STAR BOND FEASIBILITY STUDY September 2020
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STAR BOND FEASIBILITY STUDY September 2020 Village East Project District Project Areas 1, 2A, 2B, 3, 4 and 5 State Avenue and Interstate 435 Kansas City, Kansas 58533535.2 72851738.5 74663735.4 CANYON RESEARCH SOUTHWEST, INC. COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS STAR BOND FEASIBILITY STUDY VILLAGE EAST PROJECT DISTRICT PROJECT AREAS 1, 2A, 2B, 3, 4 and 5 STATE AVENUE AND INTERSTATE 435 KANSAS CITY, KANSAS September 2020 Prepared for: Homefield, LLC 411 Nichols Road, Suite 225 Kansas City, MO 64112 Prepared by: Canyon Research Southwest, Inc. 475 Ellicott Street #301 Buffalo, NY 14203 PR# 20-08-02 475 ELLICOTT STREET, SUITE 301 / BUFFALO, NY 14203 / (716) 327-5576 CANYON RESEARCH SOUTHWEST, INC. COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS September 1, 2020 Robb Heineman Homefield, LLC 411 Nichols Road, Suite 225 Kansas City, MO 64112 RE: STAR Bond Feasibility Study Village East Project District; Kansas City, Kansas Mr. Heineman: In 2005, the Kansas Department of Commerce approved the allocation of STAR bonds for a 380- acre STAR Bond District (with a single coterminous project area) located on the east side of Interstate 435 between the State Avenue and Parallel Parkway interchanges in Kansas City, Kansas. The Village East Project District (the “Project District”) is designed as a tourism-based mixed-use development. The initial phase of the Project District involved construction of the 65- acre Schlitterbahn Kansas City water park which opened in summer 2009. In August 2014, the Village East Project District was expanded to include an additional 126 acres. The Project District includes six separate project areas which include the existing Schlitterbahn Waterpark Kansas City, the U.S. Soccer National Training & Coaching Development Center (now known as the Pinnacle National Development Center), an auto mall, and other mixed-use components, including office, entertainment, restaurant, and retail uses. The Schlitterbahn Kansas City water park has closed with plans to convert Project Area 1 into a major multi-sport athletic complex known as Homefield and Homefield Outdoor. The multi-sport indoor and outdoor sports facilities will offer clinics, lessons, practices, training and summer camps for a variety of amateur sports, as well as restaurant, bar and entertainment spaces. Pursuant to the STAR Bond Financing Act, Canyon Research Southwest, Inc. has prepared the attached STAR Bond Feasibility Study for the Project District. The study examines the market viability of the proposed Project Plans for Project Areas 2B, 3, and 5 as well as forecasts the impact on the Kansas economy, out-of-state visitation, and STAR bond revenues and evaluates the project’s impact on existing area businesses and active STAR bond projects. Upon review of the report, should any questions arise, or additional information requested, contact me directly at (716) 327-5576. Respectfully submitted, CANYON RESEARCH SOUTHWEST, INC. Eric S. Lander, Principal 475 ELLICOTT STREET, SUITE 301 / BUFFALO, NY 14203 / (716) 327-5576 T A B L E O F C O N T E N T S Page # SUMMARY OF MAJOR FINDINGS ............................................... iii INTRODUCTION .................................................................................... 1 Study Objective and Organization .......................................................... 1 Village East Project District Plan ............................................................ 4 MARKET STUDY .................................................................................... 9 Tourism Destination Market Analysis .................................................... 10 Kansas City Area Attractions ................................................... 10 Tourism Market Trends ............................................................ 12 Athletic Facilities Market Analysis ......................................................... 18 Sports Participation ................................................................... 18 Comparable Athletic Facilities ................................................. 21 Assessment of Potential Market ............................................... 23 Facility Evaluation .................................................................... 24 Conclusions ............................................................................... 26 Automobile Dealership Market Analysis ................................................ 27 Auto Mall Concept ................................................................... 27 Kansas New Vehicle Dealership Franchise Law ...................... 27 Competitive New Vehicle Dealerships ..................................... 29 Site Evaluation .......................................................................... 32 Lodging Market Analysis ........................................................................ 34 Kansas City Transient Lodging Tax Revenues ........................ 34 Competitive Hotel Market ....................................................... 35 Site Evaluation ......................................................................... 37 Retail Market Analysis ............................................................................ 38 Retail Trade Area Defined ....................................................... 38 Kansas City Retail Market Overview ...................................... 39 Kansas City MSA Retail Pull Factor ....................................... 43 Retail Space Demand Estimates .............................................. 44 Competitive Retail Market ....................................................... 46 Site Evaluation ......................................................................... 47 Conclusions ............................................................................................. 48 MARKET IMPACT STUDY ............................................................... 50 Project Positioning and Unique Quality................................................... 50 Synergy with Area Businesses and Attractions ....................................... 51 Impact on Comparable Market Area Businesses .................................... 52 Estimated Customer/Visitor Counts ........................................................ 56 Estimated Retail Sales Potential............................................................... 65 Impact on Active Kansas STAR Bond Projects ...................................... 72 Canyon Research Southwest, Inc. i T A B L E O F C O N T E N T S (Continued) Page # ECONOMIC IMPACT STUDY .......................................................... 83 Construction-Phase .................................................................................. 84 Operational-Phase ................................................................................... 88 STAR BOND REVENUE PROJECTIONS .................................... 91 STAR Bond Revenues ............................................................................. 91 Supportable Debt Estimate ...................................................................... 93 ADDENDA ................................................................................................. 102 Exhibit A: Canyon Research Southwest, Inc. Client Roster ................. 103 Exhibit B: Canyon Research Southwest, Inc. ........................................ 106 List of Public Financing Projects Exhibit C: Resume of Eric S. Lander, Principal .................................... 108 Canyon Research Southwest, Inc. Canyon Research Southwest, Inc. ii SUMMARY OF MAJOR FINDINGS Sales Tax Revenue (“STAR”) bond financing is being sought to assist in funding a portion of the Village East Project District (“Project District”) located on the east side of Interstate 435 between the State Avenue and Parallel Parkway interchanges in Kansas City, Kansas. The Project District incorporates Project Areas 1, 2A, 2B, 3, 4, and 5 designed for a mix of sports, entertainment, retail, restaurant, lodging, and automobile dealership uses. As part of the STAR bond application process Canyon Research Southwest, Inc. has prepared the enclosed STAR Bond Feasibility Study. The study evaluates the Project District by addressing each of the evaluation criteria outlined by the Kansas Secretary of Commerce. The report’s major findings are summarized in the text below. Market Study Conclusions The Village East Project District occupies an approximately 506-acre site located on the east and west sides of Interstate 435 between the State Avenue and Parallel Parkway interchanges in Kansas City, Kansas. The STAR Bond Project District Plan designates the Project District, including Project Areas, 2B, 3, and 5, for a mix of multi-sport, entertainment, retail, restaurant, lodging, and automobile dealership uses. The Market Study section of the report evaluated the ability of Project Areas to support feasible development of these planned land uses. The Project District’s development concept is designed to foster economic growth for Kansas City, Kansas by creating a unique destination experience capable of generating significant out-of-town visitation and expenditures. The synergy with the neighboring Village West creates a regional tourism draw by offering sports, entertainment, retail, and hospitality venues in a single location. The critical mass of destination attractions in a single location has generated visitation levels exceeding 12 million visitors annually. By elevating the status of Village West and Village East as a regional tourism destination