Polsinelli Shughart HQ @ West Edge

[FangKC]

Ok, real estate people, under this situation, with Van Tuyl leasing back the building from the City, wouldn't it be possible that the rent would cover the City bond payments, and still make enough profit on top of the bond payments, that the City would make more than the property taxes would be each year?

Or is this set up in a way that the lease only covers the bond payments, and Van Tuyl pockets the difference between the mortgage on the building and what he charges per square foot for tenants?

The other question is, if the City is willing to not make any property taxes revenue on the building for 25 years, is it simply because they don't want to lose the earnings tax revenue on Polsinelli-Shughart employees?

Of course under this scenario, the City may come out better in the end than losing the company to Kansas, but I would assume that the County, school district, and library would lose revenue. But then again, they would anyway if PS went to Kansas, and the project didn't get finished.

[aknowledgeableperson]

But seriously $200+ mil? I can see another $100ish mil for the new building (which is crazy expensive), maybe another few points for bond fees, counsel, insurance, etc....But someone is making some serious $$ on this one.

The way I see it the city is purchasing the land, buying what is on it, raising funds for demo, raising funds to finish construction, and possibly funds for tenant finishes.

Ok, real estate people, under this situation, with Van Tuyl leasing back the building from the City, wouldn't it be possible that the rent would cover the City bond payments, and still make enough profit on top of the bond payments, that the City would make more than the property taxes would be each year?

There might be a little extra. Usually these deals are set up for payments to the city to equal the payments for the bonds. The advantage to the city is that for E-taxes the city gets to keep 100%, much like they do now.. With this deal VT might be out of the picture, except for maybe as a leasing agent or building manager.

[GRID]

I don't think there is another city on the planet that would have paid this kind of cash to bail out a project and keep a company. But then again, I dont't think there is another city that is backed into a corner like KCMO is with the Kansas poaching.

[aknowledgeableperson]

The city is not out any cash. It sells the bonds that institutions and individuals buy and that cash is used in the transaction. Instead of using its credit directly (no vote by the people) the revenue generated by the project is used to back and retire the bonds. Basically the rent to be paid by PS and other tenants is used to retire the bonds. What the city gives up are some property taxes and maybe some sales taxes that would have been paid during construction or for the company's equipment

Industrial revenue bonds tied with tax abatement were at one time a popular tool for development or business attraction/retention. The problem came with development of e-taxes and increased sales taxes that gave other revenue streams to use to fund the development. Given the expected low amount of sales taxes to be generated by this development this plan is probably the best for this project.

[FangKC]

AKP, could the city theorectically use this financing method to build housing in the East Village?

[aknowledgeableperson]

What would make it a hard sell is that there would be no overall agreement in that the rent would cover the cost of the bonds.

For example, the city issues the bonds with an annual cost of $1,000,000. At the same time the city enters into a contract with ABC company to rent the property for $1,000,000. Money in, money out. With regards to EV there would be no entity to guarantee the rent (bond cost) so the bond holders come up short, or the city takes funds from the general fund. Without that guarantee the bonds would likely be junk bonds.

[chingon]

I don't think there is another city on the planet that would have paid this kind of cash to bail out a project and keep a company. But then again, I dont't think there is another city that is backed into a corner like KCMO is with the Kansas poaching.

Bullshit. A pretty cursory googling reveals a host of $300 and $400 million dollar corporate welfare payouts for corporations/headquarters/factories to stay or relocate in other cities/states just in the last 5-10 years. You seem to consistently believe that KC's problems are unique, or uniquely scaled, and I just don't think that's grounded in reality as much as it is in your emotions and biases.

That's pretty much become your internet song and dance, man. "Every problem in KC is worse than anywhere else". The Star comments section, the anti-urbanism, the country-to-city immigration patterns, the drivers, the college sports fans of teams you don't like, the people who want their streets plowed, etc., etc. etc. I hate to break it to you (again), but Kansas City's just not that special. The same bullshit here is the same bullshit everywhere. You're just to blinded by your own irrational prejudice to aknowledge it.

More to the point, these economic bidding wars are as or more disgusting to me than they are to you, but they are also pretty universal, from growing towns like Charlotte to rust belt Ohio. The real problem is that these incentive packages are growing and the supposed rewards are shrinking, here and elsewhere, and the only solution is probably a congressional invocation of the commerce clause, which isn't going to happen with the "business-friendly", supposedly "small government" ideologues in the drivers seat, because pooling public money and giving it over to private interests is the kind of wealth redistribution they were elected to pursue. "Privatize profit and socialize risk" is the motto and m.o.

[warwickland]

I don't think there is another city on the planet that would have paid this kind of cash to bail out a project and keep a company. But then again, I dont't think there is another city that is backed into a corner like KCMO is with the Kansas poaching.

Clayton vs downtown St. Louis. At least Overland Park doesnt have a large, corporate, clean, shiny downtown walkable to leafy 1920s neighborhoods, bars, and restaurants for KCMO to compete with...they don't have anything like that. KCMO has the urban office market cornered.

In KC, there's just this BS state vs state facade overlaying everything, when in reality it's not much different than an old fashioned struggle between a center city and it's suburbs.

[GRID]

I don't think there is another city on the planet that would have paid this kind of cash to bail out a project and keep a company. But then again, I dont't think there is another city that is backed into a corner like KCMO is with the Kansas poaching.

Bullshit. A pretty cursory googling reveals a host of $300 and $400 million dollar corporate welfare payouts for corporations/headquarters/factories to stay or relocate in other cities/states just in the last 5-10 years. You seem to consistently believe that KC's problems are unique, or uniquely scaled, and I just don't think that's grounded in reality as much as it is in your emotions and biases.

That's pretty much become your internet song and dance, man. "Every problem in KC is worse than anywhere else". The Star comments section, the anti-urbanism, the country-to-city immigration patterns, the drivers, the college sports fans of teams you don't like, the people who want their streets plowed, etc., etc. etc. I hate to break it to you (again), but Kansas City's just not that special. The same bullshit here is the same bullshit everywhere. You're just to blinded by your own irrational prejudice to aknowledge it.

More to the point, these economic bidding wars are as or more disgusting to me than they are to you, but they are also pretty universal, from growing towns like Charlotte to rust belt Ohio. The real problem is that these incentive packages are growing and the supposed rewards are shrinking, here and elsewhere, and the only solution is probably a congressional invocation of the commerce clause, which isn't going to happen with the "business-friendly", supposedly "small government" ideologues in the drivers seat, because pooling public money and giving it over to private interests is the kind of wealth redistribution they were elected to pursue. "Privatize profit and socialize risk" is the motto and m.o.

Show me a single metro area that sees this type of thing occur many times a year with companies moving around the metro area and with the same amount of money thrown around that you see in metro KC please. (KS offers WAY more than normal short term tifs or property tax abatements to move companies already in the metro).

This is not about keeping a major factory in town that would otherwise close or move (the Claycomo tax break was a great move by MO). Nor is it about bringing in 1000 high paying jobs via a new HQ from another metro.

We are talking about the suburbs (and sometimes the city) handing out tens of millions to move jobs from less then 10 miles away into greenfield office parks.

Please show me another metro that does that and does so as frequently as metro KC.

[rxlexi]

warwickland, while I appreciate your comparing DT Clayton competing for office supremacy with DT StL (it must be an absolute bear to deal with when Clayton is even more "centrally" located within the metro, complete with Metrolink and US64 access) to the KCMO/KS stuff, I think the state line issue runs deeper than a superficial "facade" over classic city/suburb issues.

A prime example would be the difficulty if not impossibility of creating regional cultural or infrastructure tax districts that incorporate Johnson County. Look at our recent "zoo tax" - there wasn't even a serious discussion about including JoCo, clearly a powerhouse metro region, due to political "impracticalities" implicit in the state line.

Contrast that to StL County's highly successful cultural tax (Zoo, museum, science center), or the recently passed regional Metro transit proposition. Such basic "regional" issues are essentially impossible in KC, to say nothing of the corporate border war, etc. I understand Grid's frustration.

That said, I feel your pain, as Clayton continues to grow and provide the more desirable, safe, clean urban alternative that you describe. Losing Centene from BPV to downtown Clayton should never have happened....

[warwickland]

warwickland, while I appreciate your comparing DT Clayton competing for office supremacy with DT StL (it must be an absolute bear to deal with when Clayton is even more "centrally" located within the metro, complete with Metrolink and US64 access) to the KCMO/KS stuff, I think the state line issue runs deeper than a superficial "facade" over classic city/suburb issues.

Well I guess I wanted to point out the silver lining in that one can find comfort in that at least KCMO has a monopoly on the "urban" office space for firms that increasingly want to convey a fisticated and sustainable image, instead of that market being heartbreakingly bisected. Office parks arent going to go away, but people are getting tired of them (as I type this sitting in an office park ).

[rxlexi]

^^^ A good point, to be sure. If one wants urban office space, KCMO is the only game in town. Though Park Place in Leawood is increasingly starting to compete on that front, IMO, at least as it applies to a company looking for a more "walkable", amenity-laden address in a new building, etc.

[warwickland]

I was actually thinking that (im not familar with park place) johnson county could end up developing a snazzy, shiny, sub-urban office district (more urban than College Blvd).

[earthling]

^JoCo has no conception of pedestrian scale design. I once worked at Sprint's Watergate office in Lenexa with several sprawling buildings in the park. Everyone drove to go to a meeting in another building. This was before the move to the new campus. I mentioned to others who worked there why Sprint not just build a hirise and be done with it... you take an elevator to a meeting! Most I mentioned to actually preferred the office park/driving thing - bizarre.

The closest thing to pedestrian scale office district in JoCo is the new Sprint campus.. and it's an isolated prison with no mixed use.

[taxi]

Not to get off topic, but the old Sprint campus is one of the most disgusting places I have ever been.

[grovester]

Not to get off topic, but the old Sprint campus is one of the most disgusting places I have ever been.

Where exactly was the "old" campus?

[Highlander]

Not to get off topic, but the old Sprint campus is one of the most disgusting places I have ever been.

Where exactly was the "old" campus?

I thought it was on Johnson Drive just across State line from the Plaza back in the old United Telecom days. Cool Place.

I think in the early days of Sprint, they were spread across various spec office building along College Blvd before the new campus was built. I don't remember an "old campus" per se.

[taxi]

I meant the "new" one that they vacated most recently.
The older one on SM Pkwy was actually pretty cool, but by no means a campus.

[slimwhitman]

Not to get off topic, but the old Sprint campus is one of the most disgusting places I have ever been.

I can't agree with this comment. It is bad to passersby or even if you drive on the internal loop road, but it is quite nice on foot. The outside spaces in the central courtyards are very nice. These cannot be seen unless you park your car and get out. Most people that do not work there would never see these spaces. It works well for employees moving from meeting to meeting and doing other things during the workday. They have (had?) several cafes and other services like dry cleaning on-site. Employees would never think to walk to their car and drive to the other end of the campus for a meeting.

I also think the architecture of the buildings is far from bad. At least the buildings will age well.

The campus is not well integrated into the city fabric. But why should it be? All other uses near this site are suburban islands as well, that few peds would ever consider walking to. It is appropriate for the suburban context of the site.

Too bad they didn't engage one of the attractive courtyards with 119th Street to make the campus feel more humane to the outside world.

[ThaMexican]

And if you walk in OP people look at you weird. I once droppped my car at NTB at 119th and Metcalf and walked to the office, first thing I noticed was everyone was looking at me from their cars. Second to cross Metcalf man I tell you could be intimidating and I have crossed crazy streets in Mexico.