The entire 59 page Contract between The City of Overland Park and “The Developer” of Corbin Park establishing a Transportation Development District (TDD) on September 8, 2008 may be viewed here- http://apps.opkansas.org/City-Government/Agendas-and-Minutes/Finance-Administration-and-Economic-Development/Agendas/2011/2011-07-20/DIS-1-2.pdf
Once “The Developer” completes at their up front expense certain eligible improvements as defined by Kansas Statute, a municipality (in this case Overland Park) may create a TDD and reimburse “The Developer” for pre-agreed monies funded through the sale of Bonds. The principal and interest on these Bonds are paid by a “TDD Tax” (in this case 1%) on all eligible retail activities occurring on the improved property.
The document dated July 20, 2011 below http://apps.opkansas.org/City-Government/Agendas-and-Minutes/Finance-Administration-and-Economic-Development/Agendas/2011/2011-07-20/DIS-1-1.pdf again confirms the existence of this TDD but moves the collection of taxes out to October 1, 2012. So the TDD exists which means Bonds were sold to pay “The Developer” for scheduled improvements, how is the principal and interest payments being made to the Bond Holders? What happens if the property remains in it’s current condition for an extended period?
FINANCE, ADMINISTRATION AND ECONOMIC DEVELOPMENT COMMITTEE
July 20, 2011
1. Corbin Park Transportation Development District (“TDD”) Agreement.
Policy Issue: Resolution No. 3417 establishes the Finance, Administration and Economic Development Committee as the Council Committee designated to review matters related to Transportation Development Districts.
Staff Recommendation: None. This matter is presented for discussion at this time.
Background: In April of 2008, the Developer and property owners within the Corbin Park Shopping Center, submitted a petition requesting the formation of a TDD. On June 2, 2008, following a public hearing, the City approved the creation of a TDD for transportation related improvementsi in the Corbin Park Shopping Center through the adoption of Ordinance No. TDD-2753. The TDD Ordinance called for the TDD Improvements to be financed with TDD Bonds payable from revenues received from the imposition of a one percent (1.0%) TDD Sales Tax on sales within the Corbin Park TDD Districtii.
On September 8, 2008, the Developer and the City entered into a Development Agreement for the TDD improvements. This agreement sets forth various terms related to reimbursement of eligible TDD expenditures, procedures related to TDD financing and terms for assignment by the Developer of its rights and duties to another entity. The assignment provisions also include the City’s right to consent to assignments. The Development Agreement included a collateral assignment to Bank of America, N.A. (“BOA”) the construction lender for the project.
Early in 2010 the Developer of Corbin Park filed for bankruptcy, and the project has been the subject of bankruptcy proceedings since that time.
In June of 2011 the City was contacted by Mr. John Snyder with the law firm of SNR Denton US LLP on behalf of his client, Michael Schlup. Mr. Snyder advised that he expected that his client would be the successful bidder for purchase of the Corbin Park, subject to final bank and court approval. He requested that city staff assist him and his client in presenting a request for assignment and documents necessary for an assignment to the Governing Body in order for the TDD Development Agreement to be assigned to his client. The website for the developer is http://www.carsondevelopmentinc.com. The actual name of the buyer (a single-purpose entity) is Aspen Square, Inc., a Kansas corporation. The purpose of this discussion is to review with the Committee the request and the documents and approvals that would be necessary to assign the Corbin Park TDD Agreement.
Budget Impact: All expenditures for improvements in the district are paid from revenues generated within the district. No City of Overland Park funds are obligated for payment of TDD improvements.
Attachment: A copy of the current TDD Development Agreement is attached for your reference. Also attached is a copy of the Joint Motion of Debtor and Bank of America for (I) Approval of (a) Form of Purchase Agreement; (b) Bid Procedures, and (c) Form and Manner of Notice, and (II) for Schedule of Auction Date. (Please note that this document is over 70 pages, and is included only as an attachment to the on-line agenda.)
i The TDD improvements included improvements to 135th Street from Metcalf Avenue to Nall Avenue; improvements to 138th Street, Lamar Street and the interior Loop Road of the shopping center (including paving, storm improvements and lighting); signal improvements at 135th Street and Riley Street, 138th Street and Metcalf Avenue, 135th Street and Glenwood Street, 138th Street and Lamar Avenue, and 139th Street and Metcalf Avenue; mass grading and erosion control; interior site improvements (including grading, curb and gutter, paving, striping, signage, sidewalks, utilities, hardscape, landscaping and lighting); power relocation along 135th and Metcalf; water main construction; sanitary sewer infrastructure; and landscaping.
ii The TDD sales tax has been collected for one quarter, between July 1, 2009 and September 30, 2009. Ordinance TDD-2753 adopted in June of 2008 specified that the TDD Sales Tax would begin on July 1, 2009. In June of 2009, at the request of the Developer, the Governing Body passed Ordinance No. TDD-2815 acknowledging that the TDD Sales Tax would be collected from July 1, 2009 to October 1, 2009 and thereafter approving the discontinuance of the collection of the TDD Sales Tax until October 1, 2010. In June of 2010, again at the request of the developer, the Governing Body passed Ordinance No. TDD-2878 delaying collection of the TDD Sales Tax until October 1, 2012