June 24, 2024

Keeping Media and Government Accountable.

Westwood officials have no cash flow analysis of Karbank incentive project

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The city of Westwood, Kansas — in northeast Johnson County — apparently did not conduct a long-term cash flow analysis on a development project with Karbank Real Estate that includes millions in new debt for city taxpayers.

According to the Kansas City Star, Westwood residents spent nearly four hours pleading with city leaders not to rezone a greenspace — including the city’s only park — for an office and retail development.

“In a 7 to 2 vote at 11:06 p.m., the commission voted to recommend to the Westwood City Council that 7.6 acres of land near 50th Street and Rainbow Boulevard be rezoned from residential to commercial and that a preliminary plan for a four-building project by Karbank Real Estate Co. also be approved,” the Star reported.

According to the plan, Karbank would have to pay off the remaining roughly $275,000 debt the city owns on a former church the city purchased in 2013 and demolished in 2020. Additionally, Karbank would “donate” $2.65 million to the city to purchase a closed school building from the Shawnee Mission School District, demolish it, and grade the land for a new 3.8-acre park.

The city is proposing, with Karbank’s help, to create a Public Benefit Tax Increment Financing district to pay for the new park.

A TIF is a type of financing in which a portion of increased property and sales tax revenues are used to pay for bonds (loans) as part of the development.

Karbank, in this case, has stated that it would not require TIF incentives for its development but let the city keep the proceeds.

City documents claim they expect to realize some $6.7 million in revenue over the 20-year life of the district — considerably more than the $2 million they estimate as the cost of the new park.

However, it is difficult to determine if any of the projections are accurate because the city has declined to provide — or does not have — standard financial forecast data to support its contention.

On Oct. 23, 2023, the Sentinel sent the City of Westwood an Open Records request for “all documents pertaining to the financial analysis of the Karbank project, including a cash flow forecast for any debt to be issued.”

Rather than provide the requested records, the city directed the Sentinel to the city website and said any detailed analysis was exempt.

“Any other records the City may possess related to financial analysis fall under one of the following two exceptions to KOMA:

“(13) The contents of appraisals or engineering or feasibility estimates or evaluations made by or for a public agency relative to the acquisition of property, prior to the award of formal contracts therefore.

“All of our analysis relates to the financial feasibility of acquiring and constructing park improvements.

“(20) Notes, preliminary drafts, research data in the process of analysis, unfunded grant proposals, memoranda, recommendations or other records in which opinions are expressed or policies or actions are proposed, except that this exemption shall not apply when such records are publicly cited or identified in an open meeting or in an agenda of an open meeting.”

But there is nothing confidential about a multi-year cash flow analysis that projects revenue, expenses, and debt payments.  The Sentinel asked for that specific type of analysis, to which Westwood City Administrator Leslie Herring responded that the city had “provided such records as are kept or maintained by the City which are responsive to your request and which are not otherwise exempt from disclosure under the Kansas Open Records Act.”

So Westwood officials either did not perform a standard cash flow analysis to support their contention that the project is viable, or they are withholding it in apparent violation of the Kansas Open Records Act.

 

 

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