PortKC approves bonds, tax exemption for $250M NorthPoint project

The Port KC board of commissioners on Monday approved a property tax exemption and issuance of bonds to support NorthPoint Development’s $250 million plan to develop 4.3 million square feet of industrial space in Kansas City’s Northland Park.
 
Brent Miles, NorthPoint’s vice president of economic development, said the firm would take over from New York-based Rockefeller Group as master developer, acquiring 240 acres there in phases from the Suburban Land Reserve, a real estate investment subsidiary of The Church of Jesus Christ of Latter-Day Saints.
 
Located three miles east of Interstate 435 along Missouri Highway 210, Northland Park is adjacent to Norfolk Southern’s Kansas City Intermodal Terminal and just a few minutes southeast of Ford Motor Co.’s Kansas City Assembly Plant in Claycomo.
 
But despite the park’s prime location, nothing has been built there since the 700,000-square-foot distribution center occupied by Musician’s Friend was completed in 2007. Among the reasons, Miles said, are wetlands and topographical challenges on the site.
 
“We will need 3 million cubic yards (of fill) to build this park out,” Miles said. “That’s a massive amount of dirt.”
 
The fill requirement represents “a $2 million to $3 million disadvantage” for each of the nine to 10 buildings that NorthPoint plans to develop in the park during the next seven years.
 
Miles said the fill situation is similar to the one NorthPoint encountered in developing the Riverside Horizons industrial park about 25 miles west in Riverside.
 
If employment by Northland Park’s tenants ends up being similar to Riverside Horizon’s, Miles added, the project’s estimated total employment could be 4,200 to 4,500 — more than double the current conservative estimate of 2,000.
 
To support the project, the Port KC board voted unanimously to issue as much as $250 million in taxable revenue bonds. The bonds, which only NorthPoint will be responsible for repaying, will make the project eligible for a 20-year property tax exemption as well as sales tax exemption on the purchase of building materials.
 
The tax exemption, also approved unanimously, calls for a 10-year, 100 percent exemption, followed by a 10-year, 50 percent exemption. However, NorthPoint actually will receive an effective 90 percent exemption in the first 10 years because it has agreed to make 10 annual payments in lieu of taxes equaling 10 percent of the exempted amount to the taxing jurisdictions that will forgo revenue as a result of the incentive.
 
One of the jurisdictions, North Kansas City Schools, will receive an estimated net benefit of $15 million during the 20-year exemption term, Port KC CEO Michael Collins said.
 
NorthPoint also plans to establish a Center for Advanced Professional Studies — or CAPS — partnership with the school district. The CAPS program would have a logistics career focus.
 
North Kansas City Schools CFO Paul Harrell recently supported NorthPoint’s Nortland Park project via a letter to Port KC. The project also has won the support of the Clay County Economic Development Council, which was represented at Monday’s meeting by its executive director, Jim Hampton.
 
“We’ve been losing out on some projects because we do not have the inventory,” Hampton said.
 
NorthPoint, which will begin the project with a 342,000-square-foot structure built on a speculative basis, meaning before a tenant is secured, already is entertaining a couple of Northland Park prospects, including one that would employ 1,000, Miles said.
 
Miles said NorthPoint began looking at Northland Park because it is preparing to break ground for the third and final building in its Three Trails Industrial Park and wanted to start another industrial park in Kansas City.
 
Specifically, he said, NorthPoint wanted to develop in Clay County, which represents “the last piece of the pie” in the metropolitan area where no large spec industrial construction is taking place.
 
Miles said Riverside Horizons had attracted 700,000 square feet of leases by suppliers to General Motors’ Fairfax Assembly Plant. He expects to see similar demand at Northland Park from suppliers of the nearby Claycomo plant, which Hampton said is the “No. 1 Ford plant in the world by volume.”

 

Rob Roberts – Kansas City Business Journal

Date: Monday, June 20, 2016

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