandview Fire Marshal Lew Austin does a walk-through in all school buildings to ensure their safety.

“We are extremely fortunate to have those partnerships because they help us create and keep a safe environment for our staff and our kiddos,” said Cook.

Grandview also continues to work on updating its crisis plans, looking for consistency and alignment with safety standards. While physical safety is important, the district continues to look for ways to increase the feeling of safety for students and staff in the buildings.

“Student reporting is critical in helping minimize or eliminate threats to the schools and other students,” said Cook.

Since becoming superintendent, Dr. Kenny Rodrequez has worked to implement a change in the way staff thinks about safety.

“As superintendent, I’m taking matters of student safety very seriously,” said Rodrequez. “I think we pushed the envelope quite a bit over the last year with things that we’re doing. I’m not a big fan of us constantly having to be reactive. I want to be as proactive as possible. We can’t resolve everything and we can’t stop everything; however, there are a lot of things that we can prevent.”

While he says that the district is on a good path, Rodrequez added that the district isn’t anywhere near where they should be. In a conference he recently attended, safety was a widely-discussed topic. One session focused on the importance of a relationship with the first responders in the community, which Rodrequez said is strong in Grandview. 

“I’m very proud of the work that we have done,” said Rodrequez. “We will continue to do everything we can to make sure everyone is as safe as possible.”