Watertower an investment in all Topekans' future

By JOHN ARNOLD

Special to The Capital-Journal

With the historic water tower at S.E. 11th and Quincy streets as the focal point, an exciting new project is poised to renew and energize a neighborhood near downtown that was blighted 34 years ago by a tornado. The time has come to create a vibrant entertainment, commercial and business district that will evolve into a capital city landmark and that will enhance downtown --- the Watertower 2000 Redevelopment Project.

Under the plan, the area will be the location for high quality entertainment, retail and eating establishments and office facilities. It will feature a major indoor sports facility hosting basketball, volleyball and indoor soccer, a state of the art movie theater and one or two hotels, all along a pedestrian-friendly streetscape and plaza, with plentiful parking.

This is taking place because the city has attracted real people who are ready to invest real dollars in this community. These private developers are willing to invest $40 million in the eight-block, 32- acre site adjacent to the water tower. All they want is the city of Topeka to say, "We are ready, willing and able."

Watertower 2000 encompasses the area south of downtown, bounded north and south by S.W. 10th and 13th streets, with Interstate 70 and Kansas Avenue as the east and west boundaries. Redevelopment activities within Watertower will be carried out by the city and selected developers.

As we move forward on this project, it is important that Topekans be informed about the details. Here are the facts, no spin, no gloss:

The total cost of the Watertower 2000 project would be $73.3 million.

The developers

The developers acquire the land needed for their facilities from the city. They design and construct their project as required by their development agreements with the city. Each development will provide its own financing separate from any funding provided through the city of Topeka. Developers are:

- Wallace Theaters of Portland, Ore. (Hollywood Theaters), proposes to construct a 10-screen stadium-type theater, covering 32,000 square feet and valued at about $3.2 million.

- Sapphire Properties of Dallas plans to construct 122,500 square feet of retail space, including at least three nationally-known restaurants and 65,000 square feet of office space, with a value of $19.2 million.

- The Hoop USA of Portland, Ore., plans to build a 73,000 square foot $3 million indoor athletic center for basketball, volleyball and indoor soccer.

- Another developer or a hotel corporation would develop one or two hotels. Each hotel would be valued at about $7 million.

The total amount of developer contributions to the project is $39.4 million. This is money they are providing or financing on their own.

The city will assemble the land, move the residents, clear the site, design, contract for and supervise construction of infrastructure, and provide the land to the developers in "shovel_ready" condition. Costs include:

- $15.2 million to replace water and sewer lines, rebuild streets, construct new public sidewalks and landscaping and to develop a pedestrian plaza around the water tower.

In addition, the city would develop the required areas for more than 2,100 parking spaces. These improvements would provide a high quality environment for new private investment.

- $10.5 million would be used to acquire the needed land for the development, and relocate the existing residents.

- $8.3 million would be needed to finance the sale of the bonds, pay the interest during the construction phases and aid in site preparation.

Total public sector costs of land, new infrastructure, financing, and site preparation would be $33.9 million.

The financing

The city would authorize the issuance of full faith and credit bonds, under the state's tax increment financing laws, in the amount of $27.5 million. That state law allows communities to use the increased tax revenues from property, sales and hotel guest taxes generated by new development to repay the bonds issued to fund the development of the streets, parking lots, utilities, streetscapes and plazas, the purchase of land and relocation of property residents.

The new tax increment, including sales and guest taxes generated by the new development, will be approximately $1.5 million per year. Parking revenues from off-street meters and new lots in the development will generate $722,000 per year. Interest earned over the life of the bonds on the reserve account will also be used, in the amount of $3.8 million.

Other funding sources include $800,000 from the city utility fund for utility relocation and $2. 5 million of projected Community Development Block Grant funds, to be annually decided upon by the city council at $500,000 a year, so if it is not needed one year, it will not be used.

Land sales to the developers will generate $3.2 million. The theater will contribute a percentage of its gross receipts for 10 years, estimated to be $1.5 million.

Bond repayment

The Watertower 2000 redevelopment effort will finance itself principally through the various taxes generated from its own growth. All of the revenue sources combine to generate funds over and above the amount needed to pay the annual debt service on the bonds and to provide risk protection. The excess revenue is required for prudent bond financing, and to cover unanticipated costs, and in this instance exceeds 7.4 percent. That's also a protection for taxpayers.

Over a 20-year period, the taxes generated by this new development will be used to retire the bonds. But at the conclusion of that 20 years, the taxes generated by this new development will be of tremendous benefit to the city, county, Topeka Unified School District 501, and other taxing entities.

Additional benefits

The city's role in subsequent development would be to provide the land, utilities, and infrastructure on a schedule agreed to with the developers as specified in the Development and Disposition Agreements (you will hear them referred to as DDAs) between the city and the developers.

New jobs created by the Watertower 2000 include 172 construction jobs over the three_year construction period, 184 permanent jobs created by the retail, cinema and hotel developments, and 275 to 350 spin-off jobs created by the new activity.

Watertower 2000 has progressed further than any previous effort in this area, which is an indicator of the project's firm foundation. Private developers are willing to invest approximately $40 million to give our community a new identity in which we can all take pride. The city council has expressed its support and belief in the project and has taken the first step toward success by approving agreements with the developers.

What is needed now is a commitment from the community --- the very group who will benefit most from the potential advantages Watertower 2000 offers to our city. You will have an opportunity to express this commitment at a public hearing on June 20 in the city council chambers. Let's invest in our future. Let's build Watertower 2000.

John Arnold is the city's chief administrative officer.

Learn more about the Watertower 2000 project by reviewing the 45- page redevelopment plan at the city clerk's office or download it from www.topeka.org.

Copyright 2000
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