Wichita OKs $11M incentive for developers of apartments, hotel near Riverfront Stadium

The Wichita City Council approved an $11.3 million incentive for an Overland Park development company to develop a parking garage, hotel and apartment complex near Riverfront Stadium.

The move faced opposition from former mayor candidate and city-incentive watchdog Celeste Racette and Delano neighborhood leader Vince Hancock, who both voiced frustrations with the city’s broken promises concerning development around the stadium since 2019.

The council ultimately approved the incentives by a 6-1 vote after Troy Anderson, assistant city manager for economic development, told them the EPC Real Estate Group’s $110 million project would not be built unless the developers were reimbursed $11.3 million for project costs through TIF.

Tuesday’s action was a departure from the original plan laid out by the city in 2019 that called for using TIF to help pay for the city’s $83 million in stadium debt.

“You promised citizens’ tax dollars would not be given to developers, would not be used to finance development,” Racette said. “. . . So now here we are. Promises made to us, Wichita taxpayers, have been broken, but the $83 million debt payments are holding us hostage.”

City officials say the new project will generate more money to pay for the stadium than the 2019 plan, through other tax dollars generated by the EPC development. Anderson said the city plans to receive $39.8 million through the EPC development deal versus $18.6 million in the 2019 plan. New property taxes above $11.3 million will go back to the city.

“So a significantly better position for the city now than back in 2019 when the city entered into that original development agreement,” he said.

The major change is the addition of a hotel instead of an office building, which will generate additional tax revenue through local hotel taxes.

The $11.3 million will come back to EPC after the development is completed in the form of new property taxes generated in the area. The TIF economic development incentive is designed to help drive development in blighted areas. It works by capturing new property taxes in the area and reimbursing the developer for eligible costs with money that would have otherwise gone to the city of Wichita, Sedgwick County and Wichita Public Schools.

It’s one of several economic development tools used by the city to spur development around its new stadium on the west bank of the Arkansas River.

After EPC builds the parking garage, which will have residential housing on top of it, the city of Wichita plans to buy the garage from EPC for approximately $8 million. That’s in addition to the TIF reimbursement.

Council member Jeff Blubaugh, whose district includes Riverfront Stadium and the 2-acre development site, voted against the change, saying it does not fulfill the original promises made by the council in 2019 when members told the public that tax revenue generated within the stadium district would be used to pay for the stadium, not go to developers.

“I think it’s a great project,” Blubaugh said. “I’m excited for the much needed housing coming to Wichita. What I’m not excited about is an $11 million incentive that we’re going to address before we do the debt service on the stadium, and I want to fulfill the original promises that we made to the taxpayers whenever we got the buy-in from the city to go forward with the stadium.”

Vice Mayor Mike Hoheisel, who joined the council in 2022 after the stadium project had been completed, said he voted for the $11.3 million incentive because the larger project could help pay for the stadium through transient guest taxes at the hotel, sales taxes at the hotel and retail space and other potential revenue streams.

“I wish things would have happened differently,” Hoheisel said. “Nobody’s happy with the process so far. We have faced many obstacles, most notably COVID and the death of Lou (Schwechheimer), the former owner of the Wind Surge. I think things would have gone a lot differently if Lou had still been around. We knew that there were negotiations with the changes that we had recently. This is the result of those negotiations that we’re talking about here.”

Hancock, president of Delano United neighborhood group, said those behind-the-scenes negotiations have cost the city lots of trust over the past four years, starting with a secret deal to sell four acres of city land to the Wind Surge team owners for $4 without putting the project out for a competitive bid known as a request for proposals, or RFP.

“Citizens were concerned that the 2019 development agreement was from backroom negotiations between the previous mayor, the previous assistant manager and a now-departed ballpark development group,” Hancock said. “This agreement was developed the same way. We need to stop doing these backroom negotiations and have an open process. I understand we’re past that point now with this project. But this really could have gone out for bids. It could have been a much more open process.”

The city presented the massive public investment in the stadium project as a “catalyst” project that would spur private development in the surrounding area, which would help pay for the stadium.

Instead, no private development has been realized around the ballpark since it was completed in 2020. So the city is stepping in with further public investment to spur private development, calling the EPC project a catalyst for future development.

“The (EPC) project is a catalyst for the overall — continues to be a catalyst for the overall district,” Anderson said. “Yes, there was some commentary around that the stadium was the catalyst, but at the same time this continues to be a public — or the private development catalyst to continue to see development around the ballpark.”

Council member Bryan Frye, who has been an outspoken defender of the city’s handling of the development deals around the stadium, also called it a catalyst.

“Eventually this will be good for the taxpayers,” Frye said. “The idea all along was to have a catalyst project to take care of a site that wasn’t generating the revenue it needed to and was costing the city in terms of maintenance and this lack of opportunity.

“Have we had struggles along the way? Absolutely.”

Council member Becky Tuttle said the TIF incentives for EPC make sense because the development’s projected cost has grown from $77 million under the 2019 plan to $110 million in the 2023 plan. She said the project will help fulfill a need for more hotels, apartments and parking in downtown Wichita.

“To go from $77 million dollars to $110 million in our city’s core to me sounds like an amazing opportunity. And again, I can’t wait for the ribbon cutting in 30 months, so I will be supportive of this today.”

Under state TIF law, developers can’t be reimbursed for construction costs for most buildings – unless the building is a parking structure.

EPC Executive Vice President Austin Bradley told The Eagle that “the lion’s share” of incentive funds would go toward construction of the 260-stall parking garage, which EPC plans to sell to the city and lease back.

Here’s how it will work: EPC will pay to build a parking structure to support its hotel and apartment complex. The property taxes generated within the TIF will be used to pay EPC back for what it spent on the parking garage. EPC will then sell the garage to the city and lease it from the city.

Here’s a breakdown of what costs will be reimbursed to EPC:

Sitework: $2.78 million

Acquisition costs: $250,000

Street and infrastructure improvements: $750,000

Parking: $2.24 million

Contingency: $567,914

Financing and other costs, including interest: $4.75 million