KANSAS CITY, Kan. — After years of talk, the ball is finally rolling to address downtown Kansas City, Kansas' food desert.
The Unified Government Commission approved Thursday night the agreement with grocer The Merc Co-Op to build a new grocery store at 5th & Minnesota.
They are approving to spend $6 million on design, planning and construction.
The commission will set a time for a public hearing to establish a TIF, or tax increment financing, to use the sales and property tax money generated to pay off the project.
“Everything, top to bottom, will be designed for KCK,” promised Jon Stephens, director of Economic Development.
The UG says the Merc will be a catalyst for further development in the area.
Every quarter the Merc will report its sales to the UG.
“If the quarterly sales generally are around $700,000 or less, they will have access to a diminishing quarterly 50% match of their loss,” Stephens said.
If there’s a loss, the UG shares half of the burden up to a quarterly cap of $100,000.
Built into the $6 million figure is a stabilization fund of $540,000, which is what The Merc would dip into if they underperform in the first quarter of being open.
If the Merc outperforms, they’ll pay the UG 3.5 percent of its quarterly sales, and would not have access to the stabilization fund.
Stephens said the 3.5 percent is similar to a lease payment. Depending on how well the store does in the future, the UG will look to enter into a lease agreement with The Merc or sell the building.
The Merc in Lawrence generally focuses on organic products, and the UG has continually pointed out there will be generic, 99-cent type items in the KCK store and will not be identical to the Lawrence location.
That is generating debate.
At a previous commission meeting, resident Shirley Ikerd brought up her concern.
“I resent the fact that in this proposal that you're going to have food ‘for the area.’ Anybody who lives in this area eats all kinds of food. We don't have to have food that's going to sell in ‘this area.’"
The Merc has promised to stock its shelves with what the neighborhood wants.
The project has support from the University of Kansas Health System, which is building its Strawberry Hill campus across from where The Merc will go.
The UG will start accepting contracting bids and design work the first week of September.
This is the breakdown of the funding:
- UG cash contribution: $4.2 million from the sale of the Hilton Garden Inn.
- Sales / Property tax from the TIF: $1.6 million
- Construction costs: $2.76 million
- Furniture, fixtures, equipment: $1.5 million
- Professional services: $500,000
- Project contingency: $500,000
- Stabilization guarantee fund for 3 years: $540,000
- Grand opening fee: $150,000
- Alternate sources of funding, 0% interest: $2 million