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Proposed development at I-435 and Hwy. 45 is the bailout


The residents and taxpayers of the Parkville and the surrounding areas deserve to be told the truth about why much of the development property around Hwy. 45 and I-435 has been “blighted” for the last eight years or more, and why a development proposal is being pushed through the approval process at record speed.

In the “development” article published in the Oct. 10 issue of The Landmark, Joe Parente, city administrator for Parkville, was quoted at the end of the article making remarks about how Parkville “invested in sewer and street improvements” and how previous developers had “abandoned their projects.”

Nothing could be further from the truth. I was a majority partner in several of the partnerships that attempted to advance development projects between 2003 and 2009 on land we owned, roughly 250 acres of the more than 300 acres currently being considered for development now.

Parkville’s reign of terror begins around the year 2000 with a quest to annex the area along I-435 using the twisted logic that “we need to annex it or KC MO will.” The reality is that Parkville was looking for tax base, sales, real estate hotel/motel etc. Hence what I call the surgical annexation, a geographic appendage running along the river and up the corridor. Parkville had no financial resources or plan as to how they would provide the infrastructure and services to the area. This is typical of small cities annexing real estate to secure future tax revenue. Post annexation we received a real estate tax bill on the properties we owned and nothing in return other than a very minimal police presence.

The core issue today is a city self-inflicted financial crisis that has or will be transferred to all the taxpayers of Parkville from an ill-conceived sewer NID. Beginning in 2003, myself and other developers attempted to secure sewer service for the area around I-435 and Hwy. 45. The short version of a complicated issue is that after being bounced back and forth between the Platte County Regional Sewer District and Parkville we were given one option only. The city would create a NID (neighborhood improvement district) and sell general obligation bonds to fund a sewer from the sewer plant up to Hwy. 45 and I-435.

The bonds would be retired by a special assessment (property tax) only on all the properties in the NID (then approx. 300+ ac). The city and the PCRSD insisted that the sewer be an “interceptor class” sewer with capacity to serve the entire Brush Creek watershed from KCI to the river, but the cost would be borne by only the taxpayers in the NID properties.

The city made no investment except using some of their bond capacity and guaranteeing the bonds. The sewer design capacity was more than double what was required to service the NID but all the cost was shifted to the NID. Again, the city made no investment. We argued in vein that at least 50% of the project (for future capacity outside the NID) should be the city’s responsibility. I further requested the city at least pick up all the soft costs such as legal, survey, engineering etc. since this was their newly annexed area. The answer was no.

This was pure extortion and we knew it but had no choice but to accept the terms so we could at least sell off property that was simply not marketable without a sewer.

It gets worse. Once the NID was formed the city took complete control of the design and construction process and embarked on another misguided effort to design a gravity sewer without pump stations as demanded by Platte County
Regional Sewer District. My engineering staff advised against it, but we were required to provide a preliminary design for the NID per PCRSD parameters. The cost was excessive and some sections simply not feasible. The city retained another firm for a second design. The city then handed it off to a contract engineer in house. After at least three design and re-designs the final design had at least three pump stations. Well over $100k wasted.

The city grossly mismanaged every aspect of the sewer NID project. The city ran out of bond funds before they completed the last phase and the pre-NID estimate of $2.5 million swelled to over $5.0 million today. Now the tax burden on all NID properties is about $1,150+ per acre per year. So a one acre building lot would have an annual sewer tax well in excess of $1,150 per year since the public right of way greenspace, parkland etc. is not taxed post development but the tax is distributed pro rata to the private owned marketable parcels. Note that this is in addition to the all the other property taxes such as Park Hill School District, South Platte Fire, Library, ambulance, Parkville City etc.

A developer simply can’t market large lots or low density with that kind of tax burden. The only solution to the problem, absent an abatement from the city, is to maximize the density and dilute the tax over as many parcel or dwelling units as possible, hence the proposed density.

So why does the city need a bailout? From 2003 until we finally lost all our property holdings via deed in lieu of foreclosure in 2009, the city was anti-development rejecting numerous proposals from several development partnerships. The preliminary plans we submitted (north of the log cabin and the rest of the intersection) included detailed architectural standards for all three quadrants of the intersection, lower density, restrictive covenants, reasonable greenspace, site preparation for a trail along the creek, and standards with restrictive covenants for the business park and BP zoning. There simply was no plan that was acceptable to the city.

We will never know why the city was so obstructionist but I can only assume that it was the result of several factors. A complete absence of a master plan for a half a decade post annexation, a director of community development that could be best described as a utopian dreamer, a board of aldermen with no consensus of opinion or vision about how or what might be developed in the area, and perhaps the fact that the city had no financial resources to make any infrastructure improvements to the annexed area. A planning commission with no template or master plan to follow and a conflicted patchwork quilt of zoning and planning regulations made the situation even worse. During the same time period however the city seemed to be elated about anything The National group proposed in the Hwy. 9 and Hwy. 45 region including the now famous city hall leaseback “to avoid voter approval” deal. No sewer issues and lots of sales tax generators.

At the eleventh hour after the housing market collapse and the bank failures of 2008-2009, some of the plats were approved but it was too late. Even then the sewer was not complete and the total cost was a moving target. The delays I refer to were measured in years not months. We made a simple request to add BP zoning (a very restrictive industrial class) to the city’s out of date and broken zoning order so as to align the county zoning we had. More than a year went by before we even got a response. The owner of the convenience store at Brink Meyer and Hwy. 45 was delayed more than two years before he received a building permit.

The endless, mindless, pointless reviews and revisions demanded by the city drove his cost up by several hundred thousand dollars.

Between 11 consecutive Fed rate increases, no date or cost certain for a sewer and a city that refused to entitle our holdings we were driven to the brink of bankruptcy by the city. Interest carry cost on acquisition debt and the improvements we had already made, like Brink Meyer Rd., spiraled out of control. Many of our lot and large parcel sales dried up when the buyers got tired of waiting for the city entitle the property and reveal the final cost of the sewer.

Post foreclosure two banks owned most of the property. The annual tax cost of holding the property on Brink Meyer south of the log cabin was so high, since it included a second NID required by the city for road and utility improvements, it was unmarketable at any price considering Parkville past antidevelopment stance. That bank eventually surrendered the deed to the city, who owns it today and is covering the tax payment (bond payment) from an emergency fund diverting money from the general fund.

A similar fate befell the industrial park property on the southwest corner that we owned twice. Once when we originally purchased it, once when we won it back in a lawsuit against the bank before we surrendered it back to the bank rather than pay a legal fee lien and the sewer tax two years later. The bank then surrendered it again to the city who owns it today and is covering the bond payments from the emergency fund.

The property on the northwest corner was also owned by a bank that unwisely chose to pay the tax bill for more than four years at a cost in excess of $600,000. They recently dumped that property at a loss for bargain price rather than pay any more tax bills. I suspect that the bank may have even considered deeding that property to the city in the near future rather than growing an even bigger loss. That could have pushed the city closer to default.

This is why Parkville has a financial crisis and needs a bailout in the form of a huge development. They must unload the bond payment liability and soon.

Another developer bought the property from the convenience store south to the log cabin from the bank back about 2009 or 2010. One might notice that nothing has happened there. Every mixed use plan he presented was pushed back by the city. He gave up and put the property on the market. Why didn’t the city rush to approve a plan for him? Simple answer. He has paid the sewer tax every year. No financial stress for the city.

As to the remark about investing in streets, I need to remind Joe, again, that Brink Meyer Rd. from Hwy. 45 to the log cabin including underground utilities was designed, constructed and paid for by one of my partnerships. We shouldered more than 80% of the more than $1.25 million cost with a contribution from Platte County toward asphalt paving and one from Barth Development in exchange for a road improvement for Stone Gate. Parkville contributed nothing.

In fact as part of the surgical annexation, Parkville cleverly annexed to the section line at the west boundary of the county road right of way, ensuring that the county or future developers would have to bear the cost of improvements and maintenance but Parkville could harvest the tax revenue from future improvements like the convenience store. I think the county later compelled them to take the road into the city limits, of course after it was improved.

The current development proposal, its attributes, and density are driven in large measure by the need to dilute the sewer tax over as many dwelling units or other occupancies as possible and still maintain marketability. I don’t believe this is a case of an evil greedy developer raping the landscape. The developer is responding to an opportunity but is constrained by the sewer tax from hell.

My partnerships built the building you see today at the southwest corner as well as the left turn lane and the block long street. That is the private street that Parkville refused to accept as public right of way in another effort to rid itself of maintenance costs. Again Parkville made no investment.

Parkville, in my experience, is the most incompetent, misguided, and possibly corrupt municipal government in the metro area. Control and tax revenue is their objective, sold under the banner of creating a community.

Subdivisions and developments in rural Platte County such as Stone Gate, Thousand Oaks, Timber Ridge, Country Wood, and Emerald Hills were developed with minimal interference and reasonable regulation from Platte County government. They have everything they need. Quality county level services for EMS, PCRSD, South Platte Fire, county road maintenance and good law enforcement. When Parkville annexed this area they brought nothing to the table but a tax bill and the destruction of personal property rights.

Unfortunately all the public testimony at the recent hearings is little more than theater. The board of aldermen will likely approve anything that any developer presents if it will quickly solve their budget (bond) crisis.

The next chapter of this horror story may unfold soon, perhaps behind closed doors. The city owns several large parcels on the southeast and southwest corners of the intersection. They were the ones surrendered to the city by banks rather than paying the sewer tax. The city’s basis in the property can be quantified by determining the cost of the bond payment(s) made to date and the soft costs such as legal. How they will sell those tracts should be interesting.

Will they recover all their cost and protect the taxpayers from a loss? How will they offer them for sale. Public auction? Public auction with a reserve equal to their basis would be the reasonable and fair thing to do, but it’s Parkville. If the current proposal is feasible then the likely bidder is the developer with an approved plan.

The history of the Hwy. 45 and I-435 region from 1999 to today is a text book example of bad government.

The final cost of Parkville’s annexation crusade has yet to be determined but it already includes millions of dollars lost by all the previous developers and their banks, and the liquidation of a 25-year-old construction and engineering firm by a bank to recover debt on unmarketable real estate with the sewer tax from hell.

I had a short window of opportunity from 2000 to 2002 to petition the courts for de-annexation once the city failed to provide basic services such as a sewer. I should have lawyered-up.

To my fellow rural Platte County residents, welcome to Parkville, does it feel like a community yet?

--Richard Kopp
Rural Platte County