Rob Roberts, reporter Kansas City Business Journal
From a floundering start to the Wal-Mart that got away, 2016 has been a wild year for Mission Gateway — a mixed-use project now entering its 12th year with plans for the beginning of a happy ending: a March groundbreaking.
For those who have been following this mother of all local development fiascos, it’s no doubt been a year that bears recapping. But first, let’s take a look further back.
2004: The Mission Gateway saga started, oddly enough, with a 2004 plan to replace the struggling Mission Center indoor mall with a 203,000-square-foot Wal-Mart Supercenter.
Copaken White & Blitt (now Copaken Brooks) owned the mall and, in July 2004, announced it planned to sell the site to Wal-Mart Stores Inc. But a month later, the Wal-Mart plan was squelched when the Mission City Council adopted anti-big-box zoning changes for the city’s so-called East Gateway district, where the mall was located.
2005: The Cameron Group of East Syracuse, N.Y., came on the scene as a hero that many Mission residents and officials would come to view as a goat.
In August of 2005, the Cameron Group, led by veteran developer Tom Valenti, closed on the purchase of the 16-acre Gateway site, which is bounded by Roe Avenue, Johnson Drive, Shawnee Mission Parkway and Roeland Drive.
2006: In May 2006, the Cameron Group began demolition of the mall and announced plans for a $380 million mixed-use project to include 350 condos, 500,000 square feet of retail, 180,000 square feet of office, a 150-room hotel and a Johnson County Community College extension campus. A 2008 completion date was expected.
2008: By the end of 2008, of course, construction on the Mission Gateway project had not even begun. But in June of that year, the Kansas Secretary of Commerce announced that the project had qualified for $63 million in Kansas sales tax revenue (STAR) bonds, thanks to a 2 million-gallon aquarium that had been added to the Mission Gateway plan in 2007.
At that point, Mission Gateway had a reduced price tag of $307 million project and new target date for completion: 2010.
Unfortunately, recession set in, leading to trouble signing retailers and securing financing.
2011: But by November 2011, Valenti announced that he’d landed a project-saving anchor tenant: Wal-Mart, which would relocate from Roeland Park to a 155,000-square-foot Mission Gateway location to be topped by a second story of retail venues.
2012: Seven months later, in June 2012, the Cameron Group jettisoned plans for the aquarium and hotel at Mission Gateway, meaning the loss of the $63 million in STAR bond financing.
2013: But grading began a year later for Mission Gateway, which had been reduced to a $165 million project to include 330 apartments and 400,000 square feet of retail.
2014: Unfortunately, Valenti had more bad news to deliver in March 2014. The project was still a 60,000-square-foot retail lease away from securing private financing, and the first-quarter sale of $37.5 million bonds that the city had agreed to back for the project had to be postponed.
That prompted Valenti to promise “no more promises” about Mission Gateway during a breakfast meeting held to update Mission residents on the project.
“Too many times I’ve made the mistake of being overly optimistic,” Valenti said, “and I’ve lost credibility because of that.”
While Valenti remained largely mum, Mission Gateway became increasingly unhinged in 2014 as engineers and architects that had worked on the project began filing lawsuits for nonpayment and Mission began assessing Cameron Group $600,000 a year as repayment for the $12 million in stormwater improvements the city made to tee the site up for development.
2015: The next year wasn’t much better. After Valenti gave up on the stores-over-Wal-Mart plan that had fizzled with potential retail tenants, the Mission City Council voted in November 2015 to reject the latest Mission Gateway plan. Besides the Wal-Mart, the $153 million plan called for another 65,000 square feet or retail space; a seven-story 200-room Aloft hotel with two restaurants; 182 apartments; a three-story parking garage that would serve all those uses; and, if tenants for it could be signed, an office building.
A month later, Valenti blamed the defeat, in part, on the fact that some council members seemed to prefer “something over Wal-Mart.” So as the year closed, he proposed a 65,000-square-foot rooftop park over the big-box store.
Then came 2016, another wild year for Mission Gateway. Here are some of the highlights:
January: The Mission City Council voted 5-4 to approve the latest plan for Mission Gateway, with Mayor Steve Schowengerdt breaking a tie. The vote came after Andy Sandler, the most vocal of several project opponents in the audience, likened Mission residents to a group of folks who got together and ordered a pizza 10 years ago. In Sandler’s analogy, Valenti was painted as a guy who promised to deliver the pizza but came back with something less appetizing.
“It’s a flounder. It’s a rotting fish. It stinks,” Sandler said to a raucous ovation. “I’m not saying it’s intentional. … But he’s had Plan A; it didn’t work. He’s had Plan B; it didn’t work. He’s had Plan C; it didn’t work. He’s gone from pizza to flounder to pigs’ knuckles to pigs’ feet.”
April: Mission Gateway took another hit during municipal elections, when two new anti-Wal-Mart candidates were elected to the City Council, with one of them defeating Ward 3 incumbent Jennifer Cowdry, who had been one of Mission Gateway’s most enthusiastic supporters.
May: Though the project won plan approval in January, it still required City Council approval of incentives and a development plan. So Valenti submitted a new plan that he thought would be more palatable to the newly reconstituted council. In place of the rooftop park, it called for wrapping 74 apartments around three sides of the Wal-Mart store.
August: Though the Mission Planning Commission voted unanimously to recommend approval of the new plan in July, the City Council rejected it by a 7-1 vote. Obviously shaken by the vote, Valenti waxed like poet Dylan Thomas after the meeting, vowing, “We are not going to go away quietly into the night. I can assure you that.”
Valenti didn’t know at that point just what course he would take. But doing nothing was not an option, he said, given that he, partner Allen Gross of GFI Development Co. LLC and other investors in Mission Gateway had invested a total of $40 million in the project during the previous 11 years.
October: Things had come full circle by Oct. 3, when Valenti announced that he and Wal-Mart officials “mutually agreed that we would move on without them.” Wal-Mart decided to stay put in Roeland Park and remodel its store there. Valenti said Cameron Group would replace Wal-Mart with two or three different retailers, allowing Mission Gateway to proceed under the site plan approved in January 2016.
December: The Mission City Council voted unanimously on Dec. 21 to approve a memorandum of understanding with the Mission Gateway developers. It calls for Cameron Group to break ground in March on a first phase that will include 168 apartments and 50,000 square feet of small-shop retail. No incentives are being requested for that phase.
According to the MOU, a second phase will include a 150-room Aloft hotel and a 50-room Element extended-stay hotel, which the developers will own and operate. A final phase will include the 110,000 square feet of retail that will replace the Wal-Mart. Valenti pans to seek incentives, including tax increment financing and a 1-cent community improvement district sales tax surcharge, for the final two phases. But the city will not be asked to guarantee any repayment of bonds.
Rob reports on real estate and development.