by Ivan Foley
A one cent sales tax collected in the Zona Rosa shopping district is not generating enough revenue to cover an annual $2 million bond payment to a transportation development district (TDD).
The TDD is a funding source for paying off bonds that were used to construct the shopping center near I-29 and Barry Road in Platte County.
Zona Rosa was built in 2004 and expanded with a second phase in 2008.
In 2007, the Platte County Industrial Development Authority--at the majority approval of the county commissioners at the time--issued additional transportation revenue bonds as a financing tool for the second phase of Zona Rosa development. Phase two included another parking garage, as well as a Dillard’s store, etc.
For the bonds during the first phase of Zona Rosa construction, the county was potentially liable for $18.6 million, but under the 2007 resolution the county became potentially liable for $32.2 million.
County officials say the annual payment to the TDD is $2 million. Zona Rosa’s one cent sales tax dedicated to the TDD has been raising only about $1.5 million, leaving a $500,000 annual shortfall.
Historically, the owners of Zona Rosa have covered the revenue shortage by making a cash payment to the TDD, county officials say. That did not happen this year, and UMB Bank, as trustee of the bonds, has drawn on the letter of credit the owners of Zona Rosa had on file to meet the shortfall for the 2017 payment.
“Of course, now that the trustee has drawn on the current letter of credit, we believe the owners of Zona Rosa are required to replace that letter of credit with a new letter of credit,” said John Elliott, second district county commissioner.
It appears the owners of Zona Rosa have not yet replaced that letter of credit, Elliott said Monday.
“We do know that the trustee has made a demand of the owners that they replace the letter,” Elliott added.
The Landmark reached out to Olshan Properties, the owners of Zona Rosa, for comment in regard to the situation. On Tuesday, Parke Chapman of Rubenstein Strategic Communications in New York City, told the newspaper Olshan Properties is choosing to decline comment. Rubenstein Communications handles public relations for Olshan Properties.
An article in The Landmark in July of 2007 when the county commission approved the issuance of bonds for the second phase of Zona Rosa indicated “the county would be obligated to pay the cost if the projected revenues were 70 percent or less of the projected amounts.”
Current county commissioners stopped short of confirming that this week but did indicate they are hiring outside legal help to assist them in understanding the county’s potential obligation in this matter.
Serving on the county commission when the vote on the bonds for the second phase of Zona Rosa was taken in 2007 were Betty Knight, Jim Plunkett and Tom Pryor. The motion passed on a 2-1 vote, with Pryor opposed.
After his vote of opposition, Pryor told The Landmark: “The TDD has a history of revenue income and could have obtained its own bonding for the project at a slightly higher interest rate. I felt increasing the obligation of the county was the incorrect thing to do.”
The bonds at the time were described as 25-30 year bonds.
“Having a 30-year life on these bonds is questionable,” Pryor said in 2007. “It depends on whether we will have another Plaza or a Metro North (no longer in existence).”
County officials this week said the bonds are scheduled to be paid off in the year 2032.
Elliott said the county is in the process of “evaluating our options to protect the assets of the county and the taxpayers without damaging the county’s excellent credit rating.” He said the county commission is hiring outside bond counsel “to fully understand the county’s obligation.”
News of the underperforming taxing district comes in an economic environment that finds some brick and mortar retailers feeling effects from the proliferation of online shopping by consumers.
Through the first 11 months of this year, the combined collection of sales and use taxes in Platte County is up by two percent compared to the first 11 months of 2016.
Collections of dedicated sales taxes, such as the county half cent park tax and 3/8th cent road tax, are up by only 1.68% compared to last year.
Zona Rosa consists of 980,500 sq. ft. of retail space, with 111,300 sq. ft. of office space. In addition, there are 73 residential units.
Key tenants in Zona, according to the Olshan Properties website, include Dillard’s (three story), Old Navy, Dick’s Sporting Goods, Barnes & Noble, The Gap, Gap Kids, Buckle, American Eagle, Gymboree, White House/Black Market, Forever 21, Express, Evereve, Kay Jewelers, Altar’d State, Victoria’s Secret, and DSW, among others.