paragonstar-blog

[paragonstar-blog]

$400M Paragon Star breaks ground but still faces hurdles

"You can always amend a big plan, but you can never expand a little one."

Mike Downing, the director of the Missouri Department of Economic Development, used that Harry Truman quote Wednesday to congratulate entrepreneur and developer Phillip "Flip" Short on the grand vision behind his $400 million Paragon Star project.

But judging from the pieces not yet in place for the mixed-use project's $212 million first phase, Downing's comment could have been taken as a hint of skepticism, as well.

Downing and a host of local dignitaries were among dozens who gathered in a tent on a chilly morning for first-phase groundbreaking ceremonies at Paragon Star's 130-acre site at Interstate 470 and View High Drive in Lee's Summit.

Before the event, Bill Brown, project coordinator for Paragon Star LLC, noted that a public-private partnership involving Lee's Summit had paved the way for the groundbreaking. During the past year, the Lee's Summit City Council has approved incentives that will cover $40 million of the initial phase's $212 million price tag, he said, ticking off the $26 million that will come from transportation development district and community improvement district sales tax surcharges, $13 million in tax increment financing and $1 million in city spending for interchange improvements next to the site.

But Paragon Star LLC still is negotiating with lenders in its effort to secure the debt portion of the $151 million it plans to raise through equity and debt, Brown said.

And it is counting on $20 million of the $212 million coming from a Missouri economic development tool that's never been used: the State and Local Government Convention, Sports Facility, Meeting and Tourism Act of 1989.

Downing touted the Paragon Star project Wednesday as a means to bolster an already strong Missouri tourism industry, which this year will attract 44 million visitors who will spend $12.4 billion in the state. But Gov. Jay Nixon, the man who appointed Downing to his post two years ago, will be replaced in January by Gov.-elect Eric Greitens, meaning there's a good chance Downing won't be around to support the Paragon Star grant during the next legislative session.

Source: http://www.bizjournals.com/kansascity/news/2016/11/30/paragon-star-challenges-ahead.html

[paragonstar-blog]

How the Lee’s Summit House of Cards Fell

On November 30, 2016, local officials joined project developer colleagues Bill Brown, Phillip Short and their attorney Christine Bushyhead to break ground on one of the most talked about developments in Lee’s Summit—Paragon Star, a $400 million soccer/retail/entertainment mixed use complex development on the west side of Lee’s Summit. For the local area, what really began that day was the Lee’s Summit version of House of Cards--the popular TV series that shows a gang of people using a web of deceit, politics and money, legal maneuvering and personal motives to win their prize.

In the local version of house of cards the city manager, city treasurer and developers needed to get hold of the only close source of public money, so they quietly began developing their own special taxing zones.  The first zone is called the I-470 and View High Community Improvement District (CID) and is the future home to the Paragon Star project.  The second taxing zone expanded their area even farther and it’s called the Southwest I-470 Transportation Development District (TDD).

Meanwhile, at the same time, friends of the development placed a Paragon Star sub-contractor on the city charter commission to influence rules affecting Lee’s Summit citizens.  Interestingly, this happened during the same time period that was the most critical year to Paragon project as it had to have numerous financial and property approvals from the Lee’s Summit city council.

The lesson of how a $212 million project turns into a $400 million, odd ball project that is a poor copycat of a competitor and similar-type project without any clear, tangible payback stream in private investments, lucrative end-user lease agreements or job creation can be found in the house of card players.

Paragon house of players: • the former city employee, charter commissioner and Paragon sub-contractor; • the 2016 chairman of the Lee’s Summit Economic Development Council • the former city attorney and current attorney for the new CID & TDD tax zones and 2017 chairwoman of the Lee’s Summit Economic Development Council • the local Paragon Star property owner and the single, largest financial supporter of the August 2016 ballot effort for a city sales tax grab of $52 million over 15 years.

While the city rules were being re-written on the Charter so was the creative way to access public money.  On December, 2015, both petitions for the Paragon Star View High CID and the TDD were passed by City Council which meant that the tax zones could go ahead and complete their formation. When a tax zone completes its formation, it becomes independent from the city which authorizes it and, like a city, the zone operates either through electing or appointing a board to conduct its business.

The city sued Jackson County to create the mega tax zone known as the Southwest I-470 TDD.  That district stretches from the empty fields that is now Paragon Star, east along I-470 highway and across to the other side of the highway to the money prize. The mega zone would include access to one of the most lucrative public money sources of Lee’s Summit, the sales taxes from Summit Woods shopping area. There was just one problem--Summit Woods was already part of its own TDD that ends July 2017.  In its pleadings, the city asked the Judge to end the Summit Woods TDD but to continue the taxes.  The new Southwest I-470 TDD would cover all debts with other people’s money. Suddenly, city council members had to approve a side agreement promising the developers of Summit Woods that their debts would get paid.

When different council members started questioning different actions by members of the Paragon house, they were faced with a possible threat of lawsuit from the Paragon sub-contractor who was serving on the charter commission.  Then, in August 2016 another member of the Paragon house sent a letter to the city council discussing having witnessed events in favor of the sub-contractor on charter commission and against the city.  Shortly after the city council was presented the notice of possible lawsuit and while under that threat, more approvals for Paragon Star are pushed forward by the city manager and attorney.

On September 12, 2016, the city attorneys filed the final judgement that finalized the formation of the Southwest I-470 TDD and Paragon had its prize money. On October 20, 2016, the city manager put before council a real estate agreement to sell the city’s property to the Paragon View High CID for a $1.00 option and cut the price to half the estimated value and provide half the funds to get it ready for development.

In December, 2016, the charter commission ended its work and the Paragon sub-contractor filed his lawsuit for $15,000 against the taxpayers on February 9.   Just 2 days before, on February 7, 2017, the formation of the View High CID was completed.  On March 9, the city manager and attorney put before council for approval the city’s agreement with the CID even though members of the Paragon  arewitnesses in a lawsuit against the taxpayers.

Surprisingly, it only took 2 qualified voters to approve the I 470 and View High CID which would cost taxpayers millions for many years.   Also, two city employees--the city manager and city treasurer--are board members of the 5-member View High CID board that now is authorized to run independently with Lee’s Summit public sales tax money.

The savior of Lee’s Summit citizens for some much-needed tax relief is that no one has noticed that the house of cards already fell within a failure clause of Ordinance #7762 that formed the View High CID December, 2015 and signed by the city attorney and the Mayor.  Section 10 of this ordinance clearly states that the I-470 and View High Community Improvement District must enter into a cooperative agreement with the city within six months of that ordinance being passed.  However, the cooperative agreement between the View High CID and the city was not entered into for more than a year later.  This section will relieve concerned taxpayers that all the web of deceit is finished because it, “…shall nullify and render void the approvals granted by this Ordinance upon such declaration by the City Council.” Like it never happened at all!

Now the question needs to be asked: “Who has the city manager, treasurer and attorney been working for since the failure clause applied in June 2016?”

Submitted opinion by: Vicki Tarpley, Regional marketing professional and Lee's Summit Citizen

Source: http://lstribune.net/opinion/how-the-lee-s-summit-house-of-cards-fell.htm

#Steve Arbo #Bill Brown Phillip Short