The news yesterday that Kansas City-based Landmark Retail Properties had entered into a contract to sell the Village Shops, Corinth Square and the Fairway Shops to Bethesda, Md.,-based First Washington Realty prompted a range of reactions from optimism to disappointment among members of the Prairie Village city council, which will be asked to reassign the Community Improvement District agreements the city passed in 2010 to help spur the redevelopment of the centers.
The language in the CID provision addressing transfer of rights and obligations under the agreement dictates that council approval is required to allow another developer to step into the shoes of the current owners. However, a line in the section pertaining to transfer essentially obligates the council to approve the reassignment without demonstrable concern that the new developer is not fit to take over the centers:
“The Governing Body shall provide such consent unless a proposed assignee does not have qualifications and financial responsibility, as reasonably determined by the Governing Body, necessary and adequate to fulfill the obligations of the Developer being assigned.”
With valuation at $3.5 billion and experience managing more than 90 retail centers across the country, it’s difficult to see councilors making an argument that First Washington is not equipped to step into the role.
Andrew Wang, the only councilor still on the governing body who was in office at the time of the original vote to vote against the CIDs, said his position on the CIDs hasn’t changed since September 2010, and that in some ways news of the sale validates his concerns.
“My perspective on the CID at this point is the same,” he said. “A private developer enters into an investment opportunity based on what that investment will bring in return. It shouldn’t be contingent on the actions of another group — in this case the city council — to make that a successful investment.”
Brooke Morehead, who made incumbent Dale Beckerman’s participation in negotiation of the CID agreements a keystone issue in her 2012 campaign for office, said Thursday that the sale was disappointing in that it was providing a benefit to the property owners without allowing the city to “participate in the financial windfall of the increased value of the properties.”
“There was no provision for any recovery of taxpayer subsidy in the event of ownership transfer,” she said. “It is basically a give away of public funds to a private developer.”
But Laura Wassmer, who represents the same Prairie Village ward as Morehead and who voted in favor of the CIDs in 2010, said she was “cautiously optimistic” about the sales. Wassmer said the success of the redevelopment at Corinth Square is boldly apparent, both in terms of aesthetics and sales. The renovations at the Village Shops should yield similar results, she said.
“I think sometimes people forget what Corinth looked like before CID,” she said. “And I don’t think people understand that it wouldn’t have happened without the CID. We would have had basic maintenance improvements. But there is no way we would have had the extensive remodel inside restaurants, the landscaping, everything.”
Wassmer said her meeting with the representatives of First Washington left her with the impression that they would continue to invest in improvements to the centers, even if she would have preferred the local ownership to continue.
“I think it’s disappointing — we were hoping that they would be involved for the long haul,” she said. “But as long as the principles remain the same in terms of what they will do to keep the centers vibrant and they remain what community wants them to be, I think it will be fine. At this point I’m cautiously optimistic.”