Parkville developer will use $10.5 million established in a special community improvement district (CID) fund to finance his purchase of city-owned property for his use in a 350-acre development.
The city acquired the land when a previous developer defaulted on payment. The purchase agreement will end $300,000 in annual payments the city has been making toward Neighborhood Improvement District (NID) debt since acquiring the property several years ago.
The tract of land is located near the Thousand Oaks residential development in Parkville and represents the largest tract in the planned development.
Brian Mertz, who owns Parkville Development, will use the CID money to purchase the land from the city for $4.8 million and will keep the additional $6 million.
City administrator Joe Parente previously had stated the CID money would be used to cover the cost of infrastructure, such as roads, bridges and other improvements at the development site, which is near Interstate 435 and Hwy. 45.
At Landmark deadline, Parente and Mayor Nan Johnston had not yet responded to a request for comment for this article.
Ed Greim, an attorney for Jason Maki, a member of a citizens’ group opposing the handling of the development, said “Maybe they (Parkville city officials) have got other money for sidewalks.”
Greim said the CID maneuver is “just swapping out one form of debt for another” and said the city could have sold the property for more than the amount being granted to the developer.
The city took over the payment of principal and interest in bond debts when a previous developer who owned the land could not make payments and the land was forfeited during a judicial sale, said Greim, an attorney with Graves Garrett Law Firm in Kansas City.
“I think this is a good deal for the developer,” he said during a telephone interview, adding that “the land could be worth a lot of money in the future.”
Greim said he’s unsure of the legality of the use of CID money for land purchase. “The question is, ‘what’s an appropriate purpose for a CID?’” he said, adding, “The answer can be found in Missouri law.”
Greim added that he’s unaware if checks-and-balances exist.
“Maybe there’s nobody out there interested in policing this,” he said, adding that he’s not sure if the practice is a common incentive used by cities to spur economic development. If it is, perhaps citizens are unaware of the practice, he said.
“It’s rare to have somebody like Mr. Maki who’ll step up and put up the fight,” he said.
The Parkville Board of Aldermen approved the sale of the property to Mertz during a March 5 meeting. The agreement allows the developer to tax apartments and houses within the CID boundaries for up to 30 years. When the $4.8 million is paid, the developer may continue to tax residents to offset development costs, according to the agreement.
The latest incentive is in addition to a $52 million Tax Increment Financing (TIF) earlier approved by the Parkville Board of Aldermen.