YouTube video blasts Eagle River Station developer
EAGLE, Colorado ” NoBailout4RED has been a hot viewing ticket in Eagle this week.
The YouTube video is a nine-minute-plus piece that is highly critical of RED Development, one of the principals behind the proposed Eagle River Station plan. The piece, which was produced by a labor union ” the Carpenter’s District Council ” slams RED Development over financing issues surrounding Summit Fair, a 550,000-square-foot shopping center currently under construction in Lee’s Summit, Mo. The video alleges that RED received $52 million in “direct taxpayer subsidies” but needed an additional $9 million loan from the city to complete construction.
The video has Eagle talking. Local resident Liz Spetnagel first heard about it from a member of the Eagle Town Board last week.
“I feel it ought to be brought into the discussion,” she said. “I don’t think it can be simply characterized as all lies and distortions.”
The video criticizes RED for bringing in out-of-state contractors to work on the Summit Fair development and includes footage of a University of Missouri professor named Michael Kelsay saying the project did nothing to help the local employment picture. Other video highlights include conversations with Lee’s Summit business owners who object to the financing package approved by the city and an unemployed construction worker who blasts the community for assisting a developer who didn’t hire local workers.
Several union members attended a Wednesday night Eagle River Station meeting, but the town board members noted they would not hear testimony regarding the video or RED’s contractor hiring process. Instead, town board members strictly confined Tuesday’s discussion to issues surrounding planning issues for the proposal ” items including building heights and lighting standards.
But talk of NoBailout4RED spilled out onto Broadway after the meeting concluded, and Trinity/RED representatives invited union workers to a morning meeting today to discuss work potential at Eagle River Station.
The Carpenter’s District Council was the most outspoken opponent of the RED deal in Lee’s Summit. Members of the union argued they were shut out from work because RED turned to cut-rate contractors from out of state to build the center. That claim has generated considerable interest in Eagle, where last week Trinity/RED touted that construction of Eagle River Station would result in an estimated 1,900 local jobs.
Dave Wilson of the Carpenter’s Council of Kansas City said the union representatives traveled to Eagle this week to lobby for local work crews at Eagle River Station.
“The local workers who are paying the taxes to subsidize the project and shopping in the businesses should have the opportunity to build the project,” said Wilson.
Michael Hans of Trinity/RED Eagle said the company was unfairly characterized in the YouTube video.
“We are very proud of our record of hiring local labor,” said Hans.
Hans said RED has a proven history of hiring local contractors on its projects. Defining “local” as companies with offices within 50 miles of the construction sites, Hans said the percentage of local labor on the last five RED projects ranged from 66 percent at Summit Fair to 98 percent at One Nineteen, a project in Leawood, Kan.
“A local contractor’s union (in Lee’s Summit) who was not awarded work on the project due to the fact that their bid was substantially higher than all others has decided to use our financing arrangement as a way to attack the project and RED,” said Hans. “RED has a fiduciary responsibility to spend money wisely, especially when a project involves public financing. In times like these, it is absolutely essential that we invest public and private money with prudence.”
When they learned of the YouTube piece, Eagle officials launched an investigation of its claims. Arne Ray of Ray Real Estate Services Inc., a consultant hired by the town to help research the Eagle River Station proposal, was asked to look into the video allegations.
Ray said the Summit Fair deal was a straightforward agreement between the city and the developer to pay back $9 million toward $42 million in public improvements.
“There’s just nothing there that smells, for me. I am an advocate for the town of Eagle, no one else, and I don’t see anything alarming in the Lee’s Summit deal,” said Ray.
He also noted that the Lee’s Summit deal differs markedly from the Eagle River Station financing package. In Lee’s Summit, the city itself is issuing the bonds and carrying debt for the center development. In Eagle, the town is not carrying debt and is not providing upfront financing. In Eagle, Trinity/RED will receive tax increment financing ” basically a rebate on sales tax generated from businesses within the development, to pay off the debt.
Karen Messerli, mayor of Lee’s Summit, Mo., voted last week to approve a $9 million loan to RED Development to complete Summit Fair.
Messerli hasn’t seen the YouTube video, but she has heard about several of the claims it contains. She is particularly peeved about the term “bailout.”
Messerli, who has served as Lee’s Summit mayor for 15 years, said the community first began working with RED Development nine years ago to develop an 800,000-square-foot shopping mall. At that time, Messerli said her community included a Wal-Mart, Kmart and 15 empty storefronts.
“We had an incredible sales tax leakage. It was shameful, really,” Messerli said.
She characterized the shopping center as a success that generates approximately $1 million in revenue annually for the city of 93,000 residents.
The Summit Fair project is a new “lifestyle center” ” a shopping center with an outdoor focus similar to what’s proposed at Eagle River Station. RED Development began construction of the center last year with confirmations from anchor tenants Macy’s and J.C. Penney’s.
Messerli said that Lee’s Summit was obligated to issue bonds to pay for public improvements once the project reached a certain level of leasing. RED requested a partial bond issue to pay $9 million in off-site improvements that had already been completed. As an alternative, the city staff proposed a $9 million loan to the developer which would generate higher interest than current investments and save $400,000 in bonding costs. The $9 million construction loan will be absorbed into the overall debt once the center is finished, said Messerli.
“The word ‘loan’ sent people into a feeding frenzy,” Messerli said.
Other members of the Lee’s Summit council objected to the deal, saying it was a risky way to use taxpayer money. But the proposal passed earlier this month in a 5-4 vote. Messerli said the city expects to sign papers in the next 10 days and she plans to attend opening day ceremonies at Penney’s on July 29 and at Macy’s on Aug. 5.
Meanwhile back in Eagle, the Eagle River Station hearings will resume on Wednesday, June 17, at 6 p.m. and opponents of the project said they plan to include the NoBailout4RED video as part of the public hearing record.
“It only emphasizes the fact that RED Development has been dishonest about what they are doing,” said Spetnagel.