Overland Park-based Black & Veatch is asking the City of Overland Park for about $250 million in subsidies to help finance an ambitious $1.1 billion development at its Lamar Avenue campus. The engineering and construction firm plans a new 612,000 square foot headquarters, total office space of nearly one million square feet,1,884 residential units in a multi-family, townhomes, and condominiums mix, 5,500 square feet of retail space, a 160-room hotel, and nearly 6,000 structured parking spaces.
The company is requesting the city to approve $227.7 million in Tax Increment Financing (TIF) which uses the increases in property tax revenues and local sales tax revenues to retire the bonds sold to finance eligible redevelopment project costs, or to reimburse developers for pay-as-you-go costs, and $19.9 million in funds from a Community Improvement District (CID), which is a separate legal entity established to pay for public improvements or private projects through a sales and use tax, special assessment, or real property tax. Another financing instrument, an Economic Development Revenue Bond (EDRB), providing a sales tax exemption on construction materials and furnishing, fixtures and equipment for projects within a TIF redevelopment district or a CID approved by the City Council, is also available. Overland Park’s subsidies will be approximately 20% of the total cost of the project.
Black & Veatch justified their “ask” in a statement:
“Black & Veatch continually explores ways to enhance and optimize our workplaces to create vibrant, collaborative environments that attract and retain top talent while meeting our growing demands and our clients’ evolving needs. That includes consideration of a new, modern global headquarters currently being proposed on our existing, longstanding Overland Park location. We are working with the city of Overland Park for approval requirements, which is part of the process as we strategize how to best enhance our workplace. While no formal decisions have been made, we’ve been a strong, grateful member of the Kansas City-area business community since our founding more than a century ago, and we certainly don’t expect that to change.”?
Interviewed on KCMO 95.7, OP Mayor Kurt Skoog was asked by talk show host Pete Mundo why his city, recently listed by Livability.com as #6 on the list of Most Livable Cities in America, felt it had to offer subsidies to an existing private company which decided, on its own, to diversify its business model:
“I talked earlier about my website OPKansas.org with Kansas spelled out. I encourage people who are interested in TIF and how it works to go and Google TIF. We’ve issued a report on how our current TIF agreements that we have, how they perform financially, to the benefit of the residents of Overland Park.
“But, you know, if we want to build more suburban offices, then we don’t need to participate as we’re participating in this project. Where we have participated with the private sector in development is to deliver the vision of the community. Look at downtown Overland Park, right? I get all kinds of praises about what downtown Overland Park has become; it is a great gathering place. It’s a live, work, play space with a great city park, a great farmer’s market and all of the amenities down there. None of that could have happened without public participation.
“And so, the key is in Overland Park, the way that we do public participation or incentives is different than most people do.?We do not issue bonds. So the developers spend their money up front and has the opportunity to get qualifying expenses reimbursed over the life of the agreement. So, we do things differently, and if you go to the website and look at that report, you can see, right in graphic form, how these projects that we have done in Overland Park have benefited our residents.”
Interviewed earlier on the Mundo Show, Kansas Policy Institute CEO Dave Trabert said Black & Veatch can’t be faulted for “pushing an open door.
“You can’t blame them. I mean, if you’ve got city council handing out candy, you’ve got a fiduciary obligation to shareholders to maximize their profits. You’d almost be derelict in not saying, ‘Where’s my handout?’ And it’s just everybody lines up for their share of someone else’s money.”
The OP City Council Finance Committee unanimously approved the Black and Veatch subsidy in its May 21st meeting, and directed council to instruct staff to begin negotiations on the financing instruments and set a date for a public hearing on the issue.
