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Wichita suburb wants to use new state incentives for land deal involving Steven brothers

In our Reality Check tales, Wichita Eagle journalists dig deeper into questions over details, penalties and accountability. Story concept? [email protected].

The metropolis of Goddard wants to use a new state incentive program to give a developer $1.2 million in taxpayer cash to purchase 7.57 acres from Rodney Steven II and Brandon Steven.

The land could be the positioning for 100 garden-style flats beside the Genesis Sports Complex in Goddard. The Wichita suburb plans to use a $2 million federal grant and $3.5 million in Reinvestment Housing Incentive District, or RHID, funds to subsidize the estimated $17.3 million mission.

Rodney Steven II has a task in each the corporate promoting the land — Goddard Sports LLC, which he co-owns together with his brother — and the corporate shopping for it, Goddard Housing LLC.

No one will say who owns Goddard Housing. It was integrated in Delaware below a regulation that permits homeowners of LLCs to stay nameless.

Steven’s function within the firm is unclear. He electronically signed a Kansas state enterprise submitting on behalf of Goddard Housing LLC three days after Goddard permitted the deal, altering the corporate’s workplace deal with to the identical Wichita deal with as Goddard Sports LLC and Genesis Health Clubs on East Central.

The RHID incentive program had been confined to rural areas however was lately expanded by the Kansas Legislature to permit its use in city and suburban housing initiatives. Much of Wichita and its suburbs at the moment are eligible for the housing incentive.

The Goddard residence mission is the primary RHID mission permitted by a neighborhood authorities in Sedgwick County. The settlement will take impact until the Sedgwick County Commission or native faculty board nullifies it inside 30 days. The fee is anticipated to vote on the motivation earlier than May 15.

The county can veto any RHID mission that commissioners decide would have “adverse effects” on Sedgwick County. Commissioners have cited considerations that RHIDs in Sedgwick County may create an unfair enjoying subject that rewards builders whereas inserting the property tax burden on everybody else.

“First of all, I don’t think we should be using other people’s tax money to buy land for developers,” Commissioner David Dennis mentioned. “Then there’s the not paying taxes for 25 years, but the government services will continue. That means for the next 25 years any services (related to the apartments) are covered by everyone else in the county. There’s fire service. There’s 911. There’s EMS. That doesn’t go away.”

Similar to tax increment financing, RHIDs divert native property taxes inside the district to reimburse builders for eligible prices akin to land acquisition and public enhancements. The RHIDs can final up to 25 years — 5 years longer than TIF districts — which means properties in reinvestment housing districts this yr wouldn’t return to the tax rolls till 2049.

The Goddard City Council unanimously permitted the motivation package deal on April 15.

Paperwork for the motivation package deal labels Goddard Housing LLC as an affiliate of Goddard Sports LLC and directs a replica of the settlement be despatched “to the developer” — with a line saying “Attn: Rodney Steven.”

Steven didn’t return cellphone calls or reply written questions on who owns Goddard Housing LLC. Asked whether or not Goddard is utilizing RHID to pay considered one of his LLCs $1.2 million to purchase land from one other of his LLCs, he wrote, “This is Not accurate.” He didn’t elaborate or reply to observe up questions in search of clarification.

The Kansas Department of Commerce declined to say whether or not it is aware of who’s behind the Delaware firm. Goddard City Administrator Craig Crossette stopped wanting confirming Steven owns it.

“All I know is what’s in the paperwork, so I’ll refer you to that,” Crossette mentioned.

Goddard metropolis officers say there’s nothing within the RHID regulation that prohibits cities from utilizing the motivation to pay builders to purchase land from themselves utilizing two LLCs.

“Yes, RHID allows reimbursement for land costs including in the manner with which you have suggested,” Crossette mentioned. “No, this would not be a concern to the City as we are supportive of providing incentives to motivate investment for certain types of housing where we have severe deficiencies such as Class A Apartment complexes.”

Kansas regulation requires cities to disclose the “names, addresses and specific interests in real estate in the proposed district of developers” in RHID districts. Goddard listed “Goddard Housing LLC” because the proprietor and developer within the district. The RHID regulation requires much less transparency than different incentive packages, akin to STAR bonds, which require cities to disclose the principals and companions in improvement firms.

Goddard’s software says: “Developer is an affiliate of Goddard Sports, LLC – current owner of all property in the District. Following establishment of the District, the current owner will convey all property in the District to Developer, who will develop the Project.”

Second time incentives have paid for this land

This could be the second time Goddard has used state financial improvement incentives to purchase the land in query for a developer.

In 2014, Goddard used STAR bonds to reimburse Rick Worner’s Goddard Destination Development $2.5 million for greater than 100 acres between 183rd and 199th streets south of Kellogg, the place the Goddard Sports Complex is now positioned. It included 7.57 acres the place the flats are deliberate.

Steven purchased the 100-plus acres from Worner for an undisclosed value in 2018. Sedgwick County information present Steven took out a $1.2 million mortgage to pay for it.

STAR bonds, which divert resort and gross sales tax income for main leisure, tourism or business initiatives, have introduced to life the Genesis Sports Complex in Goddard, which features a Genesis Health Clubs health middle, a Blast Off Bay water park, a resort, a 6S Sports bar and grill, and several other baseball and softball fields. The advanced is a 20-minute drive from downtown Wichita.

The Kansas Department of Commerce, which gave a letter of approval for the RHID district boundaries in October, didn’t reply to questions for this story. A spokesperson mentioned the division is reviewing the land sale.

“We are currently reviewing the proposed transfer of land, which is located in the STAR Bond District and was initially acquired with STAR bond proceeds,” Patrick Lowry, spokesman for Commerce, mentioned in an announcement. “We anticipate that due diligence to take some time, most likely several weeks.”

Goddard metropolis paperwork and a Kansas secretary of state enterprise submitting initially linked Worner to Goddard Housing LLC.

Worner — who introduced earlier this month that he’s partnering with Steven on another Wichita suburban STAR Bonds project, Derby Shores — recognized himself because the supervisor of Goddard Housing LLC in a May 2023 letter to former Goddard Mayor Hunter Larkin.

But he instructed The Eagle he’s not concerned within the RHID incentive course of and that he doesn’t know who owns Goddard Housing LLC.

“I have no long term ownership interest in the proposed apartments,” Worner mentioned. “I was involved in applying for multiple grants for the city. Some efforts were successful — some were not. I don’t know who the members are of the (Goddard) Housing LLC.”

Joe Oaks, a Kansas City-area actual property legal professional who has represented Worner’s firms prior to now, has represented Goddard Housing LLC at native authorities conferences. He didn’t reply to written questions from The Eagle. In a quick cellphone interview, Oaks mentioned he was “not equipped to answer” who owns Goddard Housing LLC and hung up on a reporter.

Goddard’s mayor and metropolis council members didn’t reply to written questions in regards to the land sale.

Sedgwick County to take into account plan

The Goddard City Council permitted the land sale as a part of an incentives package deal for Goddard Housing LLC at its April 15 assembly after fewer than 10 minutes of debate.

The incentives package deal included $3.5 million in RHID funds and a $2 million federal grant from the Kansas Housing Resources Corporation. Goddard had already permitted a letter of intent to problem $17.35 million in industrial income bonds to finance the mission on April 1. IRBs supply a tax abatement on development supplies and sometimes present builders with decrease rates of interest.

The Sedgwick County Commission is anticipated to take into account Goddard’s software for RHID funding this month..

Commissioner Jim Howell mentioned he worries that approval of the Goddard RHID would set a nasty precedent that might be copied all through the state.

“Why wouldn’t every developer who wants to build an apartment complex or a housing project just set up an LLC and sell the land they already own to themselves and then get reimbursed through RHID?” Howell mentioned. “Pick your own price. Why not, if the law allows it? And if we (the County Commission) say that’s OK, I worry how that’s going to play out.”

Howell mentioned he may help an RHID mission if the incentives have been essential, “but there has to be a but-for,” which means the mission couldn’t be accomplished with out the incentives.

“If this incentive is used to reimburse developers for land they already own, how can a city claim a project wouldn’t happen ‘but for’ the incentive? I think that’s a hard case to make,” he mentioned.

“How can we be mad at a developer for doing something that’s allowed by law to maximize their profits?” Howell mentioned. “Take Rodney Steven out of this. It’s not about the developer. It’s about what I think is a bad law that would allow something like this.”

Crossette mentioned Goddard is prepared to supply the RHID incentives as a result of it has tried and failed to land residence initiatives prior to now. He mentioned the $1.2 million for the land sale is required as a result of the developer received’t construct with out it. Goddard didn’t order an appraisal of the property and Crossette mentioned he feels $1.2 million is a fair-market worth.

“These incentives are necessary because we would not have Class A apartments ‘but-for’ the necessary incentive,” Crossette mentioned.

The proposed garden-style flats would come with facilities akin to granite counter tops, luxurious vinyl tile flooring and chrome steel home equipment together with tenant frequent area.

Crossette mentioned the flats are vital in Goddard as a result of it has few renting choices for latest graduates.

“We would like to give our Goddard graduates an opportunity to live in our community after they graduate,” Crossette mentioned at a latest council assembly. “I know oftentimes we always want to say, ‘let’s send them off to go see the world.’ That’s great, but we’d love them to be able to come back and have a place that they can afford to stay. Not a lot of folks at that point in their life are able to afford a brand new house or even a duplex, so this would give those folks an opportunity.”

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