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BPU says it won’t waive T-Bones’ utility payments

The Unified Government is trying to keep the lights on at the T-Bones stadium, but the Board of Public Utilities says it won’t waive the baseball club’s utility bill. (File photo)


by Mary Rupert

An effort to waive utility payments that the T-Bones owe the Board of Public Utilities was rejected last week at a BPU board meeting.

David Alvey, a BPU member who is running for mayor, made the motion, which passed 5-0, at the BPU meeting to reject the bailout request.

According to Alvey, the Unified Government asked the BPU to forgive $172,700 of $314,000 that the T-Bones owes the BPU for electricity and water over the past few years, and the UG also asked the BPU to provide the T-Bones with a special rate of 6.5 cents per kilowatt hour in the future.

“If people really want the T-Bones to survive, they need to go out and buy tickets and buy beer,” Alvey said. “That’s how a business makes it. I do not believe the BPU should subsidize it. We would not have this relationship with anybody else in the city. I don’t know of anyone in the past who had this much past due forgiven and was given a special rate.”

David Alvey (File photo)


Alvey said he believes the proposal was not fair to the BPU’s ratepayers. The BPU will eventually shut off power to poor people who do not pay their bills, and if it has another policy for businesses, it’s not fair, he believes.

Alvey said it isn’t for the BPU to decide which businesses make it and which ones don’t. There are other businesses that can’t pay their utility bills, and the BPU doesn’t get to decide which ones are successful.

Alvey thinks the UG may next propose to pay the utility bill, or part of it, through its funds. He said if the UG decided to pay the T-Bones’ utility bill, he would protest that as a taxpayer. He said he doesn’t think it’s the UG’s job to subsidize businesses with his tax money. If he were elected mayor and the issue comes up in the future to the UG, he said he would not support subsidizing the baseball club.

Alvey said he met with the UG about three weeks ago, and he was told then by the UG that the T-Bones had not tried to find private financing. “If private money wasn’t solicited, why was it brought to BPU ratepayers?” he asked.

A spokesman for the Unified Government, Edwin Birch, sent out a statement and response: “The T-Bones Baseball organization is leasing a tax-exempt, government-owned facility. The UG seeks to ensure its facilities continue to be used for the benefit of our Wyandotte County – Kansas City, Kansas, community. The UG has explored various scenarios as it relates to utility payments, but ultimately no changes have been approved yet.”

David Mehlhaff, BPU spokesman, confirmed that the BPU vote last week to reject the request was unanimous, and he confirmed that the T-Bones, not the UG, owe the utility payments to the BPU.

UG Commissioner Mike Kane, when asked about the BPU’s vote on the T-Bones, said, “Can you blame them?”

Kane said that the UG has helped the T-Bones before. The UG bought the T-Bones stadium three years ago, but the agreement with the T-Bones states that the T-Bones will pay the utility bills.

“It’s extra difficult when we shut off other people’s electricity that have lived here years and years,” Kane said. He didn’t recall other businesses whose electric bills were waived.

He said he heard about the bailout effort earlier in some private “three-on-three” meetings that the UG held with three commissioners at a time. If it comes before the UG Commission for a vote on whether the UG will pay the T-Bones’ electric bill, they would have to show him something really compelling for him to vote for a waiver of the electric bills, he added.

This is not a sign that tourism at Village West is having problems, according to officials. While she did not have a specific comment about the issue of the BPU and the T-Bones’ utility bill, Bridgette Jobe, executive director of the Kansas City, Kansas, Convention and Visitors Bureau, said, “The T-Bones are a great attraction for Kansas City, Kansas.”

Tourism in the Village West area of Kansas City, Kansas, is “doing great,” Jobe said.

“We have one of the highest occupancy rates at our hotels in the metro area, and we are always in the top two or three in the metro area for our average daily rates,” Jobe said. “A lot of people are staying here and they’re willing to pay more money to stay here. Our hotels are full in the summer months, many times it’s hard to find a room. Our attractions are doing well. If you look at a Sporting game, or Schlitterbahn just opened up – it wasn’t the best weather weekend – but people are continuing to come here and they are continuing to come back.”

She added it’s very early in the season for the T-Bones, and the weather wasn’t the best for the first games, but in general, tourism is doing well in the Village West area.

There was no response from Kansas City, Kansas, Mayor Mark Holland’s spokesman for this story.

Alvey’s motion at the BPU meeting:

“As the members of this Board are aware, the Unified Government has asked the BPU to forgive $172,700 of the $314,000 that the T-Bones owes the BPU for power and water over the past several years.

“Additionally, the Unified Government has asked the BPU to provide a special rate to the T-Bones going forward, of just 6.5c per kilowatt hour. That rate would not even cover the cost of producing or distributing the electricity, so the BPU would, in effect, be subsidizing the T-Bones on the backs of our other ratepayers.

“When this proposal was brought to our attention, I expressed my concerns, as I know other members of the Board did as well, that this proposal is not fair to our ratepayers.

“First, three years ago the Unified Government agreed to purchase the stadium from the T-Bones because the T-Bones was not making enough money to pay all of the expenses for upkeep. I asked Don Gray at that time, and Doug Bach, if the BPU would now have to provide free power and water to the stadium because it would now be owned by the UG; we all know that the BPU already provides over $7m in free utilities and services to the UG each year. I was assured that BPU would not be providing free utilities but yet, here we are, being asked to provide a subsidy to the T-Bones.

“In our meeting with UG just three weeks ago I asked if the T-Bones had tried to find private financing for their operations. I was told that they had not: one has to wonder why private pockets were not tapped by the T-Bones. And if private money wasn’t solicited, why was it brought to BPU ratepayers? What do the ratepayers get out of the deal?

“Third, as far as I know, if any other business or resident were to be this far in the hole to the BPU, we would shut off their utilities. We all know people, many of them poor or elderly or on fixed incomes, who have had their power shut off. It is clearly unfair to not enforce our policies on everyone in the same manner.

“Moreover, I can name at least three businesses that have gone out of business in the past couple of years, who could easily make the claim that if they had been given this same kind of deal from the BPU and the UG, that they might still be open. How can we claim to be fair and transparent when others do not get this kind of deal, or even know that such a deal was possible for them?

“I have been told that the UG has now changed their proposal, but not by much: the T-Bones would still get the special rate of 6.5 c/kwh, but that the Unified Government, that is, the taxpayers, would make up the difference between what the electricity actually costs and what the T-Bones can pay. So, the BPU ratepayers would not be subsidizing the T-Bones electricity, but the taxpayers will. If that is what the UG wants to do, that is their business, but as a taxpayer I protest.

“Moreover, the new proposal, as I understand it, is that the BPU would still forgive $172,700 of the amount the T-Bones owe from previous years. In my conversation with Don Gray, our GM, I expressed my opposition to agreeing to wipe out that debt. I understand that this decision may be at the discretion of the GM, and I respect that; however, I think the public needs to know what stand the members of this Board is taking on this proposal.

“So at this time I am asking for a sense of the Board. I move that it is the sense of the Board that we oppose providing the T-Bones a special rate for electricity that is not currently available through existing Board policies, and I further move that it is the sense of the Board that the T-Bones pay for their past due utility bills, and that all applicable policies and procedures be implemented in regards to their past due account.

“Finally, I think this is important so that our General Manager can clearly and consistently communicate to the UG the position of this Board. We are elected to this Board to represent the ratepayers and to provide reliable power and safe water, at the most affordable cost, to our ratepayers. I for one did not commit myself to subsidizing a failing business on the backs of the other ratepayers.

“Folks, if you like the T-Bones and want them to succeed, then go out to the stadium buy a ticket and beer and concessions. That is how this should work.”

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Legends 14 Theatres to change ownership and operator

Redeveloper to purchase theater; AMC Theatres to become operator

Legacy Development announced today that it plans to purchase the Legends 14 Theatre at the Legends Outlets in Kansas City, Kan., according to a news release.

A spokesman for the company said it will pave the way for redevelopment of the property under the direction of a new theater operator, AMC Theatres.

Currently, the theater is owned by the Unified Government. It has been managed by Phoenix Big Cinemas LLC since it opened in 2005.

In the news release, Wes Grammer, chief development officer for Legacy Development, said “We couldn’t be more excited. The Legends is a great project and we relish the opportunity to deepen our involvement in it.”

A spokesman said the transaction is expected to close on Dec. 11, 2015, and the building will reopen Dec. 12 under AMC management. AMC, which is based in Leawood, Kan., currently operates five locations in the Kansas City metro area, and will renovate the theater in 2016, while remaining open to guests during renovations.

“Our investment in the theater as the anchor attraction to the surrounding Legends shopping center is an example of our commitment to provide an important amenity to this community,” said UG Administrator Doug Bach in the news release. “The sale of the theater paves the way for private sector reinvestment in the 10-year-old facility and ensures that both residents and tourists will be able to enjoy this asset for years to come.”

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Deal to sell Wyandotte Plaza advancing through UG

The sale of Wyandotte Plaza, a bond refinancing and subsequent changes to the redevelopment agreement are advancing through the Unified Government.

The UG’s Economic Development and Finance Standing Committee on Monday night heard some of the details of the refinance. The topic is expected to come back to the full UG Commission at a later date, perhaps Dec. 17.

According to UG information, Wyandotte Plaza, at 78th and State in Kansas City, Kan., is being sold to Phillips Edison, a real estate investment trust that owns more than 270 properties, including many shopping centers with grocery store anchors. Bellemore Homes Inc. is a former owner of the Wyandotte Plaza Shopping Center.

The developer, Legacy Development, has a contract to sell most of the shopping center to Phillips Edison, and the sale is hoped to close before Dec. 31, according to UG documents.

As part of the recent $28 million redevelopment effort, a new Price Chopper was constructed at the shopping center, and new tenants such as Marshalls, PetSmart, Krispy Kreme, CommunityAmerica Credit Union, Advanced Auto Parts and others were added.

Dave Claflin, representing Legacy Development, formerly Red Legacy, the developer for the Wyandotte Plaza redevelopment project, told the UG committee on Monday night that Phillips Edison has some very nice quality shopping centers in the Kansas City area, including Quivira Crossings at 135th and Quivira in Overland Park, and Falcon Valley at 101st Street in Lenexa.

“The way we became familiar with this whole project was through Phillips Edison,” Claflin said. “They originally had this project under contract in 2011.”

When they learned Price Chopper wanted not just renovations, but a new store, Phillips Edison contacted Red Legacy for redevelopment, he said.

“They assigned the contract to us in 2011, and we pulled it across the finish line, and we feel like it is a successful project today,” Claflin said.

Lew Levin, UG chief financial officer, said in July 2012, the UG financed $8.1 million in initial financing to support land acquisition for the Wyandotte Plaza project.

The goal of the project initially was to provide bond backing, but the UG wanted to proceed with refinancing of the project after three years, once the project was completed, he said. The project now is essentially completed, for the most part, although there may be an additional pad development, he said.

After the refinancing, he said the UG will not be providing bond backing, which the UG staff regards as positive for the local government.

The project then will be supported by three revenue sources: incremental sales tax revenues, property tax rebates associated with the Neighborhood Revitalization Act program, and a 1 percent community improvement district, he said.

Todd LaSala, attorney, said the original development agreement has a 1 percent CID sales tax on it, raising sales taxes at Wyandotte Plaza by 1 percent. The UG allowed the developer to pledge that 1 percent CID to its lender as collateral, LaSala said.

At the time the property sells to a developer, that lender will be paid in full and at that point, the 1 percent CID could be pledged to the bonds that will be used to do the UG refinancing, LaSala said.

LaSala said the developer requested some other conditions Dec. 7. Among those other conditions are that the refinancing take place on or before April 1, 2016, and LaSala said the UG would prefer it to take place in February.

The second condition requested is that if there are excess revenues available from the refinancing, the developer would like access to a portion of them, LaSala said.

“We haven’t discussed that yet; we haven’t agreed to that yet,” he added.

He asked if he could negotiate with the developer about the conditions and come back to the full commission meeting having agreed to those conditions.

According to UG officials, as part of the original agreement, the developer was allowed to come back and claim excess revenues. The excess revenues could be available at closing, LaSala said.

Levin said in the original redevelopment agreement, the public funding part of the total project cost was about 50 percent, and the developer had the ability to capture slightly under $13 million in total revenues if that is available. Today, the UG has funded the developer $7 million, and the developers are looking to capture an amount based on the refinancing to that project cap, he said. The current projection is that the developer could receive about $5 million of that remaining amount, he said, but that has been contemplated since the start of the development agreement.

While the number is about $5 million now, a month from now it could turn out to be $4.8 million, Levin said. Currently the developer wants a guarantee that they would get that $5 million, and the UG isn’t ready to say with absolute certainty that they would be able to receive that $5 million, he added.

LaSala said, in answer to a question from Commissioner Gayle Townsend, that the buyer, Phillips Edison, would take on all the obligations about owning, operating and maintaining the shopping center. However, the financing commitments, bonds, repayment of money advanced, and the financial deal would remain with Legacy, not transferring to the new buyer, he said. The UG backing would go away with the refinancing, he added.

Commissioner Brian McKiernan asked if there was any risk to the UG from this refinancing. Levin said it was the UG’s intention all along to remove itself from the backing of the project.

“Our risk is if we don’t proceed, we’re responsible for that debt,” Levin said. “We do not have access to the CID revenues, and we’ll have to back the project by other revenue sources, other than the incremental property and sales tax revenues” (if the refinancing doesn’t take place).

Most of Wyandotte Plaza is in this amended redevelopment agreement. A separate sale and transfer for Advanced Auto Parts was approved in September of 2015. Also separate from the main shopping center agreement is Krispy Kreme Doughnuts, which is proposed to be sold to LAG Investments Kansas City.

UG Commissioner Ann Murguia said she was concerned that because the proposed changes to the redevelopment agreement were not released until Monday, the commissioners didn’t have a chance to read them before tonight’s meeting. While she said she knows and trusts the UG staff and attorney, she added this information needs to be released before the day of the vote for reasons of openness and transparency.

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