Title
Presentation: Request by Lee’s Summit R-7 School District Regarding Purchase of Property from Unity Realty, LLC, at 1901 NW Blue Parkway for Relocation of Hazel Grove Elementary School
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Issue/Request:
The Lee’s Summit R-7 School District seeks to purchase six separate parcel south of Colbern Road (primary address at 1901 NW Blue Parkway), which collectively total about 28.6 acres of property from Unity Realty, LLC, for the purpose of relocating Hazel Grove Elementary School. The School District making these two specific requests of the City Council:
1. Approve Purchase of the Property - Section 5.01.B of the Redevelopment Agreement for the Blue Parkway and Colbern Road Redevelopment Area among the City of Lee’s Summit, Unity School of Christianity, Bernell K. Rice and the Blue Parkway and Colbern Road Redevelopment Corporation, dated May 1, 2012, as amended by the First Amendment on May 23, 2012 and the Second Amendment on June 27, 2016 (the “Redevelopment Agreement”) provides that no sale, transfer or other conveyance of the Phase 1 Property may be made to an entity that is exempt from real property taxes without the prior written approval of the City. The School District is requesting that the City approve the requested purchase of the property by the School District, as a tax-exempt entity.
2. Waive the required annual compensation payment to the City - Section 5.01.B of the Redevelopment Agreement further provides that the sale of the property to a tax-exempt entity would require the purchaser to make an annual payment to the City in an amount equal to the CID Special Assessments that would otherwise be paid for the property if it were owned by a taxable entity. The School District is requesting a full waiver of this contract requirement, so that no payment would be made to the City under this contract requirement.
Key Issues:
Approval of the sale of property from Unity Realty, LLC, to the School District and waiver of the required reimbursement payment to the City.
Proposed City Council Motion:
I move that the City Council approve the request from the Lee’s Summit R-7 School District to approve the purchase of six parcels totaling approximately 28.6 acres in the Redevelopment Area, and waive the payment required by Section 5.01.B of the Redevelopment Agreement.
Background:
The School District has negotiated the purchase of approximately 28.6 acres of property within the Colbern Road and Blue Parkway Chapter 353 Redevelopment Area for the relocation of the Hazel Grove Elementary School. The School District is requesting that the City Council grant certain approvals that will allow the School District to complete the real estate transaction without making a contractually-required payment to the City.
The Chapter 353 Redevelopment Plan for this area was approved through the adoption of Ordinance No. 7164 on March 22, 2012. The Redevelopment Agreement referenced above contains two contractual restrictions that are relevant to the School District’s request:
• Section 5.01.B provides that no sale, transfer or other conveyance of the Phase 1 Property may be made to an entity that is exempt from real property taxes, which is defined as a “Restricted Entity,” without the prior written approval of the City during the period of time while the CID Special Assessments are being imposed by the CID in order to generate revenue to reimburse the City, which is defined as the “Restricted Period.”
• Section 5.01.B further provides that if a tax-exempt entity is allowed to purchase property with City approval as discussed above, the purchaser will have the obligation of entering into a separate agreement with the City which provides for the annual payment of an amount equal to the CID Special Assessments that would be imposed by the CID which otherwise would be paid by the Restricted Entity for each of the years remaining in the Restricted Period, “or such lesser amount as approved by the City.”
These contract restrictions were used to help ensure that the development of the property will generate revenues to reimburse the City pursuant to the Redevelopment Agreement, even if the property is sold to a tax-exempt entity.
The purpose of the Chapter 353 Plan and CID is to provide reimbursement to those parties that fund public improvements in connection with the development of property. This arrangement was designed to reimburse the City for advancing the costs to fund Blue Parkway improvements. The original outstanding amount due to the City when the Blue Parkway improvement work was completed was $3,694,480. Interest has continued to accumulate at the rate of the prime rate plus 0.75% pursuant to Section 4.3 of the original CID Cooperative Agreement. Today the outstanding amount due to the City is $6,141,821.50.
The School District is requesting that the City Council approve the requested purchase pursuant to Section 5.01.B of the Redevelopment Agreement, and also waive the payment required by this section of the Redevelopment Agreement.
Impact/Analysis:
If the request is approved by the City Council, the City will not receive any payments from the development of this property.
Timeline:
Start: LSR7 would purchase the property this calendar year. The schedule provided by the School District is included in the attachments.
Presenters
Dr. David Buck, Superintendent, Lee's Summit R-7 School District
Dr. Steve Shelton, Associate Superintendent of Operations, Lee's Summit R-7 School District
Ryan Elam, Assistant City Manager
David Bushek, Chief Counsel of Economic Development & Planning