TABLE OF CONTENTS Page I. DEFINITIONS ...... 2

II. TAX INCREMENT FINANCING ...... 5

III. GENERAL DESCRIPTION OF PLAN AND PROJECTS ...... 6 A. THE REDEVELOPMENT PLAN ...... 6 B. REDEVELOPMENT AREA ...... 6 C. PROJECT IMPROVEMENTS...... 6 D. ESTIMATED DATE OF COMPLETION ...... 6 E. REDEVELOPMENT PLAN OBJECTIVES ...... 7 F. SPECIFIC OBJECTIVES………………………………………………………….…..7 G. GAMING STATUS ...... 7 IV. FINANCING ...... 7 A. ESTIMATED REDEVELOPMENT PROJECT COSTS ...... 7 B. ANTICIPATED SOURCES OF FUNDS ...... 7 C. PAYMENTS IN LIEU OF TAXES ...... 8 D. ECONOMIC ACTIVITY TAXES ...... 8 E. ANTICIPATED TYPE AND TERMS OF OBLIGATIONS ...... 9 F. EVIDENCE OF COMMITMENTS TO FINANCE ...... 9 V. MOST RECENT EQUALIZED ASSESSED VALUATION ...... 9

VI. ESTIMATED EQUALIZED ASSESSED VALUATION AFTER REDEVELOPMENT ...... 10

VII. GENERAL LAND USE ...... 10

VIII. CONFORMANCE TO THE COMPREHENSIVE PLAN ...... 10

IX. EXISTING CONDITIONS IN THE REDEVELOPMENT AREA ...... 10

X. “BUT FOR TIF” ...... 10

XI. COST-BENEFIT ANALYSIS ...... 11

XII. ACQUISITION AND DISPOSITION ...... 11

XIII. RELOCATION ASSISTANCE PLAN ...... 12

XIV. ENTERPRISE ZONE ...... 12

XV. PROVISION OF PUBLIC FACILITIES AND LANDSCAPING ...... 12

XVI. REDEVELOPMENT AGREEMENT ...... 12

XVII. PROVISIONS FOR AMENDING THE PLAN ...... 13

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EXHIBITS

Exhibit 1: Legal Descriptions A: Redevelopment Area B: Redevelopment Projects

Exhibit 2: Maps A: Redevelopment Area B: Site Map

Exhibit 3 Specific Objectives

Exhibit 4: Construction and Employment Information A: Construction Totals by Project Area B: Employment Totals by Project Area

Exhibit 5: A. Estimated Redevelopment Costs B. Development Schedule

Exhibit 6: Estimated Annual Increases in Assessed Value and Resulting Payments in Lieu of Taxes and Projected Economic Activity Taxes

Exhibit 7: Redeveloper Affidavit

Exhibit 8: Cost-Benefit Analysis

Exhibit 9: Evidence of “But For”

Exhibit 10: Existing Conditions Study (Blight Study)

Exhibit 11: Evidence of Financing Interest

Exhibit 12: Relocation Assistance

Exhibit 13: Redeveloper’s Proposal

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SUMMARY

The Metro North Crossing Tax Increment Financing Plan (the “Plan”) contemplates the redevelopment of the existing Metro North Site, which is situated on approximately 92.21 acres and is generally bounded by 88th Street on the North, Wyandotte Street on the east, Barry Road on the south and US Highway 169/Summit Avenue on the west in Kansas City, Clay County, Missouri.

The Plan provides for the partial demolition of approximately 896,874 square feet of the existing Metro North Mall and, in its place, the development of a substantially-sized courtyard/gathering area for community events, approximately 826,175 square of feet of retail space, approximately 60,000 square feet of office space, 150 units of multi-family residential housing, a 100-room limited services hotel and approximately 4,750 parking spaces (the “Project Improvements”) and public infrastructure improvements, which may consist of streetscape, signage, signaling, sidewalks and curbs and such other related pubic infrastructure improvements that support and enhance the Project Improvements (the “Public Improvements”).

The estimated Redevelopment Project Costs to implement the Plan are approximately $185,670,152, plus costs of financing estimated to be $72,649,205 for a total cost of $258,319,357. The estimated Reimbursable Project Costs to implement the Plan are approximately $71,311,175 plus costs of financing equal to $72,649,205 for a total of $143,960,380. The Reimbursable Project Costs are identified on Exhibit 5A, attached to this Plan. Of the remaining $114,358,977 of Redevelopment Project Costs, together with financing costs related thereto, will be funded by a combination of private equity and debt.

The total initial equalized assessed valuation of the Redevelopment Area according to current records at the Clay County Assessor’s Office is approximately $2,805,0001. The current combined ad valorem property tax levy is projected to be $7.3484 per $100 assessed valuation. The 2015 annual ad valorem tax revenue from the Redevelopment Area will be approximately $206,123. Following the completion of all Project Improvements, it is estimated that the assessed value of the property will increase to approximately $37,689,198.

Pursuant to the Act, tax increment financing allows for the use of Economic Activity Taxes and Payment in Lieu of Taxes generated and collected within the Redevelopment Project Areas for a twenty-three (23) year period to pay Reimbursable Project Costs.

The estimated total Payments in Lieu of Taxes generated within the Redevelopment Project Areas and deposited within the Special Allocation Funds while Tax Increment Financing is authorized and available to pay Reimbursable Project Costs is $56,956,656. Those Payments in Lieu of Taxes, which are estimated to be generated on an annual basis, are shown on Exhibit 6, attached to this Plan.

The estimated total Economic Activity Taxes generated within the Redevelopment Project Areas and deposited into the Special Allocation Fund while Tax Increment Financing is

1 Value created by calculating 50% value of parcel 13-216-00-03-017.00 which will be segmented at a later date. ______Metro North Crossing TIF Plan 1

authorized and, upon annual appropriation by the City Council, available to pay Reimbursable Project Costs is $98,916,516. Those Economic Activity Taxes, which are estimated to be generated on an annual basis, are shown on Exhibit 6, attached to this Plan.

Upon the reimbursement of all Reimbursable Project Costs (including Administrative Expenses), all remaining Payments in Lieu of Tax and Economic Activity Taxes, subject to Section 99.850 RSMo., shall be declared surplus and shall be distributed to the Taxing Districts (as hereafter defined) in accordance with the Act.

I. DEFINITIONS

As used in this Tax Increment Financing Plan, the following terms shall have the following meanings:

A. “Act,” the Real Property Tax Increment Allocation Redevelopment Act, Section 99.800, et seq., Revised Statutes of Missouri, as amended.

B. “Administrative Expenses” shall have the meaning set forth in Section V.A. of the Plan.

C. “Blighted area,” an area which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use.

D. “City,” the City of Kansas City, Missouri.

E. “City Council” the governing body of the City.

F. “Commission,” the Tax Increment Financing Commission of Kansas City, Missouri.

G. “County,” the County of Clay County, Missouri.

H. “Economic Activity Taxes” or “EATs”, Fifty percent (50%) the total additional revenue from taxes which are imposed by the City and other Taxing Districts, and which are generated by economic activities within each Redevelopment Project Area over the amount of such taxes generated by economic activities within such Redevelopment Project Area in the calendar year prior to the adoption of the ordinance designating such Redevelopment Project Area, while tax increment financing remains in effect, but excluding personal property taxes, taxes imposed on sales or charges for sleeping rooms paid by transient guests of hotels and motels, taxes levied pursuant to Section 70.500 RSMo., taxes levied for the purpose of public transportation pursuant to Section 94.660 RSMo., taxes imposed on sales pursuant to subsection 2 of Section 67.1712 RSMo. for the purpose of operating and maintaining a metropolitan park and recreation district, licenses, fees or special assessments other ______Metro North Crossing TIF Plan

than payments in lieu of taxes and penalties and interest thereon, any sales tax imposed by a county with a charter form of government and with more than six hundred thousand but fewer than seven hundred thousand inhabitants, for the purpose of sports stadium improvement or levied by such county under Section 238.410 RSMo. for the purpose of the county transit authority operating transportation facilities, taxes imposed on sales under and pursuant to Section 67.700 RSMo or 650.399 RSMo. for the purpose of emergency communication systems, shall be allocated to, and paid by the local political subdivision collecting officer to the treasurer or other designated financial officer of the municipality, who shall deposit such funds in a separate segregated account within the special allocation fund; provided, however, if the voters in a Taxing District votes to approve an increase in such Taxing District's sales tax or use tax, other than the renewal of an expiring sales or use tax, any additional revenues generated within an existing Redevelopment Project Area that are directly attributable to the newly voter-approved incremental increase in such taxing district's levy rate shall not be considered “Economic Activity Taxes”, without the consent of such Taxing District.

I. “Gambling Establishment,” an excursion gambling boat as defined in section 313.800, RSMo., and any related business facility including any real property improvements which are directly and solely related to such business facility, whose sole purpose is to provide goods or services to an excursion gambling boat and whose majority ownership interest is held by a person licensed to conduct gambling games on an excursion gambling boat or licensed to operate an excursion gambling boat as provided in Sections 313.800 to 313.850, RSMo.

J. “Obligations,” bonds, loans, debentures, notes, special certificates, or other evidences of indebtedness issued in accordance with the Redevelopment Agreement by the Commission, City or any other public body approved by the Commission, to pay all or any portion of Reimbursable Project Costs incurred, or estimated to be incurred, to finance the cost of issuing such Obligations, to establish reserves to refund or secure such Obligations, to finance the Interest costs associated with such Obligations or to refund, redeem or defease outstanding Obligations.

K. “Ordinance,” an ordinance enacted by the governing body of the City.

L. “Payment in Lieu of Taxes” or “PILOTs,” those estimated revenues from real property in each Redevelopment Project Area, which revenues according to the Plan are to be used for a private use, which Taxing Districts would have received had the City not adopted tax increment allocation financing, and which would result from levies made after the time of the adoption of tax increment allocation financing during the time the current equalized value of real property in the Redevelopment Project Area exceeds the total initial equalized value of real property in such area until the designation is terminated pursuant to subsection 2 of Section 99.850. Payments in lieu of taxes which are due and owing shall constitute a lien against the real estate located within the Redevelopment Project Area from which they are derived, the lien of which may be foreclosed in the same manner as a special assessment lien as provided in Section 88.861 RSMo. ______Metro North Crossing TIF Plan

M. “Private Loans” any indebtedness incurred by the Redeveloper or any other non- governmental party to pay all or any portion of Redevelopment Project Costs, incurred or estimated to be incurred.

N. “Project Improvements,” those development activities undertaken within the Redevelopment Area intended to accomplish the objectives of the Redevelopment Plan, which are described by Section IV.C. of the Plan.

O. “Public Improvements,” those development activities undertaken within the Redevelopment Area intended to accomplish the objectives of the Redevelopment Plan, which are described by Section IV.C. of the Plan

P. “Redeveloper,” Metro North Crossing, LLC, or such other business organization or other entity selected by the Commission that enters into the Redevelopment Agreement with the Commission for the purpose of implementing the Redevelopment Plan, or a portion thereof.

Q. “Redevelopment Agreement,” the agreement between the Commission and Redeveloper for the implementation of the Redevelopment Plan or a portion thereof.

R. “Redevelopment Area,” the real property legally described on Exhibit 1.A.

S. “Redevelopment Plan” or “Plan,” the Metro North Crossing Tax Increment Financing Plan.

T. Redevelopment Projects,” the redevelopment projects located within the Redevelopment Area, described by Section IV.B of the Plan, and designated as such by Ordinance and intended to further the objectives of the Redevelopment Plan.

U. “Redevelopment Project Areas” the areas designated by Ordinance for each Redevelopment Project that is described by Section IV.B of the Plan and on Exhibit 1B, and as may be modified from time to time by an Ordinance passed by the City Council of the City.

V. “Redevelopment Project Costs” include the sum total of all reasonable or necessary costs incurred or estimated to be incurred, any such costs incidental to the Redevelopment Plan and/or a Redevelopment Project. Such costs include, but are not limited to the following:

1. Costs of studies, surveys, plans and specifications;

2. Professional service costs, including, but not limited to, architectural, engineering, legal, marketing, financial, planning or special services. Except the reasonable costs incurred by the commission established in section 99.820 for the administration of sections 99.800 to 99.865, such costs shall be allowed only as an initial expense which, to be recoverable, shall be included in the costs of the Redevelopment Plan or a Redevelopment Project;

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3. Property assembly costs, including but not limited to, acquisition of land and other property, real or personal, or rights or interests therein, demolition of buildings, and the clearing and grading of land;

4. Costs of rehabilitation, reconstruction, repair or remodeling of existing buildings and fixtures;

5. Cost of construction of public works or improvements;

6. Financing costs, including, but not limited to all necessary and incidental expenses related to the issuance of Obligations, and which may include payment of interest on any Obligations issued hereunder accruing during the estimated period of construction of any Redevelopment Project for which such Obligations are issued and for not more than eighteen months thereafter, and including reasonable reserves related thereto;

7. All or a portion of a taxing district’s capital cost resulting from the Redevelopment Project necessarily incurred or to be incurred in furtherance of the objectives of the Redevelopment Plan and Redevelopment Project, to the extent the municipality by written agreement accepts and approves such costs;

8. Relocation costs to the extent that the City determines that relocation costs shall be paid or are required to be paid by federal or state law;

9. Payments in lieu of taxes.

W. “Reimbursable Project Costs,” a portion of the Redevelopment Project Costs estimated to be $71,311,175, plus costs of financing equal to $72,649,205 for a total of $143,960,380, as specifically identified on Exhibit 5A, attached hereto.

X. “Special Allocation Fund,” each fund maintained by the City or the Commission, which contains at least two (2) separate segregated accounts for each Redevelopment Project, maintained by the treasurer of the City or the treasurer of the Commission into which payments in lieu of taxes are deposited into the first account and economic activity taxes and other revenues are deposited in the other account.

Y. “Tax Increment Financing,” tax increment allocation financing as provided pursuant to Chapter 99.800, et seq. RSMo.

Z. “Taxing Districts,” any political subdivision of Missouri located wholly or partially within the Redevelopment Area having the power to levy taxes.

AA. “TIF Revenue,” Payments in Lieu of Taxes and Economic Activity Taxes.

II. TAX INCREMENT FINANCING

This Plan is adopted pursuant to Act. The Act enables municipalities to finance Redevelopment Project Costs with the revenue generated from Payments in Lieu of Taxes and

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Economic Activity Taxes. This Redevelopment Plan shall be filed of record against all real property in the approved Redevelopment Project Area.

III. GENERAL DESCRIPTION OF PLAN AND PROJECT.

A. The Redevelopment Plan. The Metro North Crossing Tax Increment Financing Plan provides, in part, for the demolition of approximately 896,874 square feet of the existing Metro North Mall, with approximately 221,175 square feet of existing retail space to remain with some façade and parking improvements. Additionally, the Plan provides for approximately 912,500 square feet of new construction that will provide for retail, multi-family residential and hotel uses.

B. Redevelopment Area. The Redevelopment Area is a 92.21 acre area that is generally bounded by 88th Street to the North, Wyandotte Street to the East, Barry Road to the South, and US Highway 169/North Summit Avenue as legally described in Exhibit 1.

C. Project Improvements and Public Improvements. The Project Improvements will consist of the partial demolition of approximately 896,874 square feet of the existing Metro North Mall and, in its place, and the development of a substantially-sized courtyard/gathering area for community events, approximately 826,175 square of feet of retail space, approximately 60,000 square feet of office space, approximately 150 units of multi-family residential housing, an approximately 100-room limited services hotel and approximately 4,750 parking spaces. The Public Improvements may consist of streetscape, signage, signaling sidewalks and curbs and other related pubic infrastructure improvements that support and enhance the Project Improvements. The Project Improvements and Public Improvements will be undertaken pursuant to Exhibit 13 and in furtherance of the objectives of the Plan. A Site Plan generally depicting the location of the Redevelopment Projects, the Project Improvements and the Public Improvements is attached as Exhibit 2. Estimated construction and employment information for the Redevelopment Projects are set forth on Exhibit 4.

D. Estimated Date of Completion. It is anticipated that demolition will begin in the spring of 2016 with occupancy and opening of retail space to begin in the spring of 2017. The completion of all Project Improvements and Public Improvements is estimated to be October 2021 and the schedule for construction is set forth on Exhibit 5B.

The completion of the Project Improvements and Public Improvements and the retirement of Obligations incurred to finance the Reimbursable Project Costs will occur no later than twenty-three (23) years from the adoption of the ordinance approving each Redevelopment Project.

In no event shall any ordinance approving a Redevelopment Project be passed by the City later than ten (10) years from the passage of the ordinance approving this Redevelopment Plan.

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E. Redevelopment Plan Objectives. The general objectives of the Plan are:

1. To eliminate adverse conditions which are detrimental to public health, safety, morals, or welfare in the Redevelopment Area and to eliminate and prevent the recurrence thereof for the betterment of the Redevelopment Area and the community at large;

2. To enhance the tax base of the City and the other Taxing Districts, encourage private investment in the surrounding area;

3. To increase employment opportunities;

4. To stimulate construction and development and generate tax revenues, which would not occur without Tax Increment Financing assistance;

F. Specific objectives of this Redevelopment Plan are set forth in Exhibit 3.

G. Gaming Status. The Redevelopment Plan does not include the initial development or redevelopment of any gambling establishment.

IV. FINANCING

A. Estimated Redevelopment Project Costs. The estimated Redevelopment Project Costs to implement the Plan are approximately $185,670,152, plus costs of financing estimated to be $72,649,205 for a total of $258,319,357. The estimated Reimbursable Project Costs to implement the Plan are approximately $71,311,175 plus costs of financing equal to $72,649,205 for a total of $143,960,380. The Reimbursable Project Costs are identified on Exhibit 5A, attached to this Plan. Of the remaining $114,358,977 of Redevelopment Project Costs, together with financing costs related thereto, will be funded by a combination of private equity and debt.

The Commission has determined that certain planning and special services expenses of the Commission, which are not direct Redevelopment Project Costs, are nonetheless reasonable and necessary for the operation of the Commission and are incidental costs to the Plan. These incidental costs will be recovered by the Commission from the Special Allocation Fund in an amount equal to 5% of the Payments in Lieu of Taxes and Economic Activity Taxes paid annually into the Special Allocation Fund (“Administrative Expenses”).

B. Anticipated Sources of Funds. Redeveloper will acquire all necessary properties and construct the Project Improvements and Public Improvements through the use of private capital in the form of equity, debt financing, CID Revenues and TIF Revenue, which may be pledged to secure Obligations. Anticipated sources and amounts of funds to pay Redevelopment Project Costs are shown on Exhibit 5A

If Obligations are issued, the proceeds will be deposited in a construction/project fund and used to pay Reimbursable Project Costs, in accordance with the ______Metro North Crossing TIF Plan

Redevelopment Agreement and the documents prepared and executed in connection with the issuance and sale of such Obligations.

C. Payments in Lieu of Taxes. Projections for Payments in Lieu of Taxes are based on current and anticipated real property assessments and current and anticipated property tax rates, both of which are subject to change due to many factors, including reassessment, the effects of real property classification for real property tax purposes, and the rollback in tax levies resulting from reassessment or classification. The estimated total Payments in Lieu of Taxes generated within the Redevelopment Project Areas while Tax Increment Financing is authorized is $56,956,656. Those Payments in Lieu of Taxes, which are anticipated to be generated on an annual basis, are shown on Exhibit 6 and will be made available to pay eligible Reimbursable Project Costs, in accordance with the Redevelopment Agreement, provided however; notwithstanding anything to the contrary, 20% of the PILOTS generated and collected within the Redevelopment Project Areas, up to an annual maximum amount of $500,000, will be distributed to the Taxing Districts in the same manner and proportion as the most recent distribution by the County Collector to the Taxing Districts.

The amount of Payments in Lieu of Taxes in excess of the funds deemed necessary by the City for implementation of this Plan, if any, subject to Section 99.850 RSMo, shall be declared surplus. The declared surplus will be available for distribution to the Taxing Districts in accordance with Section 99.850 RSMo.

D. Economic Activity Taxes. The projected Economic Activity Taxes to be deposited in the Special Allocation Funds, in accordance with the Act, during the time Tax Increment Financing is authorized, with respect to each Redevelopment Project Area, is $98,916,516 as shown in Exhibit 6, attached hereto, all of which will be made available, upon annual appropriation by the City, to pay eligible Reimbursable Project Costs, in accordance with the Redevelopment Agreement.

Available Anticipated Economic Activity Taxes will include 50% of the net earnings taxes paid by businesses and employees, 50% of the net food & beverage taxes, 50% of the net utility taxes, 50% of the City, CID and County net sales taxes.

It is assumed that net earnings and sales tax revenues will increase due to inflation at a rate of 2.0% a year, which shall be in addition to the assumed increases due to job creation and business expansion.

The amount of Economic Activity Taxes in excess of the funds deemed necessary by the City for implementation of this Plan, if any, subject to Section 99.850 RSMo, shall be declared surplus. The declared surplus will be available for distribution to the Taxing Districts in accordance with Section 99.850 RSMo.

All affected businesses and property owners located within each Redevelopment Project Area, at the time the Redevelopment Project Area is designated by an

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Ordinance passed by the City Council of the City, shall be identified by the Redeveloper and the Redeveloper shall provide the Commission with such identifying documentation described by the Commission’s Economic Activity Tax Documentation and Collection Policy (the “EATS Documentation”). The Commission shall provide the City with the EATS Documentation related to each business located within the Redevelopment Project Area. Based upon such EATS Documentation, the City shall determine the “base year” and the annual amount of the Economic Activity Taxes generated within the Redevelopment Project Area and, subject to City Council approval, shall thereafter appropriate such funds into the Special Allocation Fund, no less frequently than semi-annually and no more frequently than quarterly, in accordance with the Act..

E. Anticipated Type and Terms of Obligations. It is not anticipated that Obligations will be issued to finance the Reimbursable Project Costs. In the event Obligations are issued, the Plan intends that these Obligations shall be secured by the Payments in Lieu of Taxes and/or Economic Activity Taxes generated within the Redevelopment Project Areas. Additionally, it is estimated that TIF Revenue must equal not less than 125% of the annual debt service payments required for the retirement of the Obligations. Revenues received in excess of 100% of funds necessary for the payment of principal and interest on the Obligations may be used for debt service reserves, unpaid Reimbursable Project Costs, to redeem Obligations in advance of their maturities or declared surplus. Obligations may be sold in one or more series in order to implement this Plan. All Obligations shall be retired no later than twenty-three (23) years after the adoption of the Ordinance adopting Tax Increment Financing for each Redevelopment Project. Neither Redevelopment Project may not be approved by an Ordinance more than ten years from the adoption of the Ordinance approving the Redevelopment Plan..

F. Evidence of Commitments to Finance. Commitments for any private financing of Redevelopment Project Costs necessary to complete Project Improvements for all Redevelopment Projects shall be submitted for approval prior to the approval of any ordinance. Letters of interest from private mortgage financing sources are attached as Exhibit 11.

V. MOST RECENT EQUALIZED ASSESSED VALUATION

The total initial equalized assessed valuation of the Redevelopment Area according to current records at the Clay County Assessor’s Office is approximately $2,805,000. The current combined ad valorem property tax levy is projected to be $7.3484 per $100 assessed valuation. The 2015 annual ad valorem tax revenue from the Redevelopment Area will be approximately $206,123.

The Total Initial Equalized Assessed Valuation of the Redevelopment Area will be determined prior to the time each individual Redevelopment Project is approved by ordinance. Payments in Lieu of Taxes measured by subsequent increases in property tax revenue which would have resulted from increased valuation had Tax Increment Financing not been adopted ______Metro North Crossing TIF Plan

will be segregated from taxes resulting from the Total Initial Equalized Assessed Valuation as defined herein, and deposited in the Special Allocation Fund earmarked for payment of Redevelopment Projects Costs as defined herein.

VI. ESTIMATED EQUALIZED ASSESSED VALUATION AFTER REDEVELOPMENT

When the Project Improvements have been completed, the total assessed valuation of the Redevelopment Area will be determined. The estimated increase in assessed valuation and the resulting Payments in Lieu of Taxes are shown in Exhibit 6.

VII. GENERAL LAND USE

The Plan identifies properties to be redeveloped for retail commercial and residential use. It is anticipated that some or all the Redevelopment Project Areas will be required to rezone to an Urban Redevelopment District (URD) as a condition of Redevelopment Project activation. The URD shall include the design guidelines reviewed and approved by the City’s Planning and Development Department. Each Redevelopment Project shall be subject to the applicable provisions of the City’s Zoning Ordinance as well as other codes and ordinances as may be amended from time to time.

VIII. CONFORMANCE TO THE COMPREHENSIVE PLAN

The Redevelopment Plan conforms with the City’s current comprehensive plan and will not alter the land use contemplated by the Gashland/Nashua Land Use Plan and the implementation of the Redevelopment Plan will not change the existing zoning for the Redevelopment Project Areas.

IX. EXISTING CONDITIONS IN THE REDEVELOPMENT AREA.

The Metro North Crossing Blight Study prepared by Belke Appraisal & Consulting Services, Inc. (“Belke”) and attached as Exhibit 10 provides evidence of defective or inadequate street layout, unsanitary and unsafe conditions, aging and deteriorating site improvements, improper subdivision and obsolete platting and conditions which endanger the life or property by fire or other causing. These blighting factors have led Belke to conclude that the Redevelopment Area contains the following blighting conditions stated within Section 99.805(1) RSMo: (1) retarded growth and development, (2) economic liabilities and excessive vacancy and (3) social liabilities. Based upon the evidence and conclusion reached in the Metro North Crossing Blight Study, the Redevelopment Area qualifies as a Blighted Area.

X. “BUT FOR TIF”

Substantial public financing of the Project Improvements is identified within the Plan. This assistance is necessary to ensure successful redevelopment of the Redevelopment Area in order to serve the public purpose set forth on Exhibit 3, attached hereto. The purpose of affording public assistance is to accomplish the stated public purpose and not to subsidize otherwise economically viable project improvements. In order to ensure that the public assistance being provided does not subsidize an unreasonable level of earnings, the Redevelopment Plan incorporates, as Exhibit 9, an analysis completed by Springsted, ______Metro North Crossing TIF Plan

Incorporated, which was presented to the Commission and City prior to approval of the Redevelopment Plan. The analysis, along with the Redeveloper Affidavit, attached as Exhibit 7, demonstrates that the Redevelopment Area has not been subject to growth and development by private enterprise and the Project Improvements within the Redevelopment Area would not reasonably be anticipated to be developed without the adoption of Tax Increment Financing (the “But-For Test”).

The But-For-Test suggests that acceptable investment returns to real estate investors depend on a large number of external factors and the nature of the specific investment, including, the property sector of land use; the life cycle of the property; local market conditions such as new development, major employers and their plans, demographics and the like; the overall risk associated with the property; inflation expectations, and numerous other factors. One method of determining the need for assistance through Tax Increment Financing is to study a redeveloper’s internal rate of return (“IRR”). The internal rate of return takes into account both the annual income derived as cash flow as well as the potential return from a hypothetical sale of the private improvements at the end of the forecast period.

Springsted Incorporated conducted an analysis whereby it reviewed the financial information associated with the Plan and examined the internal rate of return on a leverage and unleveraged basis with no public assistance, as compared to with assistance of TIF Revenue.

The Redevelopment Agreement shall contain provisions whereby the public may participate in excess of the annual cash-on-cash return. The level of participation will be identified in the financial analysis of each Redevelopment Project.

In the event that any Project Improvement is refinanced or sold, once all cost of the sale or refinancing have been paid, the private debt retired, the investors’ equity investment returned, the public will share in residual proceeds. The annual cash-on-cash and residual sales participation shall be in the same proportion as the proportion of public investment in the completed Redevelopment Project or group of Redevelopment Projects bears to the total cost of all Project Improvements in such Redevelopment Project or group of Redevelopment Projects. The proceeds of such participation shall be distributed per the discretion of the Commission.

As shown on Exhibit 9, the Plan would have negative IRR without Tax Increment Financing assistance. The Plan would have an unleveraged IRR of 9.06% with TIF. This is within the market rate of 6-10% for most developments of this type and slightly above the average of 7.9%. The analysis was performed and reported on by Springsted Incorporated.

XI. COST-BENEFIT ANALYSIS

A cost-benefit analysis has been prepared for the Plan. This analysis and other evidence submitted to the Commission describe the fiscal impact on every affected Taxing District; the Cost-Benefit Analysis can be found on Exhibit 8.

XII. ACQUISITION AND DISPOSITION

Although it is not contemplated that it will be necessary to acquire property by condemnation to achieve the redevelopment objectives, the Commission may acquire property ______Metro North Crossing TIF Plan

by purchase, donation, lease or eminent domain in the manner provided for by corporations in Chapter 523, RSMo. The property acquired by the Commission may be cleared, and either (1) sold or leased for private redevelopment or (2) sold, leased, or dedicated for construction of public improvements or facilities. No property for a Redevelopment Project shall be acquired by eminent domain later than five (5) years from adoption of the ordinance approving the Redevelopment Project.

XIII. RELOCATION ASSISTANCE PLAN

Some limited business relocation may be necessary to achieve the objectives of the Plan. Relocation assistance will be available to all eligible displaced occupants in conformance with the Commission’s Relocation Assistance Plan as shown in Exhibit 12 or as may be required by other state or federal laws. Any relocation will be at the expense of the Redeveloper.

XIV. ENTERPRISE ZONE

In the event mandatory abatement is sought or received pursuant to Section 135.215, RSMo., as amended, such abatement shall not serve to reduce payments in lieu of taxes that would otherwise have been available pursuant to Section 99.845, RSMo. without Commission approval. Said designation shall not relieve the assessor or other responsible official from ascertaining the amount of equalized assessed valuation of all taxable property annually as required by Section 99.855, RSMo.

XV. PROVISION OF PUBLIC FACILITIES AND LANDSCAPING

Redeveloper will provide and maintain all landscaping of all real property owned by the Redeveloper and located within the Redevelopment Area and provide or cause to be provided necessary public facilities and utilities to service the Redevelopment Area.

XVI. REDEVELOPMENT AGREEMENT

Upon approval of this Plan, the Commission and Redeveloper will enter into a Redevelopment Agreement, which will include, among other things, provisions relative to the following:

1. Implementation of the Plan;

2. Reporting of Economic Activity Taxes;

3. The Commission’s Affirmative Action Policy and Workforce Policy;

4. Design guideline process;

5. The Commission’s Relocation Plan, if any;

6. Approval by Commission of the costs, design of the Project Improvements, Redevelopment Project Costs, certified reimbursable Redevelopment Project Costs;

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7. Public participation in excess return;

8. Payment of Prevailing Wages;

9. Certification of Costs and Reimbursement Policy; and

10. Certificate of Completion and Compliance Policy.

XVII. PROVISIONS FOR AMENDING THE PLAN

This Redevelopment Plan and Projects may be amended pursuant to the provisions of the Act except in the event that there are minor inaccuracies contained within this Redevelopment Plan or any Exhibit attached hereto, and such inaccuracies do not alter the substance of the Redevelopment Plan or a Redevelopment Project, the City Council of Kansas City, Missouri authorizes the Commission to approve and correct such inaccuracies and to execute any required instruments and to make and incorporate such amendment or change to this Redevelopment Plan or any Exhibit attached hereto.

______Metro North Crossing TIF Plan

METRO NORTH CROSSING Sources and Uses of Funds SOURCES

Private Funds Construction Private Financing$ 139,252,614 Private Equity 46,417,538 Total$ 185,670,152

Developer Equity/Private USES Total Project Costs TIF Reimbursable TIF % Financing Site Assembly/Acquisition$ 6,000,000 $ 3,000,000 $ 3,000,000 50%

Site Work/Landscaping/Signage 23,940,000 23,940,000 - 100%

Demolition/Renovation 4,500,000 4,500,000 - 100%

Survey/Soils 120,000 120,000 - 100%

Architectural/Engineering/Professional 1,600,000 - 1,600,000 0%

Appraisals 50,000 - 50,000 0%

Hard Construction- Developer 70,550,000 31,747,500 38,802,500 45%

Tenant Improvement Cost- Developer 10,500,000 - 10,500,000 0%

Hard Construction- Third Party 37,775,000 - 37,775,000 0%

General Conditions 1,510,500 528,675 981,825 35%

Construction Interest 15,500,000 5,425,000 10,075,000 35%

Financing Costs 2,438,855 - 2,438,855 0%

Construction Management 360,000 - 360,000 0%

Development Fee 3,000,000 - 3,000,000 0%

Taxes During Construction 600,000 - 600,000 0%

Permit/Inspection 250,000 - 250,000 0%

Preliminary Studies 50,000 - 50,000 0%

Professional Fees 750,000 - 750,000 0%

Commission (Sales) 618,470 - 618,470 0%

Commissions (Leasing) 1,557,327 - 1,557,327 0%

Off-Site Road Improvements 1,000,000 1,000,000 - 100%

Contingency 3,000,000 1,050,000 1,950,000 35%

Total $ 185,670,152 $ 71,311,175 $ 114,358,977 38%

ADD TIF REIMBURSEMENT CARRY @ 6% $72,649,205 $72,649,205

Grand Total $ 258,319,357 $ 143,960,380

Metro North Crossing Revenue Projections

Taxes Available Under Statutory TIF TOTAL TIF REVENUES 20.00% 0.00% Utility F&B Retail CID Sales Individual Earnings Total EATS PILOTS School District Super 5% Total TIF TOTAL Cumulative Annual 100% 6.00% PV of Total Revenue Cumulative Annual Revenue Year Taxes Sales Sales Per TIF Pilot TIF (Capture) TIF Admin Fee (Statutory) REVENUE Revenue Coverage Factor PV Factor at 6.0% at PV 1$ 12,870 $ 68,063 $ 438,750 $ 120,108 $ - $ 639,791 $ 457,018 $ (91,404) $ - ($50,270) 955,135 $ 955,135 $ 955,135 $ 955,134.68 0.9426 $900,306 $ 900,306 2$ 30,031 $ 158,813 $ 1,023,750 $ 280,252 $ 32,538 $ 1,525,383 $ 1,066,375 $ (213,275) $ - ($118,924) 2,259,559 $ 2,259,559 $ 2,259,559 $ 2,259,558.51 0.8885 $2,007,588 2,907,895 3$ 60,061 $ 317,625 $ 2,047,500 $ 560,503 $ 79,619 $ 3,065,309 $ 2,132,750 $ (426,550) $ - ($238,575) 4,532,934 $ 4,532,934 $ 4,532,934 $ 4,532,933.57 0.8375 $3,796,261 6,704,155 4$ 68,642 $ 363,000 $ 2,340,000 $ 640,575 $ 93,071 $ 3,505,288 $ 2,437,429 $ (487,486) $ - ($272,762) 5,182,469 $ 5,182,469 $ 5,182,469 $ 5,182,469.31 0.7894 $4,091,089 10,795,244 5$ 81,512 $ 431,063 $ 2,778,750 $ 760,683 $ 113,249 $ 4,165,256 $ 2,894,447 $ (500,000) $ - ($327,985) 6,231,718 $ 6,231,718 $ 6,231,718 $ 6,231,717.76 0.7441 $4,636,983 15,432,227 6$ 85,802 $ 453,750 $ 2,925,000 $ 800,719 $ 119,975 $ 4,385,246 $ 3,046,786 $ (500,000) $ - ($346,602) 6,585,430 $ 6,585,430 $ 6,585,430 $ 6,585,430.09 0.7014 $4,618,888 20,051,116 7$ 86,660 $ 458,288 $ 2,954,250 $ 808,726 $ 121,175 $ 4,429,098 $ 3,092,488 $ (500,000) $ - ($351,079) 6,670,507 $ 6,670,507 $ 6,670,507 $ 6,670,506.62 0.6611 $4,409,991 24,461,106 8$ 87,527 $ 462,870 $ 2,983,793 $ 816,813 $ 122,386 $ 4,473,389 $ 3,092,488 $ (500,000) $ - ($353,294) 6,712,583 $ 6,712,583 $ 6,712,583 $ 6,712,583.06 0.6232 $4,183,060 28,644,166 9$ 88,402 $ 467,499 $ 3,013,630 $ 824,981 $ 123,610 $ 4,518,123 $ 3,138,875 $ (500,000) $ - ($357,850) 6,799,148 $ 6,799,148 $ 6,799,148 $ 6,799,148.20 0.5874 $3,993,783 32,637,949 10$ 89,286 $ 472,174 $ 3,043,767 $ 833,231 $ 124,846 $ 4,563,304 $ 3,138,875 $ (500,000) $ - ($360,109) 6,842,070 $ 6,842,070 $ 6,842,070 $ 6,842,070.37 0.5537 $3,788,288 36,426,238 11$ 90,179 $ 476,896 $ 3,074,204 $ 841,563 $ 126,095 $ 4,608,937 $ 3,185,958 $ (500,000) $ - ($364,745) 6,930,151 $ 6,930,151 $ 6,930,151 $ 6,930,150.73 0.5219 $3,616,794 40,043,031 12$ 91,081 $ 481,665 $ 3,104,946 $ 849,979 $ 127,356 $ 4,655,027 $ 3,185,958 $ (500,000) $ - ($367,049) 6,973,936 $ 6,973,936 $ 6,973,936 $ 6,973,935.64 0.4919 $3,430,714 43,473,745 13$ 91,991 $ 486,481 $ 3,135,996 $ 858,479 $ 128,629 $ 4,701,577 $ 3,233,747 $ (500,000) $ - ($371,766) 7,063,558 $ 7,063,558 $ 7,063,558 $ 7,063,558.30 0.4637 $3,275,335 46,749,080 14$ 92,911 $ 491,346 $ 3,167,356 $ 867,064 $ 129,916 $ 4,748,593 $ 3,233,747 $ (500,000) $ - ($374,117) 7,108,223 $ 7,108,223 $ 7,108,223 $ 7,108,223.28 0.4371 $3,106,839 49,855,919 15$ 93,840 $ 496,260 $ 3,199,029 $ 875,734 $ 131,215 $ 4,796,079 $ 3,282,254 $ (500,000) $ - ($378,917) 7,199,416 $ 7,199,416 $ 7,199,416 $ 7,199,415.81 0.4120 $2,966,064 52,821,983 16$ 94,779 $ 501,222 $ 3,231,020 $ 884,492 $ 132,527 $ 4,844,040 $ 3,282,254 $ (500,000) $ - ($381,315) 7,244,979 $ 7,244,979 $ 7,244,979 $ 7,244,978.56 0.3883 $2,813,493 55,635,477 17$ 95,727 $ 506,235 $ 3,263,330 $ 893,337 $ 133,852 $ 4,892,480 $ 3,331,487 $ (500,000) $ - ($386,198) 7,337,769 $ 7,337,769 $ 7,337,769 $ 7,337,769.05 0.3660 $2,685,953 58,321,430 18$ 96,684 $ 511,297 $ 3,295,963 $ 902,270 $ 135,191 $ 4,941,405 $ 3,331,487 $ (500,000) $ - ($388,645) 7,384,248 $ 7,384,248 $ 7,384,248 $ 7,384,247.61 0.3450 $2,547,805 60,869,235 19$ 97,651 $ 516,410 $ 3,328,923 $ 911,293 $ 136,543 $ 4,990,819 $ 3,381,460 $ (500,000) $ - ($393,614) 7,478,665 $ 7,478,665 $ 7,478,665 $ 7,478,664.65 0.3252 $2,432,257 63,301,492 20$ 98,627 $ 521,574 $ 3,362,212 $ 920,406 $ 137,908 $ 5,040,727 $ 3,381,460 $ (500,000) $ - ($396,109) 7,526,077 $ 7,526,077 $ 7,526,077 $ 7,526,077.43 0.3066 $2,307,171 65,608,663 21$ 99,614 $ 526,790 $ 3,395,834 $ 929,610 $ 139,287 $ 5,091,134 $ 3,432,182 $ (500,000) $ - ($401,166) 7,622,150 $ 7,622,150 $ 7,622,150 $ 7,622,150.14 0.2890 $2,202,491 67,811,153 22$ 100,610 $ 532,058 $ 3,429,793 $ 938,906 $ 140,680 $ 5,142,046 $ 3,432,182 $ (500,000) $ - ($403,711) 7,670,516 $ 7,670,516 $ 7,670,516 $ 7,670,515.91 0.2724 $2,089,232 69,900,385 23$ 101,616 $ 537,378 $ 3,464,090 $ 948,295 $ 142,087 $ 5,193,466 $ 3,483,664 $ (500,000) $ - ($408,857) 7,768,274 $ 7,768,274 $ 7,768,274 $ 7,768,273.94 0.2567 $1,994,400 71,894,785

Total$ 1,936,102 $ 10,238,754 $ 66,001,887 $ 18,068,016 $ 2,671,757 $ 98,916,516 $ 67,675,370 $ (10,718,714) $ - $ (7,793,659) $ 148,079,513 $ 148,079,513 $ 148,079,513 $ 148,079,513.21 $71,894,785 Revenue Projection Assumptions:

TAX DETAIL SALES TAX Percent OTHER Levy (%) Real Property Tax 8.73% Clay County 0.8750% Earnings Tax 1.00% City of Kansas City 2.8750% Utility Tax 10.00% Future CID 1.0000% KCZoo 0.1250% CID 1.00% Total Local 4.8750% Total 20.73% Kansas City F&B 2%

Utility Taxes -- Utility usage per retail/restaurant square foot:$ 1.95 Utility usage per office square foot:$ 1.75 Retail/Restaurant Square Feet: 826,175 Office Square Feet: 60,000 Tax rate: 10%

F&B Sales-- 3 Base year sales assumed to be:$ 6,943,750.00 Tax Rate: 6.8750% Square feet of restaurant space: 54,175 Sales per square foot of restaurant space:$ 372 % of Tax Captured: 50%

Retail Sales-- Base year sales assumed to be:$ 20,000,000 Tax Rate: 4.8750% Square feet of retail space: 772,000 Sales per sqf of retail space:$ 181 % of Tax Captured: 50%

Individual Earnings -- Number of employees: 1,281 Increase over Base:$ 23,995,000 Average Annual Salary:$ 20,995 Tax Rate: 1.0000% Base year earnings:$ 2,908,750 % Captured: 50%

PILOTS -- Property tax increment; completed market value of: $ 117,778,744 Assessed at 32% Projected Assessment at Completion:$ 37,689,198 Inflation @ 1.5% every other year Initial Equalized Assessed Value:$ 2,805,000

Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101-2887 Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com

MEMORANDUM

TO: Heather Brown, Executive Director, Tax Increment Financing, EDCKC

FROM: Matt Stark, Springsted Incorporated

DATE: September 9, 2015

SUBJECT: Cost-Benefit analysis of Metro North Crossing

Springsted was recently retained by the Economic Development Corporation to examine the proposed redevelopment of the Metro North Mall into a mixed-use development with retail, commercial and residential elements, and to estimate the relative costs and benefits related to economic development incentives that may be extended to the developer. This memo provides a summary of our efforts, and the findings derived from our analysis.

Introduction

The applicant has proposed to redevelop the site of the Metro North Mall into a mixed-use development which will include retail, restaurant, hotel, grocery, and office components, as well as 150 units of multi-family housing. At completion, the new development is expected to include approximately 950,000 square feet of commercial and retail space, and 187,500 square feet of residential space. Redevelopment activities are estimated to cost approximately $185.7 million.

To make this development feasible, the developer is seeking assistance for the project in the form of Tax Increment Financing. This financing would include redirection of 50% of sales and earnings taxes, and 100% of property taxes, to be used for reimbursable expenses. EDCKC Cost-Benefit Analysis – Metro North Crossing Page 2

Assumptions

Our analysis and projections depend on a number of assumptions about the proposed development. Assumptions about the proposed development include the following: • Redevelopment construction will occur between 2016 and 2018. • Operations for each component of the redevelopment will begin when each element is complete. The first operations are anticipated to begin in the spring of 2017, with the last coming online in June of 2018. • Costs for redeveloping the property will be approximately $185.7 million. • $10.5 million of total costs represent tenant improvements, which are treated as tangible personal property with a depreciation cycle of 7 years. • The redevelopment will add approximately $102.8 million in real value to the property, which translates to $32.9 million in assessed value. • Approximately 150 units of new residential housing will be included as part of the project. • 1,142 full-time positions will be added between 2017 and 2021, with an average annual wage of $20,995. Direct payroll is expected to total $27.0 million in 2021. • Based on regional multipliers for each sector included in the project, indirect economic effects will generate an additional 785 FTEs, and additional payroll of $18.5 million by 2021. • The hotel component of the project will include approximately 100 limited-service rooms, with average room rates of $120 per night and occupancy estimated at 60%. • We estimate that the new jobs (direct and indirect) will bring 231 new residents to the City, and 153 to the School District. • 30% of gross salaries will be spent on taxable goods and services. • Consumer spending will be 60% in Kansas City, 70% in Clay County, and 80% in Missouri. • We anticipate that new employment will bring 48 students to the School District, while residents of the new apartments will add another 27 students to the District.

Incentives

The applicant is seeking Tax Increment Financing to offset eligible expenses in the redevelopment project. This financing would include redirection of 50% of sales and earnings taxes, and 100% of property taxes. Current estimates indicate that reimbursable expenses would be paid off after 20 years of TIF payments. For this reason, our analysis assumes that the last 3 years of the usual 23-year TIF period would see each jurisdiction receiving tax revenues as usual.

EDCKC Cost-Benefit Analysis – Metro North Crossing Page 3

Per-capita Costs and Revenues

For each entity with taxing authority over the project, we have reviewed the most recent available financial statements and used this information to generate per-capita and per-worker costs and revenues. On the revenue side, we have excluded property, sales, and earnings taxes in the overall calculation, because these sources are calculated separately based on specific project data. Including them in the per-capita calculations would result in double-counting of the revenues. Other revenue line items (permits, fines, intergovernmental transfers, etc.) were allocated between residential and commercial/industrial sources, from which we derived revenues per capita and per commercial/industrial employee.

On the expenditures side, we looked at each line item for operating expenses and allocated each expense between residential and commercial/industrial uses. Similarly, we allocated each jurisdiction’s net capital investment between the two categories. From these, we calculated total costs per capita and per worker.

For revenues and costs alike, we calculate total average values, as opposed to marginal costs and revenues. This has the effect of overstating the impacts of new population, because a significant proportion of each jurisdiction’s costs and revenues are fixed, and thus would change very little based on population growth. At the present time, a study of marginal costs for each jurisdiction and each project is outside the scope of our analysis.

For the purposes of illustration, we present a scenario in which half of each jurisdiction’s per-capita costs and revenues are treated as fixed, with the other half growing in proportion to additional residents and workers. Our findings below show the results of both the full average cost scenario and the 50% marginal cost scenario.

Findings

Our projections indicate that over the first ten years of the development, negative net benefits will be shown by five jurisdictions, with positive net impacts felt by seven. Jurisdictions with sales tax revenues each show positive impacts; additionally, the Community Colleges, the Blind Pension Fund and the Mental Health Services fund show enough non-TIF revenues to offset their costs of providing services to new residents. Clay County’s Health Department and Senior Services Board each show negative impacts, though these are considerably smaller in magnitude than the positive net impact shown to the County’s general funds.

Impacts for each jurisdiction are estimated on the following page.

EDCKC Cost-Benefit Analysis – Metro North Crossing Page 4

Full average cost scenario: 10-Year Economic Impacts

Public Costs & Net Benefits Taxing Authority Public Benefits: Incentives: (Costs): City of Kansas City 65,351,896 52,566,596 12,785,300 Clay County 14,100,636 8,545,119 5,555,517 Clay County Senior Services 190,614 248,423 (57,809) Clay County Health Dept 481,855 625,342 (143,487) Tri-County Mental Health Services 927,717 792,276 135,440 Develop. Disabilities Fund 515,216 684,149 (168,932) Blind Pension Fund 272,836 133,568 139,268 Mid-Continent Library 1,236,499 1,546,074 (309,576) Kansas City Zoo District 1,914,327 1,316,193 598,134 East Platte School District 21,625,816 22,387,757 (761,941) Metro Community Colleges 1,626,520 1,584,780 41,739 State of Missouri 129,453,687 111,828,433 17,625,254

Measured over the longer term, the trend is similar. The School District shows a net positive in this case, due to annual surpluses in the three years after TIF revenues are restored. For other negatively-impacted jurisdictions, the three-year period is not sufficient to offset previous deficits. Total impacts for each jurisdiction are shown below:

23-Year Economic Impacts

Public Costs & Net Benefits Taxing Authority Public Benefits: Incentives: (Costs): City of Kansas City 182,401,211 150,315,408 32,085,803 Clay County 38,051,157 24,436,217 13,614,940 Clay County Senior Services 453,548 603,903 (150,355) Clay County Health Dept 1,161,805 1,532,774 (370,969) Tri-County Mental Health Services 2,772,816 2,262,703 510,112 Develop. Disabilities Fund 1,475,998 1,877,652 (401,654) Blind Pension Fund 818,035 412,019 406,017 Mid-Continent Library 3,512,433 4,142,372 (629,939) Kansas City Zoo District 5,203,709 3,688,308 1,515,401 East Platte School District 61,839,394 60,125,997 1,713,397 Metro Community Colleges 4,797,019 4,425,766 371,253 State of Missouri 382,587,059 344,828,805 37,758,254

As mentioned previously, our projections use full total average costs based on new residents and workers, which include fixed costs that would not be impacted proportionally by growth, thus overstating the net costs to each jurisdiction. If we were to assume, for the sake of argument, that 50% of costs and revenues were fixed, and limit our calculations to the 50% remaining as variable, the impacts to each entity would be as shown on the next page.

EDCKC Cost-Benefit Analysis – Metro North Crossing Page 5

50% Fixed Cost Scenario: 10-Year Economic Impacts

Public Costs & Net Benefits Taxing Authority Public Benefits: Incentives: (Costs): City of Kansas City 57,951,623 37,667,569 20,284,055 Clay County 13,148,729 6,168,712 6,980,017 Clay County Senior Services 189,288 190,217 (929) Clay County Health Dept 429,266 444,946 (15,680) Tri-County Mental Health Services 639,767 519,683 120,084 Develop. Disabilities Fund 481,920 499,614 (17,694) Blind Pension Fund 197,659 66,784 130,875 Mid-Continent Library 1,224,007 1,196,317 27,689 Kansas City Zoo District 1,763,011 1,059,521 703,490 East Platte School District 18,984,510 17,277,078 1,707,432 Metro Community Colleges 1,262,656 1,106,411 156,245 State of Missouri 97,942,361 55,914,216 42,028,144

By comparison with the full average cost scenario, the fiscal impacts for each jurisdiction are significantly improved by taking marginal costs into consideration. Under this scenario, only the Health Department and the Developmental Disabilities Fund show appreciably negative net impacts.

Figures for the full 23-year period are shown below:

50% Fixed Cost Scenario: 23-Year Economic Impacts

Public Costs & Net Benefits Taxing Authority Public Benefits: Incentives: (Costs): City of Kansas City 159,581,486 104,321,434 55,260,052 Clay County 35,115,146 17,104,091 18,011,055 Clay County Senior Services 450,188 456,412 (6,224) Clay County Health Dept 1,028,626 1,075,928 (47,302) Tri-County Mental Health Services 1,884,479 1,420,463 464,016 Develop. Disabilities Fund 1,373,120 1,307,489 65,631 Blind Pension Fund 586,263 206,009 380,253 Mid-Continent Library 3,473,847 3,061,716 412,131 Kansas City Zoo District 4,736,460 2,895,558 1,840,901 East Platte School District 53,659,391 44,298,461 9,360,930 Metro Community Colleges 3,672,777 2,947,732 725,044 State of Missouri 285,441,474 172,414,402 113,027,072

These figures show that over the longer term, impacts for each jurisdiction are positive, with the exception of the County’s organizations for Senior Services and the Health Department. As before, the negative impacts for these two bodies are much smaller that the positive impacts which accrue to the County in general. EDCKC Cost-Benefit Analysis – Metro North Crossing Page 6

A summary of each jurisdiction’s impacts are included as an attachment to this report. If you have any questions about our assumptions or our analysis, please do not hesitate to contact us. We hope this report provides your policy makers with information of relevance to their decision making, and we hope we may be of service to you again in the near future.

Cost-Benefit Analysis

Cost-Benefit Summary - 10-year analysis Per-capita impacts calculated at 100% of total average revenues and costs.

Tri-County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid-Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 38,579,211 $ 11,131,966 ------$ 1, 577,156 -- -- $ 54,568,032 Property Taxes: $ 5,793,244 $ 823,079 $ 187,962 $ 376,678 $ 351,817 $ 448,623 $ 122,481 $ 1, 211,514 -- $ 16,343,203 $ 898,792 $ - Income Taxes: $ 5,108,168 ------$ 11,863,002 Other Revenues: $ 15,871,272 $ 2,145,591 $ 2, 652 $ 105,177 $ 575,900 $ 66,594 $ 150,355 $ 24,984 $ 337,171 $ 5, 282,613 $ 727,728 $ 63,022,653 Total Revenues: $ 65,351,896 $ 14,100,636 $ 190,614 $ 481,855 $ 927,717 $ 515,216 $ 272,836 $ 1, 236,499 $ 1, 914,327 $ 21,625,816 $ 1, 626,520 $ 129,453,687

Costs Costs for Services: $ 29,798,055 $ 4,752,814 $ 116,413 $ 360,791 $ 545,186 $ 369,069 $ 133,568 $ 699,514 $ 513,345 $ 10,221,358 $ 956,738 $ 111,828,433 Incentives: $ 22,768,541 $ 3,792,305 $ 132,011 $ 264,550 $ 247,090 $ 315,079 $ - $ 846,561 $ 802,849 $ 12,166,399 $ 628,042 $ - Total Costs: $ 52,566,596 $ 8,545,119 $ 248,423 $ 625,342 $ 792,276 $ 684,149 $ 133,568 $ 1, 546,074 $ 1, 316,193 $ 22,387,757 $ 1, 584,780 $ 111,828,433

Net Cost/Benefit Public Benefits: $ 65,351,896 $ 14,100,636 $ 190,614 $ 481,855 $ 927,717 $ 515,216 $ 272,836 $ 1, 236,499 $ 1, 914,327 $ 21,625,816 $ 1, 626,520 $ 129,453,687 Public Costs & Incentives: $ 52,566,596 $ 8,545,119 $ 248,423 $ 625,342 $ 792,276 $ 684,149 $ 133,568 $ 1, 546,074 $ 1, 316,193 $ 22,387,757 $ 1, 584,780 $ 111,828,433 Net Benefits (Costs): $ 12,785,300 $ 5,555,517 $ ( 57,809) $ (143,487) $ 135,440 $ (168,932) $ 139,268 $ (309,576) $ 598,134 $ (761,941) $ 41,739 $ 17,625,254

Present Value of Public Benefits: $ 51,786,613 $ 11,217,362 $ 148,796 $ 376,535 $ 726,610 $ 402,409 $ 213,458 $ 965,160 $ 1,520,217 $ 16,913,816 $ 1,272,204 $ 102, 446,291 Present Value of Incentives: $ 18,035,239 $ 3,008,270 $ 103,066 $ 206,555 $ 192,921 $ 246,004 $ - $ 660,979 $ 638,674 $ 9,499,369 $ 490, 362 $ -

Springsted Incorporated 1 Summary10 Cost-Benefit Analysis

Cost-Benefit Summary - 23-year analysis Per-capita impacts calculated at 100% of total average revenues and costs.

Tri-County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid-Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 102,430,836 $ 29,298,708 ------$ 4, 172,405 -- -- $ 143,555,301 Property Taxes: $ 16,218,996 $ 2,202,791 $ 446,828 $ 895,447 $ 996,142 $ 1, 270,242 $ 354,490 $ 3, 435,261 -- $ 45,479,388 $ 2, 548,534 $ - Income Taxes: $ 15,110,972 ------$ 44,740,589 Other Revenues: $ 48,640,407 $ 6,549,658 $ 6, 720 $ 266,358 $ 1, 776,673 $ 205,756 $ 463,545 $ 77,172 $ 1, 031,305 $ 16,360,006 $ 2, 248,485 $ 194,291,169 Total Revenues: $ 182,401,211 $ 38,051,157 $ 453,548 $ 1, 161,805 $ 2, 772,816 $ 1, 475,998 $ 818,035 $ 3, 512,433 $ 5, 203,709 $ 61,839,394 $ 4, 797,019 $ 382,587,059

Costs Costs for Services: $ 91,987,948 $ 14,664,252 $ 294,981 $ 913,693 $ 1, 684,481 $ 1, 140,327 $ 412,019 $ 2, 161,312 $ 1, 585,500 $ 31,655,073 $ 2, 956,067 $ 344,828,805 Incentives: $ 58,327,460 $ 9,771,965 $ 308,922 $ 619,081 $ 578,222 $ 737,326 $ - $ 1, 981,060 $ 2, 102,808 $ 28,470,925 $ 1, 469,699 $ - Total Costs: $ 150,315,408 $ 24,436,217 $ 603,903 $ 1, 532,774 $ 2, 262,703 $ 1, 877,652 $ 412,019 $ 4, 142,372 $ 3, 688,308 $ 60,125,997 $ 4, 425,766 $ 344,828,805

Net Cost/Benefit Public Benefits: $ 182,401,211 $ 38,051,157 $ 453,548 $ 1, 161,805 $ 2, 772,816 $ 1, 475,998 $ 818,035 $ 3, 512,433 $ 5, 203,709 $ 61,839,394 $ 4, 797,019 $ 382,587,059 Public Costs & Incentives: $ 150,315,408 $ 24,436,217 $ 603,903 $ 1, 532,774 $ 2, 262,703 $ 1, 877,652 $ 412,019 $ 4, 142,372 $ 3, 688,308 $ 60,125,997 $ 4, 425,766 $ 344,828,805 Net Benefits (Costs): $ 32,085,803 $ 13,614,940 $ (150,355) $ (370,969) $ 510,112 $ (401,654) $ 406,017 $ (629,939) $ 1,515,401 $ 1,713,397 $ 371,253 $ 37,758,254

Present Value of Public Benefits: $ 111,857,695 $ 23,528,761 $ 292,340 $ 747,259 $ 1, 671,631 $ 896,728 $ 492,769 $ 2, 137,330 $ 3, 210,619 $ 37,591,630 $ 2, 898,506 $ 231,822,249 Present Value of Incentives: $ 36,624,373 $ 6,119,768 $ 199,773 $ 400,361 $ 373,936 $ 476,827 $ - $ 1, 281,167 $ 1, 309,978 $ 18,412,513 $ 950, 462 $ -

Springsted Incorporated 2 Summary23 Cost-Benefit Analysis

Cost-Benefit Summary - 10-year analysis Per-capita impacts calculated at 50% of total average revenues and costs.

Tri-County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid-Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 38,579,211 $ 11,131,966 ------$ 1, 577,156 -- -- $ 54,568,032 Property Taxes: $ 5,793,244 $ 823,079 $ 187,962 $ 376,678 $ 351,817 $ 448,623 $ 122,481 $ 1, 211,514 -- $ 16,343,203 $ 898,792 $ - Income Taxes: $ 5,108,168 ------$ 11,863,002 Other Revenues: $ 8,471,000 $ 1,193,684 $ 1, 326 $ 52,589 $ 287,950 $ 33,297 $ 75,177 $ 12,492 $ 185,855 $ 2, 641,306 $ 363,864 $ 31,511,326 Total Revenues: $ 57,951,623 $ 13,148,729 $ 189,288 $ 429,266 $ 639,767 $ 481,920 $ 197,659 $ 1, 224,007 $ 1, 763,011 $ 18,984,510 $ 1, 262,656 $ 97,942,361

Costs Costs for Services: $ 14,899,027 $ 2,376,407 $ 58,206 $ 180,396 $ 272,593 $ 184,535 $ 66,784 $ 349,757 $ 256,672 $ 5, 110,679 $ 478,369 $ 55,914,216 Incentives: $ 22,768,541 $ 3,792,305 $ 132,011 $ 264,550 $ 247,090 $ 315,079 $ - $ 846,561 $ 802,849 $ 12,166,399 $ 628,042 $ - Total Costs: $ 37,667,569 $ 6,168,712 $ 190,217 $ 444,946 $ 519,683 $ 499,614 $ 66,784 $ 1, 196,317 $ 1, 059,521 $ 17,277,078 $ 1, 106,411 $ 55,914,216

Net Cost/Benefit Public Benefits: $ 57,951,623 $ 13,148,729 $ 189,288 $ 429,266 $ 639,767 $ 481,920 $ 197,659 $ 1, 224,007 $ 1, 763,011 $ 18,984,510 $ 1, 262,656 $ 97,942,361 Public Costs & Incentives: $ 37,667,569 $ 6,168,712 $ 190,217 $ 444,946 $ 519,683 $ 499,614 $ 66,784 $ 1, 196,317 $ 1, 059,521 $ 17,277,078 $ 1, 106,411 $ 55,914,216 Net Benefits (Costs): $ 20,284,055 $ 6,980,017 $ (929) $ ( 15,680) $ 120,084 $ ( 17,694) $ 130,875 $ 27,689 $ 703,490 $ 1,707,432 $ 156,245 $ 42,028,144

Present Value of Public Benefits: $ 45,977,222 $ 10,470,177 $ 147,755 $ 335,278 $ 500,614 $ 376,295 $ 154,437 $ 955,361 $ 1,401,511 $ 14,845,123 $ 986,846 $ 77,706,419 Present Value of Incentives: $ 18,035,239 $ 3,008,270 $ 103,066 $ 206,555 $ 192,921 $ 246,004 $ - $ 660,979 $ 638,674 $ 9,499,369 $ 490, 362 $ -

Springsted Incorporated 1 Summary10 Cost-Benefit Analysis

Cost-Benefit Summary - 23-year analysis Per-capita impacts calculated at 50% of total average revenues and costs.

Tri-County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid-Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 102,430,836 $ 29,298,708 ------$ 4, 172,405 -- -- $ 143,555,301 Property Taxes: $ 16,218,996 $ 2,202,791 $ 446,828 $ 895,447 $ 996,142 $ 1, 270,242 $ 354,490 $ 3, 435,261 -- $ 45,479,388 $ 2, 548,534 $ - Income Taxes: $ 15,110,972 ------$ 44,740,589 Other Revenues: $ 25,820,681 $ 3,613,647 $ 3, 360 $ 133,179 $ 888,337 $ 102,878 $ 231,773 $ 38,586 $ 564,055 $ 8, 180,003 $ 1, 124,243 $ 97,145,585 Total Revenues: $ 159,581,486 $ 35,115,146 $ 450,188 $ 1, 028,626 $ 1, 884,479 $ 1, 373,120 $ 586,263 $ 3, 473,847 $ 4, 736,460 $ 53,659,391 $ 3, 672,777 $ 285,441,474

Costs Costs for Services: $ 45,993,974 $ 7,332,126 $ 147,491 $ 456,846 $ 842,241 $ 570,163 $ 206,009 $ 1, 080,656 $ 792,750 $ 15,827,536 $ 1, 478,034 $ 172,414,402 Incentives: $ 58,327,460 $ 9,771,965 $ 308,922 $ 619,081 $ 578,222 $ 737,326 $ - $ 1, 981,060 $ 2, 102,808 $ 28,470,925 $ 1, 469,699 $ - Total Costs: $ 104,321,434 $ 17,104,091 $ 456,412 $ 1, 075,928 $ 1, 420,463 $ 1, 307,489 $ 206,009 $ 3, 061,716 $ 2, 895,558 $ 44,298,461 $ 2, 947,732 $ 172,414,402

Net Cost/Benefit Public Benefits: $ 159,581,486 $ 35,115,146 $ 450,188 $ 1, 028,626 $ 1, 884,479 $ 1, 373,120 $ 586,263 $ 3, 473,847 $ 4, 736,460 $ 53,659,391 $ 3, 672,777 $ 285,441,474 Public Costs & Incentives: $ 104,321,434 $ 17,104,091 $ 456,412 $ 1, 075,928 $ 1, 420,463 $ 1, 307,489 $ 206,009 $ 3, 061,716 $ 2, 895,558 $ 44,298,461 $ 2, 947,732 $ 172,414,402 Net Benefits (Costs): $ 55,260,052 $ 18,011,055 $ (6,224) $ ( 47,302) $ 464,016 $ 65,631 $ 380,253 $ 412,131 $ 1,840,901 $ 9,360,930 $ 725,044 $ 113, 027,072

Present Value of Public Benefits: $ 98,175,433 $ 21,768,534 $ 290,196 $ 662,263 $ 1, 139,091 $ 835,088 $ 353,793 $ 2, 114,208 $ 2, 930,605 $ 32,694,987 $ 2, 224,914 $ 173,570,815 Present Value of Incentives: $ 36,624,373 $ 6,119,768 $ 199,773 $ 400,361 $ 373,936 $ 476,827 $ - $ 1, 281,167 $ 1, 309,978 $ 18,412,513 $ 950, 462 $ -

Springsted Incorporated 2 Summary23 Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101-2887 Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com

MEMORANDUM

TO: Heather Brown, Executive Director, Tax Increment Financing, EDCKC

FROM: Tom Denaway, Springsted Incorporated

DATE: November 6, 2015

SUBJECT: Supplemental analysis of Metro North Project

At the request of the TIF Commission we have prepared a supplemental cost-benefit analysis of the proposed Metro North development, to illustrate the impact of surplusing 20% of the PILOTS generated and collected within the TIF District, up to an annual maximum amount of $500,000. This memo summarizes the results of our analysis of the project including the newly proposed terms.

Updated Terms

The proposed change outlined in this analysis, is the City’s decision to surplus 20% of the PILOTs generated and collected within the TIF District, up to an annual maximum amount of $500,000, which shall be distributed to the property tax jurisdictions in the same manner and proportion as the most recent distribution by the collector to property tax jurisdictions. Due to the payment of surplus PILOTs the TIF District is anticipated to require the full 23- year term to satisfy the reimbursement to the Developer of eligible project costs. This is a longer period, than the 20- years that was previously anticipated. The other terms and assumptions used in this analysis remain unchanged from those listed in our report of September 9, 2015.

Assuming that the surplus PILOT payments are distributed to the property tax jurisdictions in the same manner and proportion as the most recent distribution by the collector to property tax jurisdictions, approximately 63% of these payments would accrue to the School District, with another 22% of these payments accruing to the City. The remaining 15% of the surplus PILOTs would be shared among the other entities with property tax levies.

A summary of the PILOT impacts in years 1-5, showing the ramp-up to the $500,000 cap, is shown in the table on the following page.

EDCKC Metro North – Supplemental Page 2

YEAR:12345 PILOT offered by developer: $ 86,211 $ 201,159 $ 402,318 $ 459,791 $ 500,000 Kansas City $ 18,845 $ 43,971 $ 87,941 $ 100,504 $ 109,293 Clay County $ 2,356 $ 5,497 $ 10,995 $ 12,565 $ 13,664 Clay County Senior Services $ 588 $ 1,372 $ 2,743 $ 3,135 $ 3,409 Clay County Health Dept $ 1,178 $ 2,749 $ 5,497 $ 6,283 $ 6,832 Tri‐County Mental Health Services $ 1,100 $ 2,567 $ 5,135 $ 5,868 $ 6,381 Develop. Disabilities Fund $ 1,403 $ 3,274 $ 6,547 $ 7,483 $ 8,137 Mid‐Continent Library $ 3,770 $ 8,796 $ 17,592 $ 20,105 $ 21,863 East Platte School District $ 54,175 $ 126,409 $ 252,818 $ 288,934 $ 314,201 Metro Community Colleges $ 2,797 $ 6,525 $ 13,051 $ 14,915 $ 16,219 State of Missouri $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ TOTAL PILOT: $ 86,211 $ 201,159 $ 402,318 $ 459,791 $ 500,000

Findings

When the surplus payments outlined above are added to the overall cost-benefit analysis, the results show improved impacts for each jurisdiction that levies a property tax. The most significant change involves the School District, which sees its 10-year negative impact turned into a positive, due to the surplus PILOTS received over this period. A comparison of the initial and amended impacts is shown below:

Full average costs; 10-Year Impacts

Net Impact Net Impact Taxing Authority (Initial): (Amended): City of Kansas City 12,785,300 13,583,025 Clay County 5,555,517 5,655,251 Clay County Senior Services (57,809) (32,926) Clay County Health Dept (143,487) (93,620) Tri-County Mental Health Services 135,440 182,016 Develop. Disabilities Fund (168,932) (109,540) Blind Pension Fund 139,268 139,268 Mid-Continent Library (309,576) (150,001) Kansas City Zoo District 598,134 598,134 East Platte School District (761,941) 1,531,400 Metro Community Colleges 41,739 160,124 State of Missouri 17,625,254 17,625,254

EDCKC Metro North – Supplemental Page 3

Over the course of the full 23-year life of the project, the changes are similar.

Full average costs; 23-Year Impacts

Net Impact Net Impact Taxing Authority (Initial): (Amended): City of Kansas City 32,085,803 32,516,690 Clay County 13,614,940 13,668,811 Clay County Senior Services (150,355) (91,379) Clay County Health Dept (370,969) (252,781) Tri-County Mental Health Services 510,112 535,270 Develop. Disabilities Fund (401,654) (369,574) Blind Pension Fund 406,017 406,017 Mid-Continent Library (629,939) (543,745) Kansas City Zoo District 1,515,401 1,515,401 East Platte School District 1,713,397 2,952,132 Metro Community Colleges 371,253 435,198 State of Missouri 37,758,254 37,758,254

Looking at the more realistic analysis which assumes that half of each entity’s costs are fixed, we see improved net impacts for most jurisdictions, consistent with the changes noted above. Under the updated terms all of the jurisdictions realize a positive net impact.

50% fixed costs; 10-Year Impacts

Net Impact Net Impact Taxing Authority (Initial): (Amended): City of Kansas City 20,284,055 21,081,780 Clay County 6,980,017 7,079,751 Clay County Senior Services (929) 23,955 Clay County Health Dept (15,680) 34,187 Tri-County Mental Health Services 120,084 166,660 Develop. Disabilities Fund (17,694) 41,698 Blind Pension Fund 130,875 130,875 Mid-Continent Library 27,689 187,264 Kansas City Zoo District 703,490 703,490 East Platte School District 1,707,432 4,000,773 Metro Community Colleges 156,245 274,629 State of Missouri 42,028,144 42,028,144

Measured over 23 years, the before-and-after impacts for each entity are as shown on the following page.

EDCKC Metro North – Supplemental Page 4

Full average costs; 23-Year Impacts

Net Impact Net Impact Taxing Authority (Initial): (Amended): City of Kansas City 55,260,052 55,690,939 Clay County 18,011,055 18,064,926 Clay County Senior Services (6,224) 52,752 Clay County Health Dept (47,302) 70,886 Tri-County Mental Health Services 464,016 489,174 Develop. Disabilities Fund 65,631 97,711 Blind Pension Fund 380,253 380,253 Mid-Continent Library 412,131 498,324 Kansas City Zoo District 1,840,901 1,840,901 East Platte School District 9,360,930 10,599,665 Metro Community Colleges 725,044 788,989 State of Missouri 113,027,072 113,027,072

Summaries of each jurisdiction’s impacts are shown in the pages which follow. We hope that this analysis of the amended project terms proves useful to stakeholders as they make their policy deliberations, and we stand ready to assist with any further clarifications that may be needed.

Cost-Benefit Analysis

Cost‐Benefit Summary ‐ 10‐year analysis Per‐capita impacts calculated at 100% of total average revenues and costs.

Tri‐County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid‐Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 38,579,211 $ 11,131,966 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 1,577,156 ‐‐ ‐‐ $ 54,568,032 Property Taxes: $ 5,793,244 $ 823,079 $ 187,962 $ 376,678 $ 351,817 $ 448,623 $ 122,481 $ 1,211,514 ‐‐ $ 16,343,203 $ 898,792 $ ‐ Income Taxes: $ 5,108,168 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 11,863,002 Other Revenues: $ 16,668,998 $ 2,245,326 $ 27,536 $ 155,044 $ 622,476 $ 125,985 $ 150,355 $ 184,559 $ 337,171 $ 7,575,954 $ 846,112 $ 63,022,653 Total Revenues: $ 66,149,621 $ 14,200,370 $ 215,498 $ 531,722 $ 974,293 $ 574,608 $ 272,836 $ 1,396,074 $ 1,914,327 $ 23,919,157 $ 1,744,904 $ 129,453,687

Costs Costs for Services: $ 29,798,055 $ 4,752,814 $ 116,413 $ 360,791 $ 545,186 $ 369,069 $ 133,568 $ 699,514 $ 513,345 $ 10,221,358 $ 956,738 $ 111,828,433 Incentives: $ 22,768,541 $ 3,792,305 $ 132,011 $ 264,550 $ 247,090 $ 315,079 $ ‐ $ 846,561 $ 802,849 $ 12,166,399 $ 628,042 $ ‐ Total Costs: $ 52,566,596 $ 8,545,119 $ 248,423 $ 625,342 $ 792,276 $ 684,149 $ 133,568 $ 1,546,074 $ 1,316,193 $ 22,387,757 $ 1,584,780 $ 111,828,433

Net Cost/Benefit Public Benefits: $ 66,149,621 $ 14,200,370 $ 215,498 $ 531,722 $ 974,293 $ 574,608 $ 272,836 $ 1,396,074 $ 1,914,327 $ 23,919,157 $ 1,744,904 $ 129,453,687 Public Costs & Incentives: $ 52,566,596 $ 8,545,119 $ 248,423 $ 625,342 $ 792,276 $ 684,149 $ 133,568 $ 1,546,074 $ 1,316,193 $ 22,387,757 $ 1,584,780 $ 111,828,433 Net Benefits (Costs): $ 13,583,025 $ 5,655,251 $ (32,926) $ (93,620) $ 182,016 $ (109,540) $ 139,268 $ (150,001) $ 598,134 $ 1,531,400 $ 160,124 $ 17,625,254

Present Value of Public Benefits: $ 52,400,816 $ 11,294,153 $ 167,954 $ 414,929 $ 762,471 $ 448,135 $ 213,458 $ 1,088,023 $ 1,520,217 $ 18,679,559 $ 1,363,353 $ 102,446,291 Present Value of Incentives: $ 18,035,239 $ 3,008,270 $ 103,066 $ 206,555 $ 192,921 $ 246,004 $ ‐ $ 660,979 $ 638,674 $ 9,499,369 $ 490,362 $ ‐

Springsted Incorporated 1 Summary10 Cost-Benefit Analysis

Cost‐Benefit Summary ‐ 23‐year analysis Per‐capita impacts calculated at 100% of total average revenues and costs.

Tri‐County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid‐Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 102,430,836 $ 29,298,708 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 4,172,405 ‐‐ ‐‐ $ 143,555,301 Property Taxes: $ 16,218,996 $ 2,202,791 $ 446,828 $ 895,447 $ 996,142 $ 1,270,242 $ 354,490 $ 3,435,261 ‐‐ $ 45,479,388 $ 2,548,534 $ ‐ Income Taxes: $ 15,110,972 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 44,740,589 Other Revenues: $ 50,858,941 $ 6,827,027 $ 65,696 $ 384,546 $ 1,906,204 $ 370,930 $ 463,545 $ 520,962 $ 1,031,305 $ 22,737,963 $ 2,577,722 $ 194,291,169 Total Revenues: $ 184,619,745 $ 38,328,526 $ 512,524 $ 1,279,993 $ 2,902,347 $ 1,641,171 $ 818,035 $ 3,956,223 $ 5,203,709 $ 68,217,351 $ 5,126,256 $ 382,587,059

Costs Costs for Services: $ 91,987,948 $ 14,664,252 $ 294,981 $ 913,693 $ 1,684,481 $ 1,140,327 $ 412,019 $ 2,161,312 $ 1,585,500 $ 31,655,073 $ 2,956,067 $ 344,828,805 Incentives: $ 60,115,107 $ 9,995,463 $ 308,922 $ 619,081 $ 682,595 $ 870,419 $ ‐ $ 2,338,656 $ 2,102,808 $ 33,610,146 $ 1,734,991 $ ‐ Total Costs: $ 152,103,055 $ 24,659,715 $ 603,903 $ 1,532,774 $ 2,367,077 $ 2,010,745 $ 412,019 $ 4,499,968 $ 3,688,308 $ 65,265,219 $ 4,691,058 $ 344,828,805

Net Cost/Benefit Public Benefits: $ 184,619,745 $ 38,328,526 $ 512,524 $ 1,279,993 $ 2,902,347 $ 1,641,171 $ 818,035 $ 3,956,223 $ 5,203,709 $ 68,217,351 $ 5,126,256 $ 382,587,059 Public Costs & Incentives: $ 152,103,055 $ 24,659,715 $ 603,903 $ 1,532,774 $ 2,367,077 $ 2,010,745 $ 412,019 $ 4,499,968 $ 3,688,308 $ 65,265,219 $ 4,691,058 $ 344,828,805 Net Benefits (Costs): $ 32,516,690 $ 13,668,811 $ (91,379) $ (252,781) $ 535,270 $ (369,574) $ 406,017 $ (543,745) $ 1,515,401 $ 2,952,132 $ 435,198 $ 37,758,254

Present Value of Public Benefits: $ 113,209,183 $ 23,697,730 $ 330,179 $ 823,090 $ 1,750,540 $ 997,347 $ 492,769 $ 2,407,678 $ 3,210,619 $ 41,476,956 $ 3,099,070 $ 231,822,249 Present Value of Incentives: $ 37,378,921 $ 6,214,104 $ 199,773 $ 400,361 $ 417,990 $ 533,002 $ ‐ $ 1,432,104 $ 1,309,978 $ 20,581,725 $ 1,062,438 $ ‐

Springsted Incorporated 2 Summary23 Cost-Benefit Analysis

Cost‐Benefit Summary ‐ 10‐year analysis Per‐capita impacts calculated at 50% of total average revenues and costs.

Tri‐County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid‐Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 38,579,211 $ 11,131,966 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 1,577,156 ‐‐ ‐‐ $ 54,568,032 Property Taxes: $ 5,793,244 $ 823,079 $ 187,962 $ 376,678 $ 351,817 $ 448,623 $ 122,481 $ 1,211,514 ‐‐ $ 16,343,203 $ 898,792 $ ‐ Income Taxes: $ 5,108,168 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 11,863,002 Other Revenues: $ 9,268,726 $ 1,293,419 $ 26,210 $ 102,456 $ 334,526 $ 92,689 $ 75,177 $ 172,067 $ 185,855 $ 4,934,648 $ 482,248 $ 31,511,326 Total Revenues: $ 58,749,349 $ 13,248,463 $ 214,172 $ 479,133 $ 686,343 $ 541,312 $ 197,659 $ 1,383,581 $ 1,763,011 $ 21,277,851 $ 1,381,041 $ 97,942,361

Costs Costs for Services: $ 14,899,027 $ 2,376,407 $ 58,206 $ 180,396 $ 272,593 $ 184,535 $ 66,784 $ 349,757 $ 256,672 $ 5,110,679 $ 478,369 $ 55,914,216 Incentives: $ 22,768,541 $ 3,792,305 $ 132,011 $ 264,550 $ 247,090 $ 315,079 $ ‐ $ 846,561 $ 802,849 $ 12,166,399 $ 628,042 $ ‐ Total Costs: $ 37,667,569 $ 6,168,712 $ 190,217 $ 444,946 $ 519,683 $ 499,614 $ 66,784 $ 1,196,317 $ 1,059,521 $ 17,277,078 $ 1,106,411 $ 55,914,216

Net Cost/Benefit Public Benefits: $ 58,749,349 $ 13,248,463 $ 214,172 $ 479,133 $ 686,343 $ 541,312 $ 197,659 $ 1,383,581 $ 1,763,011 $ 21,277,851 $ 1,381,041 $ 97,942,361 Public Costs & Incentives: $ 37,667,569 $ 6,168,712 $ 190,217 $ 444,946 $ 519,683 $ 499,614 $ 66,784 $ 1,196,317 $ 1,059,521 $ 17,277,078 $ 1,106,411 $ 55,914,216 Net Benefits (Costs): $ 21,081,780 $ 7,079,751 $ 23,955 $ 34,187 $ 166,660 $ 41,698 $ 130,875 $ 187,264 $ 703,490 $ 4,000,773 $ 274,629 $ 42,028,144

Present Value of Public Benefits: $ 46,591,427 $ 10,546,967 $ 166,913 $ 373,673 $ 536,476 $ 422,023 $ 154,437 $ 1,078,225 $ 1,401,511 $ 16,610,864 $ 1,077,997 $ 77,706,419 Present Value of Incentives: $ 18,035,239 $ 3,008,270 $ 103,066 $ 206,555 $ 192,921 $ 246,004 $ ‐ $ 660,979 $ 638,674 $ 9,499,369 $ 490,362 $ ‐

Springsted Incorporated 1 Summary10 Cost-Benefit Analysis

Cost‐Benefit Summary ‐ 23‐year analysis Per‐capita impacts calculated at 50% of total average revenues and costs.

Tri‐County Metro City of Kansas Clay County Clay County Develop. Blind Pension Mid‐Continent Kansas East Platte Benefits Clay County Mental Health Community State of Missouri City Senior Services Health Dept Disabilities Fund Fund Library City Zoo District School District Services Colleges Sales Taxes: $ 102,430,836 $ 29,298,708 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 4,172,405 ‐‐ ‐‐ $ 143,555,301 Property Taxes: $ 16,218,996 $ 2,202,791 $ 446,828 $ 895,447 $ 996,142 $ 1,270,242 $ 354,490 $ 3,435,261 ‐‐ $ 45,479,388 $ 2,548,534 $ ‐ Income Taxes: $ 15,110,972 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ $ 44,740,589 Other Revenues: $ 28,039,216 $ 3,891,015 $ 62,336 $ 251,367 $ 1,017,868 $ 268,051 $ 231,773 $ 482,376 $ 564,055 $ 14,557,960 $ 1,453,479 $ 97,145,585 Total Revenues: $ 161,800,020 $ 35,392,515 $ 509,164 $ 1,146,814 $ 2,014,010 $ 1,538,293 $ 586,263 $ 3,917,637 $ 4,736,460 $ 60,037,348 $ 4,002,013 $ 285,441,474

Costs Costs for Services: $ 45,993,974 $ 7,332,126 $ 147,491 $ 456,846 $ 842,241 $ 570,163 $ 206,009 $ 1,080,656 $ 792,750 $ 15,827,536 $ 1,478,034 $ 172,414,402 Incentives: $ 60,115,107 $ 9,995,463 $ 308,922 $ 619,081 $ 682,595 $ 870,419 $ ‐ $ 2,338,656 $ 2,102,808 $ 33,610,146 $ 1,734,991 $ ‐ Total Costs: $ 106,109,081 $ 17,327,589 $ 456,412 $ 1,075,928 $ 1,524,836 $ 1,440,582 $ 206,009 $ 3,419,312 $ 2,895,558 $ 49,437,683 $ 3,213,024 $ 172,414,402

Net Cost/Benefit Public Benefits: $ 161,800,020 $ 35,392,515 $ 509,164 $ 1,146,814 $ 2,014,010 $ 1,538,293 $ 586,263 $ 3,917,637 $ 4,736,460 $ 60,037,348 $ 4,002,013 $ 285,441,474 Public Costs & Incentives: $ 106,109,081 $ 17,327,589 $ 456,412 $ 1,075,928 $ 1,524,836 $ 1,440,582 $ 206,009 $ 3,419,312 $ 2,895,558 $ 49,437,683 $ 3,213,024 $ 172,414,402 Net Benefits (Costs): $ 55,690,939 $ 18,064,926 $ 52,752 $ 70,886 $ 489,174 $ 97,711 $ 380,253 $ 498,324 $ 1,840,901 $ 10,599,665 $ 788,989 $ 113,027,072

Present Value of Public Benefits: $ 99,526,923 $ 21,937,500 $ 328,036 $ 738,094 $ 1,217,997 $ 935,705 $ 353,793 $ 2,384,555 $ 2,930,605 $ 36,580,311 $ 2,425,480 $ 173,570,815 Present Value of Incentives: $ 37,378,921 $ 6,214,104 $ 199,773 $ 400,361 $ 417,990 $ 533,002 $ ‐ $ 1,432,104 $ 1,309,978 $ 20,581,725 $ 1,062,438 $ ‐

Springsted Incorporated 2 Summary23

REVISED: But-For Determination Report

Economic Development Corporation

Kansas City, Missouri

Metro North Crossing Redevelopment Project

November 6, 2015

Table of Contents

1 PURPOSE ...... 1

2 EXECUTIVE SUMMARY ...... 2

3 THE PROJECTS...... 3

4 REDEVELOPMENT COSTS ...... 4

5 ASSISTANCE REQUEST ...... 9

6 RETURN ANALYSIS ...... 11

7 BUT FOR CONCLUSION ...... 16

Mission Statement

Springsted provides high quality, independent financial and management advisory services to public and non-profit organizations, and works with them in the long-term process of building their communities on a fiscally sound and well-managed basis.

Purpose 1

1. Purpose The report that follows is pursuant to Missouri Statutes 99.800 et seq. relative to a determination that the proposed Redevelopment Project would not reasonably be anticipated to be developed without adoption of the TIF Plan.

We have approached this determination based on the proposed Projects’ plans regarding redevelopment project costs, outcomes, financing sources, and timing to develop a measure of the Developer’s expected return when compared to the amount of risk. If a project is owned and operated as an investment, a measure of return is calculated considering the time value of money, and involves an assumed sale of the property at a price appropriate in the market place. The final determination is based on whether or not a potential return is reasonable without the requested subsidy, within the current marketplace and at the present time.

The Developer is requesting the following assistance for the project:  Tax Increment Financing (“TIF”); and  A Community Improvement District (“CID”) will be created that will impose a one percent (1%) sales tax on all taxable retail sales within the redevelopment project area.

The Developer is requesting TIF assistance which anticipates the following revenues will be captured and re-directed to pay for certain eligible reimbursable redevelopment project costs associated with the project: 100% of incremental PILOT revenue along with 50% of growth in EATS (individual & corporate earnings tax, sales tax, use tax, transient food and beverage tax, and utility tax).

Additionally, 50% of the one percent (1% ) CID sales tax revenues will be captured and re-directed under TIF to also pay for certain eligible reimbursable redevelopment project costs.

The other 50% of the CID sales tax revenues will be utilized to pay for eligible operating expenses.

This but-for determination report has been revised to illustrate the impact on the rate of return if 20% of the PILOTs generated and collected, up to an annual maximum amount of $500,000, are declared surplus and distributed to the property tax paying jurisdictions in the same manner as the most recent distribution by the Collector to property tax jurisdictions.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Executive Summary 2

2. Executive Summary

The calculated internal rates of return with and without the subsidy request, based on the project costs and operating revenues of the proposed project are shown in the tables below. Determining if a project would occur without subsidy requires the testing of various assumptions which have a material effect on the calculated unleveraged internal rate of return. We have tested the sensitivity of the return without assistance by varying the cost and the revenue assumptions, each independently and then collectively. The reason for testing sensitivity is to illustrate the magnitude with which project assumptions would have to change in order for the project to be considered feasible without assistance. Table A below, details the significant findings of the sensitivity analysis:

Table A

Without Assistance Change Necessary to Rate of Return Sensitivity Analysis be Feasible without assistance Decreased Costs 41% Decrease 7.99% Increased Revenue 69% Increase 7.94% Combined Cost and 26% Decreased Costs 8.07% Revenue Changes 26% Increase Rev

The table above indicates the magnitude at which project assumptions would have to change for the project to have a feasible rate of return without assistance. Based on the Korpacz/Price Waterhouse Cooper Real Estate Investor Survey the current range of unleveraged market returns for a project of this nature is 6.00% to 10.00%; with an average of 7.90% which we used as our feasibility benchmark. Absent the changes outlined above, the project would not attract a return sufficient enough to exceed the Developer’s threshold for investment and would not likely be completed through private enterprise alone.

Table B, below, illustrates the Developer’s rates of return with and without assistance:

Table B

Base Developer Without With Assistance Pro Forma Assistance Request

Unleveraged -0.15% 9.06% Leveraged N/A 11.60%

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

The Project 3

3. The Projects The Developer is proposing the redevelopment of the former Metro North Mall site which is situated on approximately 91.60 acres generally located at 88th Street to the north, Wyandotte Street to the east, Barry Road to the south and US Highway 169/North Summit Avenue to the west all in Kansas City, Clay County, Missouri. The Metro North Crossing redevelopment project contemplates a mixed-use concept that will include a substantially-sized courtyard/gathering area for community events, approximately 826,175 square feet of retail space, approximately 60,000 square feet of office space, 150 units of multi-family residential housing, a 100-room limited service hotel, and approximately 4,750 parking spaces along with all necessary public improvements and infrastructure.

The redevelopment of the site will include partial demolition of approximately 896,874 square feet of the existing Metro North Mall site, with approximately 221,175 square feet of existing retail space to remain with some façade and parking improvements contemplated, in addition to approximately 912,500 square feet of new construction that will provide for retail, multi-family residential and hotel uses. It is anticipated that demolition will begin in the fall of 2015 with occupancy and opening of the retail space to begin in the spring of 2017. It is anticipated total build-out and occupancy of the entire site will take five (5) to seven (7) years.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Redevelopment Costs 4

4. Redevelopment Costs The total anticipated redevelopment costs are detailed in below in Table C. Table C

Project Costs Total Project Costs Private Costs TIF Reimbursable Costs Site Acquisition $6,000,000 $3,000,000 $3,000,000 Site Work Landscaping/Signage 23,940,000 23,940,000 Demolition/Renovation 4,500,000 4,500,000 Survey/Soils 120,000 120,000 Architectural/Engineering/Professional 1,600,000 1,600,000 Appraisals 50,000 50,000 Hard Construction - Developer 70,550,000 38,802,500 31,747,500 Tenant Improvement Cost - Developer 10,500,000 10,500,000 Hard Construction - Third Party 37,775,000 37,775,000 General Conditions 1,510,500 981,825 528,675 (including TIF/EDC fees) Constructions Interest 15,500,000 10,075,000 5,425,000 Financing Costs 2,438,855 2,438,855 Construction Management 360,000 360,000 Development Fee 3,000,000 3,000,000 Taxes During Construction 600,000 600,000 Permit/Inspection 250,000 250,000 Preliminary Studies 50,000 50,000 Professional Fees 750,000 750,000 Commission (Sales) 618,470 618,470 Commission (Leasing) 1,557,327 1,557,327 Off-Site Road Improvements 1,000,000 1,000,000 Contingency 3,000,000 1,950,000 1,050,000 Total Project Costs $185,670,152 $114,358,977 $71,311,175 Percentages 100% 61.59% 38.41% TIF Reimbursement Carry (6%) $72,649,205 - $72,649,205 Grand Total $258,319,357 $114,358,977 $143,960,380

Land Acquisition The Developer’s site acquisition costs are $6,000,000, which is 3.23% of the total project costs. The only property the Developer does not own within the redevelopment project area is the approximately 15.14 acre site occupied by the Macy’s department store, which is owned by the May Department Stores Co.

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Redevelopment Costs 5

The Developer acquired all other property within the redevelopment project area in April 2015, including property on the south side of the redevelopment project area that that is ground leased to the existing restaurants, which total approximately 76.46 acres. The acquisition cost equates to approximately $78,472 per acre. The Developer anticipates requesting reimbursable costs associated with site acquisition in the amount of $3,000,000.

Construction Costs Table D below, includes project costs that can be categorized as construction, or hard costs associated with the project which include demolition, construction, site work and road improvements.

Table D

% of TIF Total Project Total Developer Hard Costs Reimbursable Costs Project Costs Costs Costs Site Work/ Landscaping/Signage $23,940,000 12.89% $0 $23,940,000 Demolition/Renovation 4,500,000 2.42% 4,500,000 Hard Construction - Developer 70,550,000 38.00% 38,802,500 31,747,500 Tenant Improvement Cost - Developer 10,500,000 5.66% 10,500,000 Hard Construction – Third-Party 37,775,000 20.35% 37,775,000 Off-Site Road Improvements 1,000,000 0.54% 1,000,000 Total Hard Costs $148,265,000 79.85% $87,077,500 $61,187,500

To redevelop the former Metro North Mall site, it is anticipated that the hard costs are approximately 79.85% or $148,265,000 of the total project costs. The Developer is seeking TIF reimbursable costs associated with site work/landscaping/signage, demolition/renovation, hard construction costs, and off-site road improvements the Developer anticipates undertaking to redevelop the site, which total approximately $61,187,500. The Developer also included hard construction costs of approximately $37,775,000, which are anticipated to be undertaken by third-parties. Depending on the individual pad site developments and/or tenants, the Developer may end up undertaking some portion of these costs. However, for purposes of this pro forma these costs are anticipated to be undertaken by third-parties following the Developer’s sale of pad-ready development sites.

The Developer intends to undertake building construction and tenant improvements for approximately 250,000 square feet of the retail, an approximately 40,00 square foot cinema, an approximately 60,000 square foot

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Redevelopment Costs 6

office space, a 150-unit multi-family development and façade improvements to the existing 200,000 square foot Macy’s site. It is anticipated third-parties will develop the approximately 315,000 square feet of the retail space and the 100- room limited service hotel. It is not anticipated building construction or tenant improvements costs will be incurred as part of the redevelopment of the site for the existing 21,175 square feet of restaurant space.

To analyze the projected vertical construction line-item assumptions for the various buildings types to be constructed on the site, we compared the construction cost estimates to RSMeans, which provides construction cost estimates for the proposed type of buildings in the Kansas City metropolitan area. The RSMeans data provides a range of cost estimates for the construction of vertical building improvements.

For the office component, the Developer has assumed a per square foot cost estimate of $150.00 per square foot for the shell construction. The RSMeans estimate for office building construction costs for a similar scale building is approximately $142.70 to $154.34 per square foot.

The Redevelopment Project Area has retail space that ranges from 20,000 to 120,000 square foot buildings to be constructed on various pad sites. For the in- line junior retail space, which totals approximately 120,000 square feet, the Developer is estimating $65.00 per square foot for the shell building construction. The RSMeans estimate for shell building construction ranges from $85.18 per square foot to $93.16 per square. For the smaller retail buildings being constructed, the Developer’s is assuming $125.00 per square foot construction cost. The RSMeans estimate for shell building construction ranges from $107.64 per square foot to $134.84 per square.

For the approximately 40,000 square foot cinema, the Developer has assumed a $150.00 per square foot cost for the shell construction. The RSMeans estimate for the building construction cost for the cinema is approximately $132.88 to143.52 per square foot.

As part of the mixed-use development, the Developer anticipates constructing an estimated 187,500 square foot 150-unit multi-family development. The Developer has estimated a per square foot cost of $120.00 for construction of the building shell. The RSMeans estimate for a similar scale multi-family building is approximately $125.84 to $137.58 per square foot.

Overall, the Developer’s estimated costs per square foot for the various uses on the site appear to be reasonable. The Developer’s construction cost estimates shown above for the in-line junior retail and multi-family appear to be slightly below the low range of the construction cost estimates, while the cinema shell construction is slightly above the high range of construction cost estimates. The

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Redevelopment Costs 7

construction cost estimates provided by the Developer are based upon the Developer’s previous development experience and consultation with professional engineers; finalized construction drawings may modify the above estimated construction costs per square foot for shell building construction.

The construction cost category is a segment where project costs savings could have a positive effect on the rate of return realized by the Developer, while higher than estimated costs would have the converse effect. In the return analysis section of the report, we discuss the sensitivity of the rate of return to changes in the project costs, and the effect on the return without assistance of a decrease in project costs.

Soft Costs For purposes of this review, certain project costs have been included in the soft cost category, which are provided in detailed in Table E.

Table E

% of Total TIF Total Developer Soft Costs Project Reimbursable Project Costs Costs Costs Costs Survey/Soils $120,000 0.06% $0 $120,000 Architectural/Engineering/Professional 1,600,000 0.86% 1,600,000 Appraisals 50,000 0.03% 50,000 General Conditions 1,510,500 0.81% 981,825 528,675 (including TIF/EDC fees) Constructions Interest 15,500,000 8.35% 10,075,000 5,425,000 Financing Costs 2,438,855 1.31% 2,438,855 Construction Management 360,000 0.19% 360,000 Development Fee 3,000,000 1.62% 3,000,000 Taxes During Construction 600,000 0.32% 600,000 Permit/Inspection 250,000 0.13% 250,000 Preliminary Studies 50,000 0.03% 50,000 Professional Fees 750,000 0.40% 750,000 Commission (Sales) 618,470 0.33% 618,470 Commission (Leasing) 1,557,327 0.84% 1,557,327 Contingency 3,000,000 1.62% 1,950,000 1,050,000 Total Soft Costs $31,405,152 16.91% $24,281,477 $7,123,675

The total amount of the soft costs associated with the development equates to approximately 16.91% of the total project costs or $31,405,152. The Developer anticipates requesting reimbursement for approximately $7,123,675 of the soft cost line items which include costs associated with survey/soils, general

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Redevelopment Costs 8

conditions (including TIF/EDC fees), construction interest, and contingency for the project.

Of the soft costs, the largest percentage of the total project costs is the construction interest which is 8.35%. Line items just under 2% of the total project costs include the contingency and development fee costs which are approximately 1.62% and the financing costs which equates to 1.31%. The majority of the other line items categorized as soft costs are under 1% of the total project costs, these line items and the approximate percentage of the total project costs are shown above in Table E.

In the “Return Analysis” section of the report we discuss the sensitivity of the rate of return to changes in the project costs, and the effect on the return of a decrease in project costs.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Assistance Request 9

5. Assistance Request The Developer is requesting assistance for the project in the form of TIF and a one percent (1%) CID sales tax on all taxable retail sales within the redevelopment project area.

The Developer is seeking TIF assistance that anticipates the following revenues will be captured and re-directed to pay for certain eligible reimbursable redevelopment project costs associated with the project: 100% of incremental PILOT revenue along with 50% of growth in EATS (individual & corporate earnings tax, sales tax, use tax, transient food and beverage tax, and utility tax). Additionally, 50% of the one percent (1%) CID sales tax revenues will be captured and re-directed under TIF to also pay for certain reimbursable redevelopment project costs.

The other 50% of the CID sale tax revenues, not captured as TIF, will be utilized to pay for eligible operating expenses associated with the project.

This but-for report has been revised to reflect that 20% of the PILOTS will be declared surplus, up to an annual maximum amount of $500,000, will be distributed to the property tax paying jurisdictions in the same manner and proportion as the most recent distribution by the Collector to the property tax paying jurisdictions.

It is projected that the surplus PILOTs will reach the $500,000 cap in the 5th year TIF revenues are authorized. The gross amount of revenue captured by the PILOTs over the 23-year life of the TIF District is $10,649,479, which has a net present value of $5,381,490 based on a 6% interest rate.

The requested TIF assistance will be on a pay-as-you-go basis with the Developer initially funding all redevelopment project costs and receiving reimbursement for eligible redevelopment project costs as the TIF and CID revenues are captured and re-directed. The Developer has projected the statutorily available revenues captured and re-directed under TIF, which include the PILOTS, EATS and CID sales tax revenues that are anticipated to be generated over the lifetime of the TIF redevelopment project area are approximately $143,960,380; after the application of the proposed PILOTs payment.

The Developer is seeking reimbursement for certain eligible redevelopment project costs in the amount of $71,311,175 along with interest carrying costs in an estimated amount of $72,649,205 for total reimbursable project costs of approximately $143,960,380. However, when calculating the net present value of the 23-year TIF revenue stream the NPV at a 6% interest rate is $70,564,733, which is less than the reimbursable project cost amount, so the Developer may

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Assistance Request 10

not be fully reimbursed their eligible costs over the lifetime of the District. As a result, the development pro forma anticipates the reimbursable expenses and eligible carrying costs will require the entirety of the 23-year period.

The Developer indicated in the budget that a portion of the project hard construction costs are anticipated to be undertaken by third-party developers, which is estimated to be $37,775,000. Therefore, the financing of project costs for the redevelopment of the site being undertaken by the Developer are approximately $147,895,152, which will be funded through a combination of private debt and equity. The Developer has indicated that the private equity portion will account for 25% or $36,973,788 of the total project costs, with 75% or $110,921,364 being financed through private debt. The Developer projected private financing terms of 6.0% interest over a term of 25-years. The Developer will be responsible for initially privately financing the $71,311,175 of redevelopment project costs the Developer is seeking to be reimbursed with statutorily available TIF revenues.

The preliminary financing plan for the redevelopment project, which this review is based on, is shown in Table F below.

Table F

Project Financing Amount Equity $36,973,788 Private Debt $110,921,364 Third-Party Debt/Equity $37,775,000 Total Sources $185,670,152

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Return Analysis 11

6. Return Analysis Utilizing the operating pro forma prepared by the Developer we evaluated the need for assistance for the development scenario by comparing the potential return with and without assistance. The Developer provided a 10-year operating pro forma for the development, which included the build-out, and operating revenue and expense assumptions. The Developer demonstrated the potential return through a leveraged internal rate of return (IRR) calculation, to illustrate the potential return with and without assistance. The return realized by the Developer is a result of the assumptions used in the creation of the operating pro forma; therefore, a number of steps must be performed to analyze the reasonableness of the assumptions used.

Utilizing information prepared by the Developer, we prepared an additional IRR analysis to illustrate the rate of return on an unleveraged basis. In preparing the unleveraged analysis, certain assumptions were made in consultation with the Developer regarding the rate at which private development costs would be incurred. The assumptions used for preparing the unleveraged analysis were 30% of the costs would be incurred the first year, 40% in the second year, and the remaining 30% would be incurred in the third year.

The first step in analyzing the return to the Developer is to determine if the costs presented are reasonable. We have discussed a portion of the costs above and have commented on the mechanics whereby cost savings on the private side could occur. If cost savings for the Developer’s share occur absent any other changes, the Developer would realize a greater return than projected. In the sensitivity analysis below, we examine the impact of cost savings on the projected rate of return without assistance.

The second step in calculating the return to the Developer is to determine if the operating revenues and expenses of the proposed development are reasonable.

. The Developer’s operating pro forma included the following lease rate assumptions: . An average lease rate of $16.68 per sq. ft. for the retail space; . A full service lease rate of $23 per sq. ft. for the office space; and . An average lease rate of $1,400 per unit for the multi- family residential. The Developer is assuming a vacancy rate of 7%.

. The Developer anticipates total revenues stabilizing in year 6 and increasing 1.5% annually.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Return Analysis 12

. The Developer also anticipates selling several pad sites anticipating between $3.00 and $16.00 per square foot, depending on the pad site. The Developer included in the pro forma total land sale proceeds estimated at $10,307,832. . The Developer has projected annual operating expenses, including taxes, which are equivalent to approximately 45% of rental income for the apartment component. . For the retail portion, the Developer has projected that all annual operating expenses will be passed along to the tenants on a triple-net basis, except for a 4% management fee. . The Developer has assumed operating expenses will increase at a rate of 1% annually upon stabilization.

Third-party market information was reviewed to evaluate the projected lease rate, vacancy and inflations assumptions prepared by the Developer. Per the third-party market information reviewed, the average retail lease rate for the Kansas City market for community/neighborhood retail is $12-$15 per square foot. Office lease rates for the Kansas City market area for suburban Class A space are $21.80 and Class B space are $17.50. The suburban multi-family Class A rents are $1000 per unit and Class B rents are $700 per unit. Based on the information provided in the Developer’s operating assumptions outlined above, the assumptions for the various uses and intended lease rates appear to be reasonable.

In the sensitivity analysis we examine the impact of increased operating revenues on the projected rate of return without assistance.

The calculation of an internal rate of return requires the assumption of a hypothetical sale of the asset in the final year of the operating pro forma. The inclusion of this hypothetical sale is used purely for purposes of evaluating the return on the Developer’s investment. The determination of the potential market value of the project, through a hypothetical sale, is necessary as it allows for the inclusion of the value of the asset into the rate of return calculation. The calculation of an IRR without the hypothetical sale would result in an understated return, as the return would not be taking into account the value of the real estate asset. The use of a hypothetical sale assumption is not indicative of the Developer’s intention to sell the development in the final year.

The third step in analyzing the return to the Developer is to determine if the assumptions for the hypothetical sale of the asset are reasonable. A critical assumption when valuing the asset at the time of the hypothetical sale is the capitalization rate. The available net operating income divided by the capitalization rate results in the assumed fair market value of the asset. The Developer has used a capitalization rate of 8% for the project to calculate the hypothetical sale value. In reviewing historical cap rate trends for mixed-use developments, we feel 8% is a reasonable assumption.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Return Analysis 13

The unleveraged IRR calculation was prepared in order to compare the potential return to the Developer based on the Korpacz/Price Waterhouse Cooper Real Estate Investor Survey, Second Quarter 2015, which provides a market comparison on which project feasibility can be measured.

Table G below, shows the Developer’s base pro forma rate of return without assistance and with assistance on an unleveraged and leveraged basis.

Table G

Base Developer Unleveraged Leveraged Pro Forma IRR IRR Without Assistance -0.15% N/A With TIF Assistance 9.06% 11.60%

To evaluate the rate of return a project of this nature would require to be considered “feasible” we consulted the Korpacz/Price Waterhouse Cooper Real Estate Investor Survey prepared for the second quarter of 2015. This survey provides a resource for comparing the Developer’s rate of return to a market benchmark to help determine feasibility. According to the developers surveyed, the typical unleveraged market return necessary for them to pursue a project of this nature falls in a range from 6.00% to 10.00%; with an average return of 7.90%. 

In order to answer the question “is the development likely to occur without public assistance” we analyzed the without incentive scenarios, using the unleveraged pro forma without assistance as the basis of the assumption. We performed a sensitivity analysis to understand the magnitude at which project costs would have to decrease, or conversely project revenues would have to increase, for the project to be considered feasible. This analysis indicates how much project assumptions would have to change for the project to be feasible without assistance. For this sensitivity analysis we are using the average market return from the Korpacz Survey of 7.90% as benchmark for a feasible project.

To understand the impact of the project cost assumptions, we have performed a cost sensitivity analysis to determine the rate at which costs would have to be reduced for the project to be feasible without assistance. Table H illustrates the development would need to realize a 41% reduction in project costs in order to realize a return comparable to the Korpacz Survey’s average return of 7.90% without assistance. Given a 41% reduction in costs the project would have a rate of return of 7.99%.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

Return Analysis 14

Table H

Reduction Rate of Return Project in Project without Costs Costs assistance Sensitivity 41% 7.99%

To understand the impact of increased operating income and pad sale revenue, we have performed a sensitivity analysis to determine the rate at which project revenue would have to be increased for the project to be feasible without assistance. Table I illustrates the development would need to realize a 69% increase in revenue in order to realize a return comparable to the Korpacz Survey’s average return of 7.90% without assistance. Given a 69% increase in operating income the project would have a rate of return of 7.94% which falls into the reasonable range.

Table I

Increase Rate of Return In Project without Project Revenues assistance Revenue 69% 7.94%

As a final step in the sensitivity analysis, and to understand the impact of a combined change in project costs and revenue, we have performed a sensitivity analysis to determine the rate at which these areas would have to change for the project to realize a return comparable to the Korpacz Survey’s average return of 7.90% without assistance. Table J illustrates the development would need to realize both a 26% decrease in project costs and a 26% increase in revenue for the project to realize a return of 8.07% which falls into the reasonable range.

Table J

Reduction Rate of Return Project Increase in Project without Cost & in Revenues Revenue Costs assistance Rate 26% 26% 8.07% Sensitivity

The three tables above (Tables H, I, and J) indicate the magnitude, at which project assumptions would have to change for the project to have a feasible rate

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Return Analysis 15

of return, which we believe lies at approximately 7.90% for the proposed project. Absent changes to the costs and revenues indicated above, the project would not have a sufficient enough return to draw market investment. Only by assuming either an increase in project revenues, decreases in project costs, or a combined change of the two does the return increase to a feasible level without public assistance.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

“But For” Conclusion 16

7. “But For” Conclusion The Developer is proposing the redevelopment of the former Metro North Mall site which is situated on approximately 91.60 acres. The Metro North Crossing redevelopment project contemplates a mixed-use concept that will include a substantially-sized courtyard/gathering area for community events, approximately 826,175 square feet of retail space, approximately 60,000 square feet of office space, 150-units of multi-family residential housing, a 100-room limited service hotel, and approximately 4,750 parking spaces along with all necessary public improvements and infrastructure.

The Developer will bear all the risk until project completion and permanent financing is in place, and continued operating risk thereafter. This level of risk demands a positive return with a range between 6.00% and 10.00% based on the Korpacz Survey, with an average of 7.90%.

To assist with further illustrating the impact of the proposed assistance, we felt it would be appropriate to calculate the Internal Rate of Return on a leverage basis. Without assistance, the Developer would realize a leveraged rate of return that is not calculable and with assistance they would realize a return of 11.60%.

A Blight Study prepared by Belke Appraisal & Consulting Services, Inc. dated June 1, 2015 and an affidavit signed by the Developer states that the redevelopment area is blighted and has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of tax increment financing. Based upon the Blight Study, the Developer’s affidavit, and upon our analysis, we conclude that the proposed project would not occur on this site at this time without a public subsidy.

Kansas City, Missouri Economic Development Corporation Metro North Crossing Redevelopment Project “But For” Determination Report

BLIGHT ANALYSIS

N

FOR THE PROPOSED METRO NORTH CROSSING REDEVELOPMENT AREA NORTHEAST QUADRANT US-169 & BARRY ROAD KANSAS CITY, MISSOURI

PREPARED FOR: EDC OF KANSAS CITY, MISSOURI

EFFECTIVE DATE: JUNE 1, 2015 RECORD NO. 1574

BELKE APPRAISAL & CONSULTING SERVICES, INC. Kansas City, Missouri

Belke Appraisal & Consulting Services, Inc.

REAL ESTATE ANALYSIS & VALUATION SCOTT J. BELKE, MAI PRESIDENT

June 4, 2015

Economic Development Corporation of Kansas City Ms. Heather Brown TIF Commission Executive Director 1100 Walnut, Suite 1700 Kansas City, Missouri 64106

RE: Blight Analyses Proposed Metro North Crossing Redevelopment Area NEQ of US 169 Highway and NW Barry Road Kansas City, Missouri 64155

Dear Heather,

Per our agreement dated May 19, 2015, I am pleased to herewith submit my blight analysis for the proposed Metro North Crossing Redevelopment Area to be located in the northeast quadrant of US Highway 169 and NW Barry Road in Kansas City, Missouri and composed of the following eight Clay County Tax Parcels as identified below:

ClayCo Tax Parcel No. Address 13-216-00-04-001.00 403 NW Barry Road 13-216-00-04-002.00 401 NW Barry Road 13-216-00-04-003.00 400 NW Barry Road 13-216-00-04-004.00 400 NW Barry Road 13-216-00-04-005.00 402 NW Barry Road 13-313-00-05-001.00 400 NW Barry Road 13-313-00-05-004.00 450 NW Barry Road 13-313-00-07-002.00 150 NW Barry Road

The proposed redevelopment area encompasses 1,260,959 gross square feet of building improvements and approximately 6,667 surface parking spaces situated on 82.15 acres of land zoned B3-2, Community Business District. A careful inspection of the property was made on several occasions during May and June 2015. The effective date of this study is June 1, 2015.

After the foregoing inspection and after a careful study of all pertinent factors, it is my considered opinion that the proposed redevelopment area as a whole qualifies as a “blighted area” according to the definition provided in the Missouri Revised Statutes (Section 99.805(1)) and that four of the eight tax parcels within the proposed redevelopment area are individually blighted, reflecting 73% of the land area (2,617,085 of 3,578,454 square feet) and 82% of the improvement area (1,037,995 of 1,260,959 square feet). However, it should be noted that the

CELEBRATING 30 YEARS SERVING KANSAS CITY! 3100 NW 57TH STREET • KANSAS CITY, MISSOURI • 64151 • 816.741.6565 P • 816.741.1377 F Ms. Brown June 4, 2015 Page 2

Macy’s store and three small restaurants that are not current blighted clearly sustain the burden of the adjoining blight caused by the demise, closure, and uncertainty surrounding the vast mall complex.

The main feature of the proposed redevelopment area is the closed Metro North Mall (1,037,995 square feet) and an operating Macy’s Department Store (202,323 square feet). Also include are three outpads containing Olive Garden, Red Lobster, and McDonald’s restaurants. The mall was built between 1973 and 1976 and the weight-average age of the improvements is now 39 years. The overall Metro North Mall property contains 7,731 surface parking spaces of which 6,667 spaces are included in the proposed redevelopment area.

Montgomery Ward (east anchor and automotive) closed in 2001. MC Sporting Goods occupied a portion of the lower level Montgomery Ward space until closing in 2009. Dillard’s (north anchor) converted to a clearance center in 2007 after a new store was opened at Zona Rosa but subsequently closed their clearance center later in 2008. JCPenney closed in mid-2008 and opened smaller stores to the east in Shoal Creek and to the west at Tiffany Market Center. Due to new Northland retailing competition and the demise of the anchor tenants the small shop (mall) tenancy began to dwindle. From a peak of 150 stores tenancy dwindled to 2 stores before the mall (concourse and small shops) was finally closed on April 15, 2014.

On June 20, 2010 the city council approved the Metro North Mall General Development Plan by Ordinance No. 100283 for a Planned Industrial Expansion Authority (PIEA) of Kansas City, Missouri Plan Area encompassing the current proposed redevelopment area plus the mall areas to the north of Metro North Mall Drive (theater and overflow parking) and less the Olive Garden and Red Lobster sit-down restaurants and the McDonald’s quick-serve restaurant. The city council cites the following in the previously approved ordinance:

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY: That the Council finds the Metro North Mall PIEA Planning Area, which area contains approximately 100 acres generally bounded by N.W. Barry Road on the south, U.S. Highway 169 on the west, N.W. 88th Street on the north and N. Baltimore Avenue and N. Wyandotte Avenue on the east, and is more specifically described by metes and bounds as follows: Tracts 1, 2, 3, 4, 5, 6 and 8, METRO NORTH, in Kansas City, Clay County, Missouri, as is shown on the recorded plat thereof to be a blighted area as defined in Section 100.310, RSMo, and more specifically finds that there is a predominance of defective and inadequate street layout, insanitary and unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, and the existence of conditions which endanger life and property by fire and other causes in such planning area and as a result of the predominance of those conditions

Ms. Brown June 4, 2015 Page 2

the planning area in its present condition and use constitutes an economic and social liability and a serious menace to the public health, safety, morals, and welfare.

Since approval of the 2010 ordinance the blighting factors and conditions at the proposed redevelopment area have accelerated resulting in the subsequent closure of the mall in April 2014. The proposed redevelopment area also lies within the Northland Enhanced Enterprise Zone (EEZ) which requires a finding of blight.

The main blighting factors are the deteriorating site improvements and insanitary and unsafe conditions which are also exacerbated by defective and inadequate street layout and improper subdivision or obsolete platting, and by conditions which endanger life and property by fire and other causes. Resulting blighting conditions include economic liabilities (underutilization, extensive vacancy (82.3%), decreasing assessment (-81.4% since 2003) and taxation (-56.5% between 2004 and 2014), and advancing neighborhood vacancy of 64.2%), social liabilities (including high water danger in the southwest corner of the mall parking lot, deteriorating parking lots and sidewalks, very high deteriorating retaining walls (one with a loose railing), deteriorating exterior walls that have failed or are failing, leaking roofs causing ceiling collapses, leaking ceilings around electrical equipment, improperly disconnected electrical lines, excessive mold, asbestos, broken glass, vermin, vagrancy, vandalism, and unmonitored underground storage tanks some of which are unsecured, illegal dumping, and vehicles driven into buildings). The combination and predominance of these blighting factors and conditions clearly indicate the proposed redevelopment area is now a menace to the public health, safety, morals, and welfare and a drain on the vitality of the Metro North neighborhood.

The complete analysis employed to reach this determination are contained in the attached study.

It has been a distinct pleasure to serve you in this assignment.

Sincerely, BELKE APPRAISAL & CONSULTING SERVICES, INC.

Scott J. Belke, MAI President Missouri State Certified General Real Estate Appraiser (Certificate No. RA 001868) Kansas Certified General Real Property Appraiser (Certificate No. G-1214)

BELKE APPRAISAL & CONSULTING SERVICES, INC. TABLE OF CONTENTS

TABLE OF CONTENTS Cover Sheet ...... 1 Letter of Transmittal ...... 2 Table of Contents ...... 5

Property Data Aerial Photograph ...... 8 Subject Photographs ...... 10 Introduction ...... 17 Purpose ...... 17 Legal Descriptions ...... 17 Statutory Definition...... 18 Previous Blight Findings ...... 19 Historic Designations ...... 20 Ownership ...... 20 Consultant’s Experience ...... 20 The Metro North Neighborhood ...... 21 Location ...... 21 Access ...... 22 Neighborhood Demographics ...... 22 School Districts ...... 23 Neighborhood Development ...... 24 Adjoining Development ...... 26 Gashland/Nashua Plan Area...... 27 Gash Cemetery ...... 27 Conclusion ...... 27 Anticipated Land Use Plan ...... 28 Neighborhood Photographs...... 29 Site & Improvement Data ...... 35 Location ...... 35 Access ...... 36 Traffic Counts ...... 36 Land Area ...... 36 Zoning ...... 36 Topography ...... 38 FEMA ...... 39 Utilities ...... 39 Assessment & Taxation ...... 40 Easements & Restrictions ...... 43 Overlay Districts ...... 43 Historic Designations ...... 45 Real Estate Improvements ...... 45

METRO NORTH CROSSING BLIGHT STUDY PAGE 5 BELKE APPRAISAL & CONSULTING SERVICES, INC. TABLE OF CONTENTS

Site Improvements ...... 46 Functionality ...... 47 Environmental ...... 47 Billboards ...... 47 Conclusion ...... 48

Retail Market Analysis ...... 49

Blight Analysis Blight Analysis ...... 73 Required Findings ...... 77 Blight Defined ...... 74 Court Decisions ...... 74 Blight Factor #1: Defective Of Inadequate Street Layout ...... 75 Blight Factor #2: Unsanitary Or Unsafe Conditions ...... 79 Blight Factor #3: Deterioration Of Site Improvements ...... 93 Blight Factor #4: Improper Subdivision Or Obsolete Platting...... 140 Blight Factor #5: Endangerment By Fire Or Other Causes...... 141 Blight Factors Conclusion ...... 142 Blight Condition #1: Hindrance To Housing Accommodation ...... 143 Blight Condition #2: Economic Or Social Liability ...... 143 Blight Condition #3: Menace To The Public Health, Safety, Morals, Or Welfare ...... 146 Study Conclusion ...... 146 Certificate ...... 148 Assumptions & Limiting Conditions ...... 149 Addenda Last Deed ...... 151 County Assessment & Taxation ...... 154 Qualifications of Scott J. Belke, MAI ...... 171 Redevelopment Consulting Projects ...... 172 Company Profile ...... 174

METRO NORTH CROSSING BLIGHT STUDY PAGE 6 BELKE APPRAISAL & CONSULTING SERVICES, INC.

PROPERTY DATA

METRO NORTH CROSSING BLIGHT STUDY PAGE 7 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

AERIAL PHOTOGRAPH – PROPOSED REDEVELOPMENT AREA

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METRO NORTH CROSSING BLIGHT STUDY PAGE 8 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

The following photographs illustrate the conditions existing within the proposed Metro North Crossing Redevelopment Area during numerous inspections in May and June 2015.

METRO NORTH CROSSING BLIGHT STUDY PAGE 9 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 1:

13-216-00-04-001.00 MACY’S DEPARTMENT STORE

PHOTOGRAPH NO. 2:

13-216-00-04-002.00 BLAND/UNAPPEALING FRONT FAÇADE OF THE MALL IMPROVEMENTS

PHOTOGRAPH NO. 3:

13-216-00-04-002.00 FORMER MALL ENTRANCE

METRO NORTH CROSSING BLIGHT STUDY PAGE 10 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 4:

13-216-00-04-003.00 VACANT JCPENNEY ANCHOR SPACE

PHOTOGRAPH NO. 5:

13-216-00-04-003.00 VACANT AUTOMOTIVE SERVICE CENTER

PHOTOGRAPH NO. 6:

13-216-00-04-004.00 OLIVE GARDEN SIT-DOWN RESTAURANT

METRO NORTH CROSSING BLIGHT STUDY PAGE 11 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 7:

13-216-00-04-005.00 VACANT DILLARD’S ANCHOR STORE

PHOTOGRAPH NO. 8:

13-313-00-05-001.00 VACANT MONTGOMERY WARD ANCHOR STORE

PHOTOGRAPH NO. 9:

13-313-00-05-001.00 VACANT MONTGOMERY WARD AUTOMOTIVE SERVICE CENTER

METRO NORTH CROSSING BLIGHT STUDY PAGE 12 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 10:

13-313-00-05-004.00 RED LOBSTER SIT-DOWN RESTAURANT

PHOTOGRAPH NO. 11:

13-313-00-07-002.00 MCDONALD’S FAST-FOOD RESTAURANT

PHOTOGRAPH NO. 12:

13-216-00-04-001.00 MACY’S PARKING LOT

METRO NORTH CROSSING BLIGHT STUDY PAGE 13 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 13:

13-216-00-04-002.00 MALL TRACT PARKING LOT

PHOTOGRAPH NO. 14:

13-216-00-04-003.00 FORMER JCPENNEY PARKING LOT

PHOTOGRAPH NO. 15:

13-313-00-05-001.00 VACANT AUTOMOTIVE SERVICE CENTER PARKING LOT

METRO NORTH CROSSING BLIGHT STUDY PAGE 14 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 16:

13-216-00-04-004.00 OLIVE GARDEN PARKING LOT

PHOTOGRAPH NO. 17:

13-216-00-04-005.00 FORMER DILLARD’S PARKING LOT

PHOTOGRAPH NO. 18:

13-313-00-05-001.00 FORMER MONTGOMERY WARD PARKING LOT

METRO NORTH CROSSING BLIGHT STUDY PAGE 15 BELKE APPRAISAL & CONSULTING SERVICES, INC. SUBJECT PHOTOGRAPHS

PHOTOGRAPH NO. 19:

13-313-00-05-001.00 VACANT MONTGOMERY WARD AUTOMOTIVE CENTER PARKING LOT

PHOTOGRAPH NO. 20:

13-313-00-05-004.00 RED LOBSTER PARKING LOT

PHOTOGRAPH NO. 21:

13-313-00-07-002.00 MCDONALD’S NORTH ENTRANCE DRIVE

METRO NORTH CROSSING BLIGHT STUDY PAGE 16 BELKE APPRAISAL & CONSULTING SERVICES, INC. INTRODUCTION

INTRODUCTION

Purpose The purpose of the present analysis is to determine if the proposed Metro North Crossing Redevelopment Area located within Kansas City, Missouri and Clay County, Missouri evidences blight according to the Missouri Revised Statutes (Section 99.805(1)). The consultant visited the proposed redevelopment area and the adjoining neighborhood on several occasions in May and June 2015. The effective date of this study is June 1, 2015. The main feature of the proposed redevelopment area is the closed Metro North Mall located in the northeast quadrant of the interchange of US Highway 169 and NW Barry. Macy’s Department Store, Olive Garden, Red Lobster, and McDonald’s continue to operate within the proposed redevelopment area but are negatively impacted by the decline and closure of the mall and surrounding neighborhood. The proposed redevelopment area encompasses 3,578,454 square feet or 82.15 acres in two ownerships comprising eight Clay County tax parcels, 1,260,959 square feet of improvements (only 17.7% occupied), and 6,667 parking spaces (generally in poor condition).

Legal Descriptions The following legal descriptions were taken from the last deed recorded at the Clay County Courthouse on each tax parcel located within the proposed redevelopment area.

13-216-00-04-001.00 Tract 3, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-216-00-04-002.00 Tract 5, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-216-00-04-003.00 Tract 6, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-216-00-04-004.00 West 494.49 feet of Tract 7, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-216-00-04-005.00 Tract 4, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-313-00-05-001.00 Tract 8, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-313-00-05-004.00 East 372 feet of Tract 7, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

13-313-00-07-002.00 Tract 9, METRO NORTH, a subdivision in Kansas City, Clay County, Missouri.

METRO NORTH CROSSING BLIGHT STUDY PAGE 17 BELKE APPRAISAL & CONSULTING SERVICES, INC. INTRODUCTION

The Clay County, Missouri GIS map included below provides delineation of the platted subject lots. The proposed redevelopment is encircled by NW Barry Road (south), N Summit Street (west), Metro North Drive (north), and N Wyandotte Street (east). Metro North Mall Drive provides interior circulation for the mall complex.

CLAY COUNTY GIS MAP

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Statutory Definition The Missouri Revised Statutes provide the statutory definition of blight utilized by various local redevelopment authorities operating under the umbrella of the Economic Development Corporation of Kansas City, Missouri including the Tax Increment Financing Commission of

METRO NORTH CROSSING BLIGHT STUDY PAGE 18 BELKE APPRAISAL & CONSULTING SERVICES, INC. INTRODUCTION

Kansas City, Missouri (Section 99.805(1)). The statutory definition of a “blighted area” for these agencies is as follows:

“An area which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete plating, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use.”

Previous Blight Findings Metro North Mall PIEA Plan On June 20, 2010 the city council approved the Metro North Mall General Development Plan by Ordinance No. 100283 for a Plan Area encompassing the current proposed redevelopment area plus the mall areas to the north of Metro North Mall Drive (theater and overflow parking) and less the Olive Garden and Red Lobster sit-down restaurants and the McDonald’s quick-serve restaurant. The city council cites the following in the approved ordinance:

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY: That the Council finds the Metro North Mall PIEA Planning Area, which area contains approximately 100 acres generally bounded by N.W. Barry Road on the south, U.S. Highway 169 on the west, N.W. 88th Street on the north and N. Baltimore Avenue and N. Wyandotte Avenue on the east, and is more specifically described by metes and bounds as follows: Tracts 1, 2, 3, 4, 5, 6 and 8, METRO NORTH, in Kansas City, Clay County, Missouri, as is shown on the recorded plat thereof to be a blighted area as defined in Section 100.310, RSMo, and more specifically finds that there is a predominance of defective and inadequate street layout, insanitary and unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, and the existence of conditions which endanger life and property by fire and other causes in such planning area and as a result of the predominance of those conditions the planning area in its present condition and use constitutes an economic and social liability and a serious menace to the public health, safety, morals, and welfare.

The approved PIEA plan (following RSMo 100) allowed the owner to undertake successful condemnation proceedings to secure the Dillard’s anchor space to unify ownership which would allow for the intended redevelopment of the Planning Area.

Northland Enterprise Zone The proposed redevelopment area lies within the Northland Enhanced Enterprise Zone (EEZ). EEZ incentives are designed to encourage job creation and investment by providing tax credits and local property tax abatement to new or expanding businesses located in an Enhanced Enterprise Zone (EEZ). Creation of an EEZ requires a determination of blight, pervasive poverty, unemployment and general distress. The EEZ statutory definition of blight (R.S. Mo. 135.950 (2)) is as follows:

METRO NORTH CROSSING BLIGHT STUDY PAGE 19 BELKE APPRAISAL & CONSULTING SERVICES, INC. INTRODUCTION

“Blighted area”, an area which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use;

The definition is identical to Section 99.805(1) R.S. Mo. (Real Property Tax Increment Allocation Redevelopment Act – utilized by the Tax Increment Financing Commission of Kansas City, Missouri) and Section 100.310 (2) R.S. Mo. (Industrial Development – utilized by the Planned Industrial Expansion Authority of Kansas City, Missouri).

Historic Designations No portion of the proposed redevelopment area has been nominated to the National Register of Historic Places (NRHP). No adjoining properties are listed on the NRHP. No portion of the proposed redevelopment area has been nominated to the Kansas City Historic Registry (KCHR). No adjoining properties are listed on the KCHR.

Ownership According to deeds recorded at the Clay County Courthouse, the eight tax parcels comprising the proposed redevelopment area are currently held in two entities:

Tax Parcel No. Address Ownership Date Acquired (Document) 13-216-00-04-001.00 403 NW Barry Rd. May Department Stores Co. May 21, 1999 (Book 3007/Page 123) 13-216-00-04-002.00 401 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 37) 13-216-00-04-003.00 400 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 37) 13-216-00-04-004.00 400 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 37) 13-216-00-04-005.00 402 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 37) 13-313-00-05-001.00 400 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 38-39) 13-313-00-05-004.00 450 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 37) 13-313-00-07-002.00 150 NW Barry Rd. Metro North Crossing, LLC April 21, 2015 (Book 7479/Page 37)

A copy of the main deed is included in the Addenda. All of the proposed redevelopment area, except the Macy’s Department Store, was purchased by Metro North Crossing, LLC on April 21, 2015 from Metro North Company, L.L.C. The May Department Store Co. (or related entities) has owned the Macy’s site since 1972.

Consultant’s Experience The consultant has considerable experience preparing blight analyses on properties located within a number of local municipalities and utilizing various Missouri State Statutes (R.S. Mo. Chapters 99, 100, and 353) and Kansas State Statues (K.S.A. Chapter 12). A full listing of redevelopment projects for which consulting services have been provided is included with the consultant’s qualifications at the end of the report. The consultant has been a 30-year resident of the Northland.

METRO NORTH CROSSING BLIGHT STUDY PAGE 20 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD

THE METRO NORTH NEIGHBORHOOD

Location The Metro North neighborhood is located in the north-central portion of the greater Kansas City metropolitan area. The proposed redevelopment area is also situated at the northeast quadrant of the interchange of US Highway 169 and NW Barry Road in the southerly half of Clay County, Missouri just east (0.6 mile) of the county line with westerly adjoining Platte County, Missouri. The neighborhood is also located in the north-central portion of the City of Kansas City, Missouri. Metro North Mall is located in zip code 64155 and Census Tract 212.07.

LOCATION MAP

Downtown Kansas City, Missouri is located 10 miles (10 minute drive) south of the subject neighborhood. KCI Airport is located 8½ miles (8 minute drive) northwest of Metro North via Missouri Highway 152 and Interstate 29. Liberty, the county seat of Clay County, is located 9 miles (12 minute drive) east of the Metro North neighborhood. The Missouri River which delineates the Northland from South of the River is 9½ miles south. The nearest major retailing epicenters are 4 miles to the west in Platte County (interchange of NW Barry Road with Interstate 29) and 7 miles east in Clay County (interchange of Missouri Highway 152 and Interstate 35). Johnson County, Kansas which provides considerable retailing opportunities is located 25 miles but less than 25 minutes drive time to the southwest.

METRO NORTH CROSSING BLIGHT STUDY PAGE 21 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD

Access The subject neighborhood has good access due to US Highway 169 (north-south), Missouri Highway 152 (east-west), NW Barry Road (east-west), and North Oak Trafficway (north-south). Metro North Mall is located in the northeast quadrant of the full-diamond interchange of US Highway 169 and NW Barry Road. Exit and entrance ramps have been improved to handle the heavy traffic generated in the neighborhood. Metro North Mall is encircled by roadways including NW Barry Road on the south, N Wyandotte Street on the east, Metro North Drive on the north, and N Summit Street on the west. Metro North Mall Drive provides interior circulation to the mall complex. Metro North Mall has access points from NW Barry Road, one from the east from NW 85th Terrace, and two from the north from N Summit Street and NW 88th Street.

Neighborhood Demographics Metro North Mall lies within the southerly portion of Census Tract 212.07. However, the subject Metro North neighborhood comprises portions of Census Tracts 212.07 and 212.08 (all in Clay County) as indicated below on Census 2010 Tract Maps:

CENSUS TRACT MAP

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METRO NORTH CROSSING BLIGHT STUDY PAGE 22 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD

The tables below provide population, household, and median household income figures from previous census data. Prior to 2010 Census Tracts 212.07 and 212.08 were combined as 212.03:

Census Population Tract 1980 1990 2000 2010 212.07 2,714 212.08 6,134 212.03 3,352 4,636 5,727 Total 3,352 4,636 5,272 8,848 % chg. 38% 24% 54% chg. ‘80 to ‘10 164%

Census Households Tract 1980 1990 2000 2010 212.07 1,146 212.08 2,664 212.03 1,278 1,921 2,483 Total 1,278 1,921 2,483 3,810 % chg. 50% 29% 53% chg. ‘80 to ‘10 198%

Census Median HH Income Tract 1980 1990 2000 2010 212.07 $58,355 212.08 $50,150 212.03 $21,875 $35,815 $49,792 Total $21,875 $35,815 $49,792 $52,618 % chg. 64% 39% 6% chg. ‘80 to ‘10 141%

Although the population and households has been increasing the affluence of the households has been increasing at much lower levels. By comparison, the increase in median household income across the Kansas City metropolitan area in 2000 was a slightly higher 49% ($31,246 to $46,696) versus 39% but was much higher in 2010 (29% versus 6%; from $46,696 to $60,442). The median household income for the Kansas City metropolitan area in 2000 was 6.2% lower than in the subject neighborhood ($46,696 vs. $49,792) but in 2010 the metrowide average was 14.9% higher than in the subject neighborhood ($60,442 vs. $52,618). The median household income in Clay County in 2010 of $62,690 was 19.7% higher than in the subject neighborhood while the Platte County figure of $71,466 was 35.8% higher.

School Districts Metro North Mall is located within the Platte County R-III schools while the subject McDonald’s quick-serve restaurant is located in the North Kansas City schools. North Kansas City is the largest Northland school district while Platte County R-III is rather small. Students and the composite 2013-2014 ACT scores for the various Northland districts are included below:

METRO NORTH CROSSING BLIGHT STUDY PAGE 23 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD

District Students ACT Park Hill 10,501 23.9 North Platte R-1 616 23.9 Platte County R-III 3,788 22.8 Kearney 3,558 22.8 Smithville 2,524 22.5 Liberty 11,558 21.3 North Kansas City 19,199 21.1 Excelsior Springs 2,902 21.0

In 2005, the North Kansas City School District purchased 299.587 acres along Staley Road west of N Woodland Avenue (just over nine miles northeast of North Kansas City) for development of the district’s fifth high school and an adjoining athletic complex. Staley High School opened for classes in the fall of 2008. Secondary education is convenient located throughout the Kansas City MSA including numerous junior colleges, community colleges, colleges, universities, and technical institutes.

Neighborhood Development The neighborhood of course takes its name from the Metro North Mall which opened between 1973 (JCPenney) and September 1976 (mall and Macy’s), 39 to 42 years ago. Metro North Mall was the 8th mall to open within the metropolitan area. A historical listing of enclosed malls within the metropolitan area is outlined below:

Shopping Center Location Built Sq.Ft. Oak Park Mall Overland Park, KS 1975 1,562,679 Metro North Mall - Closed Kansas City, MO 1976 1,229,378 Bannister Mall - Demolished Kansas City, MO 1980 1,042,798 Independence Center Independence, MO 1974 1,032,000 Blue Ridge Mall - Demolished Kansas City, MO 1957 932,738 Ward Parkway Center - Redeveloped Kansas City, MO 1959 800,000 Antioch Mall – Partially Demolished Kansas City, MO 1956 700,000 The Great Mall/Great Plains - Closing Olathe, KS 1996 786,000 Indian Springs Mall - Closed Kansas City, KS 1971 782,916 Metcalf South Mall - Closed Overland Park, KS 1967 692,620

Metro North Mall is large by local standards (29,230 square feet in 9 tenant spaces at the east end of the mall have never been finished) and included 4 anchor tenant spaces (The Jones Store (now Macy’s), Montgomery Ward, JCPenney, and Dillard’s). Metro North Mall enjoyed a dominant retailing position in the Northland with the first sign of decline being the closing of Montgomery Ward in 2001 which was due to weakness of the retailer. MC Sporting Goods occupied a portion of the lower level Montgomery Ward space until closing in 2009. Zona Rosa, a “new urbanist” retail/office/residential development opened on 93 acres at the northwest quadrant of the interchange of Interstate 29 and Barry Road in June 2004. Zona Rosa was the hottest retail story in the metropolitan area in 2004. Dillard’s converted to a clearance center in 2007 after a new store was opened at Zona Rosa. JCPenney closed in mid-2008 and opened smaller stores to the east in Shoal Creek and to the west at Tiffany Market Center. Dillard’s closed their clearance center later in 2008. Macy’s continues to operate at Metro North. Due to the new Northland retailing competition and the demise of the anchor tenants the small shop (mall) tenancy began to

METRO NORTH CROSSING BLIGHT STUDY PAGE 24 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD dwindle. From a peak of 150 stores, tenancy dwindled to 2 stores before the mall was finally closed on April 15, 2014.

In 2007, the long-term owners began what would be several iterations of potential redevelopments of Metro North. The anchor sites were eventually controlled by purchase or condemnation. The mall was declared blighted by the city via the Planned Industrial Expansion Authority of Kansas City, Missouri in 2010 but redevelopment proved elusive. Finally, the mall and surrounding holdings were sold on April 21, 2015 to the redeveloper of the Blue Ridge Mall and the Antioch Mall.

Metro North Square, Metro North Commons, and Metro North Plaza were developed on the south side of NW Barry Road soon after opening of the mall. Metro North Square contains roundly 200,000 square feet. Toys R’ Us has been a long-term anchor at Metro North Square. A strip of shops adjoining to the west has had up and down tenancy over the years, currently has one vacancy (15,500 Sq.Ft.), and includes a branch of Children’s Mercy Hospital. For many years Best Buy was a tenant at Metro North Square. However, after opening stores to the east in Shoal Creek and to the west at Tiffany Market Center the Metro North store was closed and sat vacant for a number of years until Power Play recently opened. Earl May operated out of Metro North Square for many years but eventually closed and the space was demolished. The Dickinson 6 theater anchored the south end of Metro North Square development but Dickinson abandoned the property in favor of a new larger complex to the east at Missouri Highway 152 and Brighton Road. Subsequently, the theater was demolished after reuse proved infeasible. A sit-down restaurant (10,000 Sq.Ft.) on the east side of Metro North Square is currently vacant and has gone through numerous iterations. To the north is an auto service center (11,904 Sq.Ft.) that has had varied tenants and now houses a temporary use (spring flowers and landscaping). Outpads include Kentucky Fried Chicken and Taco Bueno quick-serve restaurants and a now closed 7,800-square-foot Jose Peppers sit-down restaurant (who left for locations in Shoal Creek and Briarcliff). A small structure built for Men’s Wearhouse is now occupied by We Buy Gold. Men’s Wearhouse left for a site at Zona Rosa.

Metro North Commons lies east of Metro North Plaza. The 30,000-square-foot strip center was once anchored by an electronics chain that no longer exists. Harbor Freight Tools is the current occupant of the westerly stand-alone building. Next east is a five-tenant strip with two vacancies (3,872 and 1,400 Sq.Ft.) and a former Pizza Hut restaurant (4,200 Sq.Ft.) that is now vacant.

Metro North Plaza lies east of Metro North Commons. Metro North Plaza is a 10-tenant strip center facing NW Barry Road. The 21,600-square-foot center generally is well occupied (spaces are fairly small) but is now 29 years old and shows its advancing age.

The owners of Metro North Mall decided to develop a power center (374,498 Sq.Ft. and potentially 1.5 million Sq.Ft.) at the northwest quadrant of NW Barry Road and US Highway 169 in 1995. The Barry Towne Center site was declared blighted, mostly due to the fact MoDOT would require a $2.5 million upgrade to the bridge allowing NW Barry Road to span US Highway 169 prior to development (the sole responsibility of which would fall on Barry Towne Center while benefitting all Northland residents). Home Quarters Warehouse, a now defunct home improvement chain, was to be the anchor Barry Towne Center. However, Target replaced HQ and continues to operate at Barry Towne. Kohl’s became the second anchor and then Circuit

METRO NORTH CROSSING BLIGHT STUDY PAGE 25 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD

City (brand now defunct). Dick’s Sporting Goods anchored the north end of the center but moved to a new stand-alone structure at Zona Rosa. Babies R’ Us is located near the center of the development. Like Metro North Mall, Barry Towne Center succumbed to increasing retail competition to the east (Shoal Creek) and the west (Zona Rosa, BarryWoods Commons, Boardwalk Square, The Shops at Boardwalk, Tiffany Market Center). Nine pad sites were planned fronting Barry Towne Center, but only Firestone, who moved from a Metro North Mall outpad, has been developed. Small 3-tenant and 4-tenant strip centers front to NW Barry Road with 3 of 7 spaces vacant. Verizon Wireless left one of these spaces for a stand-alone structure fronting BarryWoods Commons near Interstate 29 and Zona Rosa to the west.

Metro North once housed a 6-screen theater in the east end of the mall near Montgomery Ward. Eventually a second 6-screen, stand-alone theater was built north of Metro North Drive. After the mall theater closed the outside theater eventually became a bargain venue before eventually closing. The vacated mall theater space was in the process of being converted to a food court before work was stopped due to the demise of the mall.

At the present time much of Metro North Mall’s vast parking areas are leased out for vehicle storage to the Ford Motor Plant. A temporary chain-link fence has been constructed encompassing the vehicle storage, all of which lacks visual appeal and is a poor reflection of the highest and best use of this well located retail property.

A summary of the surrounding retail development constructed after development of Metro North Mall and the current occupancy/vacancy status is included below:

Development Name Built Age Acres Sq.Ft. Occupancy Vacancy Metro North Mall 1976 39 105.20 1,286,927 17.3% 82.7% Metro North Square 1978 37 34.16 210,000 78.5% 21.5% Metro North Commons 1984 31 3.62 30,000 68.4% 31.6% Metro North Plaza 1986 29 2.64 21,600 100.0% 0.0% Barry Towne Center 1998 17 156.56 414,326 66.0% 34.0% Total/Average 1981 34 302.18 1,962,853 35.8% 64.2%

The immediate neighborhood surrounding Metro North Mall contains roundly 1.96 million square feet of retail space that is presently only 35.8% occupied. By comparison, retail surveys performed by Lane4 Property Group at year-end 2014 indicate 94.7% occupancy in the Northwest Kansas City submarket (essentially Platte County) and 89.7% occupancy in the Northeast Kansas City submarket (essentially Clay County). The combined North occupancy figure was 91.4% amongst 12.5 million square feet of retail space. The metrowide retail occupancy rate in 2014 was 89.8% amongst 65.5 million square feet.

Adjoining Development To the south of the proposed redevelopment area is the previously described Metro North Square and Metro North Commons retail developments. East of Metro North Commons and southeast of the proposed redevelopment area is the Metro North Plaza strip center. A two-story branch bank of Commerce Bank is located east of the McDonald’s quick-serve restaurant. Next east is the Jay Wolfe Auto Outlet (a conversion from a former grocery store use). Vacant land and a single- family residential neighborhood is east of N Wyandotte Street. To the north is additional area

METRO NORTH CROSSING BLIGHT STUDY PAGE 26 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD associated with Metro North Mall, mostly excess parking and the closed 6-screen theater. An older single-family subdivision is next north. To the west across US Highway 169, is the Barry Towne retailing development which was described above.

Gashland/Nashua Plan Area The proposed redevelopment area lies within the Gashland/Nashua Area Plan adopted by the city on January 5, 2012. The interchange of US Highway 169 and NW Barry Road is designated as 1 of 2 primary gateways to the plan area and Metro North Mall is listed as 1 of 2 community identifiers. Metro North Mall is further identified for “mixed-use community” in the Future Land Use plan (see following page).

The plan further states recommendations for priority areas as follows:

Participants in the planning process identified three priority areas to target for revitalization and/or redevelopment in order to ensure the long-term health and sustainability of the Plan Area. The general locations of the following areas are reflected on the Future Land Use map and defined as:

 Metro North Mall  Barry Road Corridor  North Oak Trafficway Corridor Metro North Mall revitalization or redevelopment is the #1 priority area for the planning area. The plan further states concerning primary gateways that “Prominent locations should be anchored with buildings with unique architecture.” The plan also notes the need for “pedestrian friendly streets” and “wide sidewalks” in the area near Metro North Mall.

Gash Cemetery The Gash Cemetery is located on the north side of NW Barry Road between Red Lobster and the vacant Montgomery Ward Automotive Center. The cemetery is enclosed with a chain-link fence and the mall ownership has been providing maintenance (mostly mowing and minor security). The cemetery dates to 1834 with the last internment occurring in 1965.

Conclusion The Metro North Mall neighborhood was once the focal point of Northland retailing. New retail developments at the intersections of Missouri Highway 152 with Interstate 29 (west) and Interstate 35 (east) began to gradual erode the drawing power of aging Metro North. The opening of Zona Rosa (2004) and The Shops at Boardwalk (2003) essentially sealed the fate of Metro North. By 2008, sitting with three anchor spaces vacant the mall marched slowly towards its closing in April 2014 when only two small shops and Macy’s remained open. The Metro North Mall neighborhood could be aided by the extension of sewers in the First and Second Creek Watersheds if the anticipated residential development materializes. However, new retail developments maybe added within that extensive vacant land mass. For retailing to regain a foothold at Metro North some new concepts lacking in the Northland may be necessary (Trader Joe’s, Costco, new department store, unique entertainment, etc.)

METRO NORTH CROSSING BLIGHT STUDY PAGE 27 BELKE APPRAISAL & CONSULTING SERVICES, INC. THE NEIGHBORHOOD

METRO NORTH CROSSING BLIGHT STUDY PAGE 28 BELKE APPRAISAL & CONSULTING SERVICES, INC. NEIGHBORHOOD PHOTOGRAPHS

PHOTOGRAPH NO. 1:

ALL PHOTOGRAPHS REFLECT THE CONDITION OF THE NEIGHBORHOOD AS OF MAY & JUNE 2015

A VIEW OF METRO NORTH MALL FROM WEST ACROSS US 169 HIGHWAY

PHOTOGRAPH NO. 2:

THE WEST ENTRANCE TO THE MALL FROM NW BARRY ROAD

PHOTOGRAPH NO. 3:

THE EAST ENTRANCE TO THE MALL FROM NW BARRY ROAD

METRO NORTH CROSSING BLIGHT STUDY PAGE 29 BELKE APPRAISAL & CONSULTING SERVICES, INC. NEIGHBORHOOD PHOTOGRAPHS

PHOTOGRAPH NO. 4:

LOOKING EAST ON NW BARRY ROAD FROM THE EAST ENTRANCE

PHOTOGRAPH NO. 5:

LOOKING WEST ON NW BARRY ROAD FROM THE WEST ENTRANCE

PHOTOGRAPH NO. 6:

LOOKING EAST ON NW BARRY ROAD FROM THE WEST ENTRANCE

METRO NORTH CROSSING BLIGHT STUDY PAGE 30 BELKE APPRAISAL & CONSULTING SERVICES, INC. NEIGHBORHOOD PHOTOGRAPHS

PHOTOGRAPH NO. 7:

VACANT AUTO SERVICE BUILDING AT METRO NORTH SQUARE

PHOTOGRAPH NO. 8:

VACANT SIT-DOWN RESTAURANT AT METRO NORTH SQUARE

PHOTOGRAPH NO. 9:

VACANT SIT-DOWN RESTAURANT AT METRO NORTH SQUARE

METRO NORTH CROSSING BLIGHT STUDY PAGE 31 BELKE APPRAISAL & CONSULTING SERVICES, INC. NEIGHBORHOOD PHOTOGRAPHS

PHOTOGRAPH NO. 10:

VACANT SIT-DOWN RESTAURANT AT METRO NORTH COMMONS

PHOTOGRAPH NO. 11:

VACANT STRIP CENTER SPACE AT METRO NORTH COMMONS

PHOTOGRAPH NO. 12:

METRO NORTH PLAZA

METRO NORTH CROSSING BLIGHT STUDY PAGE 32 BELKE APPRAISAL & CONSULTING SERVICES, INC. NEIGHBORHOOD PHOTOGRAPHS

PHOTOGRAPH NO. 13:

VACANT SPACE AT BARRY TOWNE CENTER

PHOTOGRAPH NO. 14:

VACANT SPACES AT BARRY TOWNE CENTER

PHOTOGRAPH NO. 15:

VACANT SPACE AT BARRY TOWNE CENTER

METRO NORTH CROSSING BLIGHT STUDY PAGE 33 BELKE APPRAISAL & CONSULTING SERVICES, INC. NEIGHBORHOOD PHOTOGRAPHS

PHOTOGRAPH NO. 16:

VACANT SIX-SCREEN THEATER SITUATED NORTH OF METRO NORTH MALL

PHOTOGRAPH NO. 17:

UNSIGHTLY AREA WEST OF THE CLOSED THEATER

PHOTOGRAPH NO. 18:

DETERIORATED PARKING LOT (METRO NORTH MALL OVERFLOW) LOCATED WEST OF THE THEATER

METRO NORTH CROSSING BLIGHT STUDY PAGE 34 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

SITE & IMPROVEMENT DATA

Location The proposed redevelopment area is located in the northeast quadrant of the interchange of US Highway 169 and NW Barry Road. The redevelopment area is also encircled by NW Barry Road on the south, N Wyandotte Street on the east, Metro North Drive on the north, and N Summit Street on the west. One small subject tax parcel (-07-002.00) is located east of N Wyandotte Street (McDonald’s). The official addresses are 150, 400, 401, 402, 403, and 450 NW Barry Road. The proposed redevelopment area lies within the north-central portion of the Kansas City metropolitan area, the north-central portion of the Northland (Clay and Platte Counties), and the west-central portion of Clay County, Missouri.

AERIAL PHOTOGRAPH

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METRO NORTH CROSSING BLIGHT STUDY PAGE 35 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

Access The proposed redevelopment area has significant frontage and good access. The full-diamond interchange of US Highway 169 and NW Barry Road is at the southwest corner of the proposed redevelopment area. N Summit Street, Metro North Mall Drive, and N Wyandotte Street provide northerly access from NW Barry Road. Electronic signals control access from NW Barry Road at Metro North Mall Drive and N Wyandotte Street. NW Barry Road is of two-way, four-lane design with landscaped median and dedicated turn lanes. N Wyandotte Street is of two-way, four-lane design with dedicated turn lanes. Metro North Drive along the north side of the proposed redevelopment area is of two-way, four-lane design. Metro North Mall Drive, the interior circulation drive serving the mall complex (private) is of two-way, two-lane design.

Traffic Counts Traffic volume maps published by Missouri Department of Transportation (MoDOT) in 2013 indicate just over 40,000 vehicles travel along US Highway 169 pass the subject site. Slightly higher volume of just over 41,000 vehicles travels along Missouri Highway 152 just north of the proposed redevelopment area.

Land Area The proposed redevelopment area is of nearly square rectangular configuration. According to Clay County GIS Mapping the eight tax parcel contain a total of 3,578,454 square feet or 82.15 acres. KCMO GIS indicates a larger 3,609,392.455 square feet or 82.860 acres. The table below provides the land area of each individual subject tax parcel:

ClayCo KCMO Tax Parcel No. Address Sq.Ft. Acres Sq.Ft. Acres 13-216-00-04-001.00 403 NW Barry Road 656,014 15.06 658,953.293 15.127 13-216-00-04-002.00 401 NW Barry Road 911,711 20.93 932,675.628 21.411 13-216-00-04-003.00 400 NW Barry Road 667,339 15.32 661,121.489 15.177 13-216-00-04-004.00 400 NW Barry Road 145,490 3.34 141,785.643 3.255 13-216-00-04-005.00 402 NW Barry Road 466,528 10.71 474,040.332 10.882 13-313-00-05-001.00 400 NW Barry Road 571,507 13.12 578,247.788 13.275 13-313-00-05-004.00 450 NW Barry Road 89,298 2.05 91,974.356 2.111 13-313-00-07-002.00 150 NW Barry Road 70,567 1.62 70,593.926 1.621 Total 3,578,454 82.15 3,609,392.455 82.860

KCMO GIS Mapping indicates the proposed redevelopment area has 1,807.33 feet fronting the north side of NW Barry Road, 650.70 feet on the east side of N Wyandotte Street, 2,090.63 feet on the west side of N Wyandotte Street, 1,736.79 feet on the south side of Metro North Drive, and 1,644.00 feet on the east side of N Summit Street. The land-to-building ratio (LBR) of the proposed redevelopment area is 2.84 : 1 while the floor-area ratio (FAR) is 0.35 : 1.

Zoning The entirety of the proposed redevelopment area is zoned B3-2, Community Business District (Dash 2). (See the Zoning Map included on the following page.) The NW Barry Road corridor is zoned for business but the areas to the north and south have either R-1.5 or R-7.5 residential zonings.

METRO NORTH CROSSING BLIGHT STUDY PAGE 36 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

ZONING MAP

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METRO NORTH CROSSING BLIGHT STUDY PAGE 37 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

Topography The proposed redevelopment area essentially peaks at the center and slopes downward gently in all directions. The high elevation (1,015') is in the east-central portion and the low elevation is in the southwest corner (974'). Water tends to drain to the southwest and ponding can be a hazard during heavy rainfalls. Reportedly, an underground stream runs north to south through the mall property on occasion causing floors to heave and generally requiring pumping during any excavation activity.

TOPOGRAPHIC MAP

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METRO NORTH CROSSING BLIGHT STUDY PAGE 38 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

FEMA According to FIRM Community Panel 290173 0045 B (dated 5-Aug-86), the proposed redevelopment area lies outside the 100-year floodplain. A branch of East Fork Line Creek is located in the flood plain on the south side of NW Barry Road.

FLOOD PLAIN MAP

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Utilities All utilities are available to the proposed redevelopment area. Water and sewer service is provided by the City of Kansas City, Missouri. The Missouri Gas Energy (MGE; a division of Southern Union Company, publically traded and state regulated) provides natural gas service. Electric service is from Kansas City Power & Light (KCP&L; private regulated utility owned by Great Plains Energy, Inc.). All utility lines within the proposed redevelopment area have been place underground.

METRO NORTH CROSSING BLIGHT STUDY PAGE 39 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

Assessment & Taxation Following is a reproduction of the Clay County Tax Map 13-216 and 13-313 showing the location of the eight tax parcels comprising the proposed redevelopment area:

CLAY COUNTY ASSESSMENT MAP

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13-216-00-04-005.00

13-216-00-04-001.00

13-216-00-04-002.00

13-313-00-05-001.00

13-216-00-04-003.00

13-216-00-04-004.00 13-313-00-05-004.00 13-313-00-07-002.00

The appraised and assessed valuation and the real estate taxes levied against the eight tax parcels comprising the proposed redevelopment area over the past 25 years is summarized in the tables included on the following pages:

METRO NORTH CROSSING BLIGHT STUDY PAGE 40 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

CLAY COUNTY ASSESSMENT HISTORY

Macy's Mall JCPenney Olive Garden Dillard's Montgomery Ward Red Lobster McDonald's Year 13216000400100 13216000400200 13216000400300 13216000400400 13216000400500 13313000500100 13313000500400 13313000700200 Total Change 1990 $5,048,688 $11,800,000 $3,741,406 $809,500 $3,630,188 $3,165,094 $70,500 $76,500 $28,341,875 -- 1991 5,048,688 11,800,000 3,741,406 809,500 3,630,188 3,165,094 70,500 76,500 28,341,875 0.0% 1992 5,048,688 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 76,500 31,759,469 12.1% 1993 4,570,906 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 76,500 31,281,688 -1.5% 1994 4,570,906 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 76,500 31,281,688 0.0% 1995 4,570,906 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 283,500 31,488,688 0.7% 1996 4,570,906 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 283,500 31,488,688 0.0% 1997 4,570,906 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 283,500 31,488,688 0.0% 1998 4,570,906 14,553,000 3,741,406 809,500 3,630,188 3,165,094 735,094 283,500 31,488,688 0.0% 1999 5,256,500 14,553,000 4,302,594 850,000 4,174,688 3,639,906 775,000 326,000 33,877,688 7.6% 2000 5,256,500 14,553,000 4,302,594 850,000 4,174,688 3,639,906 775,000 326,000 33,877,688 0.0% 2001 7,950,000 26,416,813 5,000,000 900,000 5,970,000 5,350,000 813,813 342,313 52,742,938 55.7% 2002 7,950,000 26,416,813 5,000,000 900,000 5,970,000 5,350,000 813,813 342,313 52,742,938 0.0% 2003 7,950,000 28,416,813 5,000,000 900,000 5,970,000 5,350,000 813,813 342,313 54,742,938 3.8% 2004 7,950,000 28,416,813 5,000,000 900,000 5,970,000 2,050,000 813,813 342,313 51,442,938 -6.0% 2005 8,214,000 27,000,000 5,376,900 962,600 5,970,000 2,050,000 877,400 361,900 50,812,800 -1.2% 2006 8,214,000 27,000,000 5,376,900 962,600 5,970,000 2,050,000 877,400 361,900 50,812,800 0.0% 2007 8,319,000 22,548,000 4,486,100 1,066,300 5,324,100 2,037,900 1,022,100 642,100 45,445,600 -10.6% 2008 8,319,000 22,548,000 4,486,100 1,066,300 5,324,100 2,037,900 1,022,100 642,100 45,445,600 0.0% 2009 5,700,000 17,000,000 4,037,500 1,066,300 5,324,100 1,872,300 980,500 608,200 36,588,900 -19.5% 2010 5,700,000 17,000,000 4,037,500 1,066,300 5,324,100 1,872,300 980,500 608,200 36,588,900 0.0% 2011 5,358,800 12,176,300 3,876,000 1,128,800 3,463,500 1,797,400 1,025,000 628,900 29,454,700 -19.5% 2012 5,358,800 9,741,000 3,876,000 1,128,800 2,597,600 1,797,400 1,025,000 628,900 26,153,500 -11.2% 2013 5,152,700 5,436,700 1,863,500 925,800 2,497,700 1,797,400 939,600 628,900 19,242,300 -26.4% 2014 5,152,700 5,436,700 1,863,500 925,800 2,497,700 1,797,400 939,600 628,900 19,242,300 0.0% 2015 5,152,700 877,400 642,300 925,800 449,000 550,000 939,600 628,900 10,165,700 -47.2% Change: 1990-2015 2.1% -92.6% -82.8% 14.4% -87.6% -82.6% 1232.8% 722.1% -64.1% From Peak -38.1% -96.9% -88.1% -18.0% -92.5% -89.7% -8.3% 0.0% -81.4%

METRO NORTH CROSSING BLIGHT STUDY PAGE 41 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

CLAY COUNTY REAL ESTATE TAXATION HISTORY

Macy's Mall JCPenney Olive Garden Dillard's Montgomery Ward Red Lobster McDonald's Year 13216000400100 13216000400200 13216000400300 13216000400400 13216000400500 13313000500100 13313000500400 13313000700200 Total Change 2001 $161,826.38 $537,727.95 $101,777.60 $18,319.97 $121,522.46 $108,902.03 $16,565.58 $6,967.95 $1,073,609.92 -- 2002 162,528.53 580,948.76 102,219.20 18,339.46 122,049.73 109,374.54 16,637.46 6,998.18 $1,119,095.86 4.2% 2003 160,587.47 574,010.52 100,998.40 18,179.71 120,592.10 108,068.29 16,438.76 6,914.60 $1,105,789.85 -1.2% 2004 171,185.77 663,929.58 107,664.00 19,379.52 128,550.82 115,200.48 17,523.67 7,370.95 $1,230,804.79 11.3% 2005 175,908.39 578,223.36 115,150.10 20,614.61 127,851.62 43,902.14 18,790.25 7,750.47 $1,088,190.94 -11.6% 2006 175,648.37 577,359.36 114,978.04 20,583.80 127,660.57 51,595.84 18,762.17 7,738.89 $1,094,327.04 0.6% 2007 179,458.80 616,807.30 96,774.74 23,002.67 114,852.20 43,962.04 22,048.77 13,851.35 $1,110,757.87 1.5% 2008 179,466.78 486,443.52 96,779.04 23,003.69 114,857.31 43,964.00 22,049.75 13,851.96 $980,416.05 -11.7% 2009 122,968.09 366,688.64 87,088.55 23,000.28 114,840.28 40,385.63 21,149.30 13,118.56 $789,239.33 -19.5% 2010 129,052.10 384,831.04 91,397.37 24,138.25 120,522.15 42,383.77 22,195.69 13,767.62 $828,287.99 4.9% 2011 120,793.64 274,467.72 87,369.38 25,444.70 78,071.71 40,515.55 23,104.65 14,176.26 $663,943.61 -19.8% 2012 150,002.64 271,801.73 109,045.69 33,076.50 0.00 53,723.52 29,519.08 18,526.25 $665,695.41 0.3% 2013 143,360.13 151,261.70 51,847.04 25,758.32 0.00 50,008.15 26,141.75 17,497.69 $465,874.78 -30.0% 2014 143,251.30 151,146.88 51,807.69 25,738.77 69,438.91 49,970.19 26,121.91 17,484.40 $534,960.05 14.8% Change: 2001-2014 -11.5% -71.9% -49.1% 40.5% -42.9% -54.1% 57.7% 150.9% -50.2% From Peak -20.2% -77.2% -55.0% -22.2% -46.0% -56.6% -11.5% -5.6% -56.5%

METRO NORTH CROSSING BLIGHT STUDY PAGE 42 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

All property is supposed to be reassessed in odd-numbered years, except that new construction (including remodeling) can be assessed in any year. The assessed valuation is 32% of the appraised value (commercial rate).

The county’s appraised valuation of the proposed redevelopment area peaked at $54,742,938 ($43.41 per Sq.Ft.) in 2003 but has now decreased 81.4% to $10,165,700 ($8.06 per Sq.Ft.) in 2015. In fact, the 2015 assessment is now 64.1% lower than the 1990 figure from 25 year ago. The actual mall tract peaked at $28,416,813 ($50.41 per square foot) in 2004 but has decreased 96.9% to $877,400 ($1.56 per square foot) in 2015. Even the assessment for the operating Macy’s store decreased 38.1% from 2008 ($8,319,000) to 2015 ($5,152,700).

The county assessment for 2015 has included the mall tract, Dillard’s, the JCPenney anchor space and automotive center, and the Montgomery Ward anchor space and automotive center only as land value. The overall 2015 assessment includes $5,121,200 in land value ($1.43 per Sq.Ft. of land) and only $5,044,500 in improvement value ($4.00 per Sq.Ft. of building) for 1,260,959 square feet.

The real estate taxes collected within the proposed redevelopment area peaked at $1,230,804.79 ($0.98 per Sq.Ft.) in 2004 but has now decreased 56.5% to $534,960.05 ($0.42 per Sq.Ft.) in 2014. Additionally, the 2015 assessment is now 50.2% lower than the 1990 figure from 25 year ago. The collection will be even lower in 2015 after levies are set as the assessed valuation declined 47.2% from 2014.

The essentially vacant state of the proposed redevelopment area does not reflect the highest and best use of this well-located retail parcel within the Northland. It is reasonable to assume if the proposed redevelopment area were redeveloped to the highest and best use, significantly higher taxes (real estate, personal property, sales, e-tax, and utility) would be generated.

Easements & Restrictions The consultant was not provided with a title report and a determination of easements and restrictions that might affect the proposed redevelopment area was not possible. However, the recorded plat indicates the proposed redevelopment area is crisscrossed by storm sewer easements, sanitary sewer easements, and water easements. Additionally, a 30-foot wide natural gas line easement to Williams Pipeline Company is along the west perimeter of the proposed redevelopment area.

A 20-foot building line setback is along the north side of NW Barry Road and the west side of N Wyandotte Street, and the south side of Metro North Drive. The setback increases to 30 feet along the east side of Metro North Mall Drive (west boundary line of proposed redevelopment area).

Overlay Districts The proposed redevelopment area is contained within two designated overlay districts as outlined below.

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PIEA Plan Area On June 20, 2010 the city council approved the Metro North Mall General Development Plan (and blight study) by Ordinance No. 100283 for a Plan Area encompassing the current proposed redevelopment area plus the mall areas to the north of Metro North Mall Drive (theater and overflow parking) and less the Olive Garden and Red Lobster sit-down restaurants and the McDonald’s quick-serve restaurant. The approved PIEA plan allowed the owner to undertake successful condemnation proceedings to secure the Dillard’s anchor space to unify ownership which would allow for the intended redevelopment of the plan area.

Northland Enterprise Zone The proposed redevelopment area lies within the Northland Enhanced Enterprise Zone (EEZ). EEZ incentives are designed to encourage job creation and investment by providing tax credits and local property tax abatement to new or expanding businesses located in an Enhanced Enterprise Zone (EEZ). Creation of an EEZ requires a determination of blight, pervasive poverty, unemployment and general distress.

Adjoining Overlays The proposed redevelopment area lies between several approved TIF districts. The Barry Towne TIF is directly west across US Highway 169. To the west and north of the Barry Towne TIF is the expansive KCI Corridor TIF. The smallish Prospect North TIF is to the east at Missouri Highway 152 and Missouri Highway 1. Next east is the very large Shoal Creek TIF. South of the Prospect North TIF (along Antioch Road) is a TIF District established for the redevelopment of the Antioch Mall (Antioch Mall TIF and Antioch Crossing TIF).

AREA TIF DISTRICTS

A Neighborhood Improvement District was established surrounding the Barry Towne shopping center to the west. Community Improvement Districts have been established at Metro North Square & Commons to the south, at Oak Barry Center to the east (N Oak and Barry Road), and to the west at Zona Rosa and KCI Airport.

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Historic Designations National Register of Historic Places No portion of the proposed redevelopment area has been nominated to the National Register of Historic Places (NRHP). No adjoining properties are listed on the NRHP.

Kansas City Historic Registry No portion of the proposed redevelopment area has been nominated to the Kansas City Historic Registry (KCHR). No adjoining properties are listed on the KCHR.

Real Estate Improvements The proposed redevelopment area encompasses the failed Metro North Mall and five fronting pad sites. When operating the mall included four anchors (Macy’s, JCPenney, Dillard’s, and Montgomery Ward). Only the Macy’s is still in operation. Moving from west to east along the north side of NW Barry Road the pad users include a closed auto service center, Olive Garden sit-down restaurant, Red Lobster sit-down restaurant, a closed auto service center, and a McDonald’s quick-serve restaurant. The improvements present on each Clay County tax parcel are described below.

13-216-00-04-001.00 The sole improvement on this tax parcel is a Macy’s Department Store opened in 1976 (age=39 years) and last renovated in 2008 when an exterior insulation finishing system (EIFS) was added and a tar and gravel roof. The structure is of two-story design and contains 202,323 square feet. Macy’s anchors the west end of Metro North Mall. The tract also includes roundly 1,149 parking spaces (north, west, and south of the store). Other than the deteriorating parking lot improvements the Macy’s improvements are of above average quality in above average condition.

13-216-00-04-002.00 This tax parcel consists of all mall concourse and small shop space not included in the four anchor spaces. The mall is of two-story design, was built in 1976 (age=39 years), and contains 563,716 square. The mall tract also includes roundly 1,338 parking spaces (poor condition). The mall has a bland brick exterior and has multiple entrances to both levels. The mall was closed on April 15, 2014 and suffers from significant physical depreciation, as well as, functional and external obsolescence. It should be noted that 9 tenant spaces located in the east end of the mall and containing a combined 29,230 square feet have never been finished out or occupied over the 39-year span of the mall. The mall improvements generally are of fair quality in very poor to fair condition.

13-216-00-04-003.00 The main improvement on this tax parcel is a former JCPenney Department Store built in 1973 (age=42 years) and closed in mid-2008. JCPenney anchored the south end of Metro North Mall. The structure is of two-story design and contains 155,750 square feet. An automotive service center was added to this parcel in 1976 (age=39 years) and closed in 2014. The automotive service center is of one-story design and contains 15,360 square feet. The parcel also includes roundly 1,102 parking spaces (east, south, and west of the store (1,039) and surrounding the auto center (63)) in poor condition. JCPenney had begun renovations to their space prior to closing

METRO NORTH CROSSING BLIGHT STUDY PAGE 45 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA

(including an EIFS exterior and membrane roof). Overall, fair to average quality in poor to average condition.

13-216-00-04-004.00 An Olive Garden sit-down restaurant is the sole improvement on this tax parcel. The restaurant was built in 1990 (age=25 years), contains 9,140 square feet, and is of one-story design. The parcel also includes roundly 180 parking spaces (west, north, and east of the restaurant) in poor condition. The structure is of average quality in average condition.

13-216-00-04-005.00 The sole improvement on this tax parcel is a former Dillard’s Department Store built in 1976 (age=39 years) and closed in late 2008. The structure is of two-story design, has a bland brick exterior, tar and gravel roof (original), and contains 150,237 square feet. Dillard’s anchored the north end of Metro North Mall. The tract also includes roundly 863 parking spaces (west, north, and east of the store) in poor condition. The fair quality space is now in poor condition.

13-313-00-05-001.00 The main improvement on this tax parcel is a former Montgomery Ward Department Store built in 1974 (age=41 years) and closed in 2001 (14 years ago). Montgomery Ward anchored the east end of Metro North Mall. The structure contains 133,804 square feet, is of two-story design, has a bland brick exterior, and tar and gravel roof (original). An automotive service center was also added to this parcel in 1974 (age=41 years) and closed in 2001. The automotive service center is of one-story design, has a brick exterior, and contains 19,038 square feet. The parcel also includes abundant surrounding parking (space count indistinguishable) in poor condition. The improvements are of only fair quality in very poor condition.

13-313-00-05-004.00 A Red Lobster sit-down restaurant is the sole improvement on this tax parcel. The restaurant was built in 1993 (age=22 years), contains 8,300 square feet, and is of one-story design. The parcel also includes roundly 110 parking spaces (west and north of the restaurant) in fair condition. This is an above average quality improvement in above average condition.

13-313-00-07-002.00 A McDonald’s quick-serve restaurant is the sole improvement on this tax parcel. The restaurant was built in 1995 (age=20 years), contains 3,201 square feet, and is of one-story design. The parcel also includes roundly 56 parking spaces (surrounding the restaurant) in good condition. The building was recently renovated and is in good condition.

Site Improvements The mall property has expansive surface parking lots inside the proposed redevelopment area and additional overflow lots outside of the proposed redevelopment area. A survey provided to the consultant indicates the overall mall property contains 7,431 parking spaces of which 764 are located outside the proposed redevelopment area (6,667 inside the proposed redevelopment area). Utilizing aerial photographs from various dates the consultant was able to count 5,468 spaces with additional areas not striped (uncountable). The parking ratio within the proposed redevelopment area is a spacious 5.3 spaces per 1,000 rentable square feet. If the overflow parking outside the proposed redevelopment area is included the overall mall parking ratio

METRO NORTH CROSSING BLIGHT STUDY PAGE 46 BELKE APPRAISAL & CONSULTING SERVICES, INC. SITE & IMPROVEMENT DATA increases to 5.9 spaces per 1,000 rentable square feet. The parking lots are all in poor condition with deteriorated asphalt and concrete curbing, and mostly faded striping.

The mall has a modest amount of landscaping, much inferior to the landscaping at the nearby and recently renovated Oak Barry Center (North Oak and Barry Road). The mall has almost no stand- alone signage, only a few wall mounted signs that have deteriorated.

Functionality The mall layout is fairly typical with north, east, west, and south anchor spaces. Parking is convenient to all areas of the mall. The parking ratio at the overall mall property is quite adequate. The mall is of two-story design with convenient access to both levels. Escalators and stairs are available for access between levels but an elevator is lacking. The anchor spaces do have elevators. Some stairs are needed in the mall concourse on the lower level due to changing topography. The mall has a number of ADA deficiencies. Only one set of public restrooms serves the entire mall (anchor spaces also have restrooms). The mall has a central court which provides an open expanse but is rather bland (fountain (dry) and balloons). The mall lacked a food court, one was partially constructed but never opened. At one time the mall had a theater but it was closed many years ago (and became the never opened food court area). The mall concourse (the normative 40-foot width) is narrowed in upper level areas where openings to the lower level exist. Due to the age of the design the mall shops are dominated by deep (36' to 138') and narrow spaces (12' to 84'). None of the mall shops has a direct entrance from the exterior of the mall. Private hallways leading to the docks and trash compactors run behind all of the shop space.

Due to the advancing age of the mall the building systems (heating, cooling, electrical, plumbing, restrooms, fire safety) are dated and in some cases result in maintenance and parts difficulties. Only the chiller in JCPenney is fairly new. The remaining chillers, cooling towers, and boilers are older, even original equipment. Capacity is reportedly adequate when systems were operating. The plumbing is often original resulting in periodic fire sprinkler failures inside the building and water line failures in the parking lots (observed while inspecting). The electrical systems are original. The main switchgear is now owned by KCP&L and is located in the parking lot in a rather atypical open unguarded location. The operations manager at the mall reports KCP&L must cannibalize older systems for replacement parts. Interior electrical systems have been heavily damaged by the extensive water infiltration (from leaking roofs).

Environmental Issues An environmental report was not made available to the consultant. The operations manager noted the four underground storage tanks on the property, asbestos in the mall concourse textured ceiling, the extensive mold, and vermin.

Billboards No billboards are present within the proposed redevelopment area.

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Conclusion Various factors have led to the decline, eventual closure, and advancing deterioration of Metro North Mall. After permanent closure on April 15, 2014, the mall has now been closed for roundly 14 months, with only Macy’s still in operation. Olive Garden, Red Lobster, and McDonald’s continue to operate on outpads. The occupancy in the proposed redevelopment area is only 17.7% amongst 1,260,959 square feet of space. The accompanying decline in the immediate neighborhood has resulted in only 35.8% occupancy amongst 1,962,853 square feet of retail space. Security concerns at the large vacant mall complex have been somewhat alleviated by the presence of Ford Motor Company renting the parking lot for vehicle storage. Ford provides 24/7 security to their fenced areas. However, vehicle storage is definitely not the highest and best use of this well located 82.15-acre tract at the interchange of US Highway 169 and NW Barry Road.

Other than Macy’s and the three restaurants, the remaining redevelopment area improvements (1,037,995 Sq.Ft.) are in an advancing state of deterioration and increasing levels of safety concern. The water infiltration damage due to failure of original roof structures is now extensive with high levels of mold resulting. The county no longer attributes any improvement value to JCPenney, Dillard’s, Wards, the two automotive centers, or the mall improvements (only land value). The county’s assigned appraised value has declined a precipitous 81.4% from the peak assessment in 2004 ($54.7M down to $10.1M). Metro North was functional when built back in the 1970s but retailing design and consumer preferences have changed radically in the interim, including growing competition from online sales. The proposed redevelopment area was previously declared blighted on June 20, 2010 by the city council (Ordinance No. 100283). In the interim, the proposed redevelopment area and the neighborhood has continued to deteriorate further.

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RETAIL MARKET ANALYSIS

National Trends According to the U.S. Census Bureau, national retail sales activity between 2000 and 2007 grew 37% at an average annual growth rate of 4.6%. Due to economic recession, retail sales nationally decreased 3.4% in 2008 and 7.3% in 2009. However, increases have followed annually from 2010 through 2014, with an overall increase of 28%. The table below provides the trend in retail sales (in trillions of dollars) in the U.S. since 2000:

Year Retail Sales Change 2000 $2.99 -3.3% 2001 $3.07 2.6% 2002 $3.25 2.2% 2003 $3.42 5.2% 2004 $3.52 3.0% 2005 $3.72 5.7% 2006 $3.86 3.7% 2007 $4.10 6.4% 2008 $3.96 -3.4% 2009 $3.68 -7.3% 2010 $3.90 6.1% 2011 $4.17 7.0% 2012 $4.35 4.3% 2013 $4.53 4.0% 2014 $4.70 3.7%

The rate of growth has decreased in each of the past three years.

US retail sales growth typically changes at the rate of 4% to 8% per year. Retails sales were actually up 0.7% during the first eleven months of 2008, but due to a poor performance in December (sales were down 2.7% from November 2008 and 9.8% from December 2007) the annual figure decreased 3.4%. Retail sales in December 2010 were up 8.1% compared to December 2009 and 14.5% compared to December 2008. December sales increased 6.5% in 2011 and 4.4% in 2012. Growth in 2013 (4.2%) was the slowest since 2009 while December 2014 sales increased a more robust 4.7%.

An inventory trend of U.S. shopping centers and overall retail space as reported by CoStar Group, Inc. is shown in the tables on the following pages. The growth in the number of shopping centers and square feet began to decrease significantly in 2Q 2009. Growth in the overall U.S. retail market has been almost none existent over the 6 years since 1Q 2009 (only 2,798 centers or 3.7% growth).

For many years the National Research Bureau (NRB) tracked the gross leasable area (GLA) per capita of the nation’s MSA shopping center inventory in their Shopping Center Census. In 2004 CoStar Group, Inc. purchased NRB and changed methodology and reporting. The tables on the following page provide the trend in GLA per capita nationally since 2000. The CoStar figures for 2007 and forward are based upon the total national retail inventory:

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US PER CAPITA RETAIL SQUARE FOOTAGE

Year NRB Chg. Year CoStar Chg. Year ICSC Chg. 2000 21.60 1.80% 2007 29.75 -0.05% 2007 23.0 0.44% 2001 21.80 0.93% 2008 30.80 3.54% 2008 23.1 0.43% 2002 21.90 0.46% 2009 31.23 1.39% 2009 24.2 4.76% 2003 22.10 0.91% 2010 38.10 22.0% 2010 24.0 -0.83% 2004 22.30 0.90% 2011 38.97 2.3% 2011 23.8 -0.83% 2005 22.60 1.35% 2012 39.98 2.6% 2012 23.7 -0.42% 2006 22.90 1.33% 2013 39.09 -2.2% 2013 23.8 0.42% 2014 39.29 0.5% 2014 -- --

U.S. SHOPPING CENTER INVENTORY TREND (COSTAR GROUP, INC.)

U.S. SHOPPING CENTERS Year Centers Change Total GLA Change 2007 72,132 0.7% 4,117,377,418 0.72% 2008 72,407 0.3% 3,333,378,691 0.51% 2009 75,088 0.1% 3,389,027,003 0.16% 1Q 10 75,419 0.4% 3,396,249,006 0.21% 2Q 10 75,474 0.1% 3,399,181,471 0.09% 3Q 10 75,500 0.0% 3,401,255,142 0.06% 4Q 10 75,548 0.1% 3,404,762,194 0.10% 1Q 11 75,609 0.1% 3,409,100,649 0.13% 2Q 11 75,640 0.0% 3,411,504,924 0.07% 3Q 11 75,669 0.0% 3,414,083,947 0.08% 4Q 11 77,035 0.1% 3,446,692,810 0.09% 1Q 12 77,081 1.8% 3,449,882,274 0.96% 2Q 12 77,137 0.1% 3,452,469,659 0.07% 3Q 12 77,174 0.0% 3,454,933,240 0.07% 4Q 12 77,233 0.1% 3,459,312,964 0.13% 1Q 13 77,274 0.1% 3,462,367,313 0.09% 2Q 13 77,311 0.0% 3,464,370,978 0.06% 3Q 13 77,365 0.1% 3,468,459,887 0.12% 4Q 13 77,413 0.1% 3,472,251,150 0.11% 1Q 14 77,467 0.1% 3,475,527,812 0.09% 2Q 14 77,508 0.1% 3,478,395,196 0.08% 3Q 14 77,546 0.0% 3,481,988,128 0.10% 4Q 14 77,572 0.0% 3,485,520,259 0.10%

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U.S. RETAIL MARKET INVENTORY TREND (COSTAR GROUP, INC.)

TOTAL U.S. RETAIL MARKET Year Buildings Change Total GLA Change 2006 817,872 -- 9,409,340,524 -- 2007 828,123 1.3% 9,610,012,054 2.1% 2008 842,490 13.6% 9,818,111,000 2.31% 2009 847,366 5.7% 9,915,638,987 -0.69% 2010 849,902 4.8% 9,962,934,860 -0.98% 2011 852,056 3.0% 10,001,816,782 1.04% 1Q-12 852,734 0.1% 10,012,943,344 0.11% 2Q-12 853,144 0.0% 10,019,925,426 0.07% 3Q-12 853,579 0.1% 10,028,355,975 0.08% 4Q-12 854,276 0.1% 10,041,886,825 0.13% 1Q-13 854,821 0.1% 10,050,960,099 0.09% 2Q-13 855,326 0.1% 10,058,918,839 0.08% 3Q-13 855,903 0.1% 10,071,862,124 0.13% 4Q-13 856,440 0.1% 10,080,108,871 0.08% 1Q-14 857,016 0.1% 10,092,082,379 0.12% 2Q-14 857,381 0.0% 10,098,719,634 0.07% 3Q-14 857,819 0.1% 10,108,029,721 0.09% 4Q-14 858,148 0.0% 10,117,449,857 0.09%

The GLA per capita reported by NRB steadily increased from 1992 to 2006. The figures for 2006 forward are from CoStar and indicate good growth in 2008 followed by lower levels of growth thereafter. It should be noted that according to the 2007 Economic Census, there were 1,122,703 retail establishments in the United States and a total of 14.2 billion square feet of retail space. Using these figures, there are approximately 46.6 square feet of retail space per capita in the nation. ICSC reports a much lower figure of 23.8 square feet per capita. The US Bureau of Labor Statistics reports 1,042,413 retail establishments as of 2Q 2014, suggesting a 7.2% decline since the Economic Census in 2007. Utilizing U.S. Energy Information Administration figures for retail building areas (14.56 billion Sq.Ft. in 2012) the per capita figure decreased only slightly during the recession to 46.2 square feet.

The amount of new retail space constructed in the U.S. decreased noticeably in 2008 (-8%) and precipitously in 2009 (-50%) and 2010 (-51%). The decrease slowed in 2011, 2012, and 2013 but increased noticeably in 2014. The following table indicates the trend in US retail construction in million square feet per year:

Year Construction Change 2006 260.4 5.2% 2007 255.2 -2.0% 2008 234.6 -8.1% 2009 117.6 -49.9% 2010 57.4 -51.2% 2011 48.3 -15.9% 2012 44.8 -7.2% 2013 41.8 -6.7% 2014 60.6 45.0%

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The combined starts in the 4 years between 2010 and 2013 (192.3) is less than in any single year between 2003 and 2008 (6-year span). At the close of 2014, CoStar reports 49.37 million square feet under construction nationally.

Due to increasing sales and moderating construction, NRB/CoStar indicates centers were generating increasing sales per square foot at growth rates of 2% to 5% annually prior to the recent recession indicating the overall supply and demand balance was acceptable.

Year Sales per SF Chg. 2000 $278.21 2.30% 2001 $282.45 1.52% 2002 $286.28 1.36% 2003 $293.12 2.39% 2004 $305.25 4.14% 2005 $316.03 3.53% 2006 $328.76 4.03% 2007 $320.37 -2.55% 2008 $283.10 -11.6% 2009 $259.15 -8.5% 2010 $274.96 19.2% 2011 $294.21 7.0% 2012 $306.86 4.3% 2013 $319.74 4.2%

From 2007 to 2009, retail sales per square foot decreased annually including decline of 21.2% from 2006. However, in 2010 the figure increased 19.2% to $275 per square foot. Although the recession lowered total sales it also forced the retirement or conversion of older dysfunctional centers (lowering square footage).

National retail figures published by REIS indicate increasing vacancy from 2006 to 2010:

Year Vacancy 2006 7.2% 2007 7.5% 2008 9.1% 2009 10.6% 2010 11.0% 2011 11.0% 2012 10.6% 2013 10.4% 2014 10.2%

Vacancy increased during 2010 and held steady in 2011 and declined slightly in 2012, 2013, and 2014. REIS reports 1Q 2012 vacancy decline of 10 bps was the first decrease since 2Q 2005. REIS predicted continued decline to 10.1% by the end of 2014 which actually ended at a negligibly higher 10.2%.

Real Capital Analytics, Inc. reports a marked decrease in sales of retail properties in 2008 with only slight increases in 2009. Sales activity rebounded annually from 2010 to 2013. The number of transactions increased 29% to 7,813 properties in 2014 while total volume increased 31% to

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$82.6 billion. The average sale price equated to $202 per square foot. The average retail cap rate nationally declined 25 bps in 2014 to 6.8%.

RCA – RETAIL TRANSACTION SUMMARY ($BIL) Year Individual Portfolio Entity Total 2011 $26.0 $9.1 $9.4 $44.6 2012 $40.9 $12.4 $3.7 $57.0 2013 $40.3 $16.0 $6.5 $62.9 2014 $54.8 $17.6 $10.2 $82.6

The sales volume in 2014 was nearly twice that of 2011.

RCA – RETAIL SECTOR SUMMARY ($MIL)

Sector Volume YOY Δ Prop. YOY Δ $/SF OAR YOY Δ NE/Mid-Atlantic $20,262 45% 1,506 18% $296 6.3% -20% Southeast $17,542 31% 1,732 20% $159 7.1% -30% Midwest $9,640 -12% 1,075 10% $135 7.3% -4% Southwest $9,486 6% 1,109 22% $171 7.1% -15% West $18,821 30% 1,503 31% $250 6.2% -45% Total $82,608 31% 7,813 29% $202 6.8% -25%

The Midwest sector, which contains Kansas City, had the worst year-over-year (YOY) performance while the West sector had the strongest performance.

Below are the preference ratings for regional mall, power center, and neighborhood shopping centers reported by Real Estate Research Corporation (RERC) over the past eight quarters. The preference ratings are on a scale of 1 to 10 with 1 representing “very bad” investment conditions and 10 representing “very good” investment conditions.

Date Regional Mall Power Center Neighborhood 2Q 2013 6.4 (5th) 5.4 (9th) 6.8 (4th) 3Q 2013 6.4 (4th) 5.4 (8th) 6.2 (5th) 4Q 2013 5.9 (6th) 5.8 (9th) 6.7 (4th) 1Q 2014 5.9 (3rd) 5.4 (1st) 6.6 (7th) 2Q 2014 6.2 (6th) 5.3 (1st) 6.1 (6th) 3Q 2014 5.9 (3rd) 5.8 (2nd) 6.4 (5th) 4Q 2014 5.9 (8th) 5.8 (9th) 6.6 (3rd) 1Q 2015 5.7 (7th) 5.4 (8th) 6.5 (4th)

At the end of 2004 the three retail types were the top rated investments (Neighborhood, Power Center, and then Regional Mall). However, by the end of 2007, regional malls were the least preferred investment, power centers were next to last, and neighborhood shopping centers were tied with hotels and industrial-flex for the next worse ranking. For the past eight quarters, retailing demand has fluctuated widely with neighborhood centers ranging between the 3rd and 7th ranking, regional malls ranging from the 3rd to 8th ranking, and power centers ranging from 1st to the 9th ranking. The noticeable decline in Regional Mall reflects the de-malling of America and the rise of the “new urbanist” and “life-style center” (open air) concepts.

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PriceWaterhouseCoopers (PwC) also conducts institutional investor surveys. The First Quarter 2015 PwC Real Estate Investor SurveyTM reported average overall cap rates of 6.38% for regional malls, 6.56% for power centers, and 7.00% for neighborhood shopping centers. The following are average investment criteria for retail as reported by PwC and RERC in 1Q 2015:

Regional Malls Power Centers Neighborhood Criteria RERC PWC RERC PWC RERC PWC IRR 7.4% 8.19% 7.9% 7.92% 7.7% 8.09% Overall Cap Rate 5.6% 6.38% 6.5% 6.56% 6.2% 7.00% Residual Cap Rate 6.3% 6.96% 7.0% 7.02% 6.7% 7.19% Rent Change Rate 3.1% 2.67% 2.6% 1.67% 2.9% 1.84% Expense Change Rate 2.8% 2.71% 2.8% 2.83% 2.8% 2.72%

Regional malls generally generate the lowest overall cap rates. However, the PwC survey indicates neighborhood shopping centers and power centers performing quite near regional malls. According to PwC surveys in 1Q 2015, mall cap rates were up 17 bps from the previous quarter but were down 18 bps from one year prior while being down 85 bps from three years prior. Real Capital Analytics reports a significant decline occurred in the trading of malls in 2006 (a large 53% decrease from 2005). Part of the decline results from a lack of quality product on the market. It is estimated that 90% of better quality mall assets are now held by the top performing public owners and are rarely traded. Investors are forced into bidding wars in secondary markets. Re-leasing of empty anchor space continues to be a problem. Vacancy is rising (8.0% nationally per REIS) and more closings are being announced (Sears, JCPenney, Jones New York). Although all investors surveyed by PwC project stable cap rates over the next 6 months, some investors project property value declines of up to 10% for certain malls over the next 12 months. The continued popularity of big-box retailers and discount giants (Walmart, Kohl’s, and Target), as well as, new open air retail concepts (new urbanism, life-style centers) continue to erode the draw of less than premier malls.

The average overall cap rate reported by PwC for power centers in 1Q 2015 was 6.56%, down 4 bps from the previous quarter while being 11 bps lower than the prior year and 76 bps lower than three years prior. Overall capitalization rates continue to contract as strong buyer competition exists for limited inventory. Investor still are cautious concerning the excessive supply, tenants reducing store sizes are closing stores, and perhaps continued consolidation or failures. Another factor is the limited growth potential of the income stream: power centers are dominated by a few tenants on long-term leases so the rent levels at the time of purchase are all an owner can expect for some period of time. PwC surveys indicate that 83% of respondents believe cap rates for power centers will remain unchanged over the next 6 months while 17% believe declines will occur. Investors surveyed indicate expectations of 10% value growth over the next 12 months.

The average going-in cap rate reported by PwC for neighborhood/community shopping centers for 1Q 2015 decreased 5 bps to 7.00%, a level 3 bps higher than one year prior but 18 bps lower than three years prior. Although overall rates are generally higher than regional malls, the PwC survey reveals investors believe neighborhood/community centers are usually stable investments. (Indeed, 75% of investors surveyed by PwC project stable cap rates over the next 6 months with the remainder evenly split between increases or decreases.) REIS reported 10.2% vacancy amongst neighborhood and community shopping centers nationally at the close of 2014. As with the other retail property types, limited offerings are creating frenzied bidding.

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Even in times of recession consumers still need to purchase necessities such as food and to complete daily tasks such as banking, laundry, and dry cleaning. An emphasis on strong supermarket anchors, proper location, tenant mix, and layout are critical. Some observers also believe that the convenience orientation of strip centers will make them less vulnerable to losing market share to Internet retailers. The weakness of the neighborhood segment is that the amount of small-shop space makes the centers management intensive, long absorption periods are the norm, and collection loss can be excessive. The potential for rapid obsolescence is also a negative factor. Continued battles among major grocery chains for market share are expected to create problems for some centers.

The Commerce Department reports U.S. e-commerce retail sales decreased in 2008 (-4.5%) more than national retail sales (-3.4%) but thereafter have increased at rates significantly higher than national retail sales. E-commerce retail sales in 2009 amounted to $141.1 billion comprising 3.8% of national retail sales. By 2014, e-commerce sales had increased to $303.9 billion comprising 6.5% of national retail sales. Over the past 10 years the e-commerce percentage of national retail sales has grown from roundly 2% to approaching 7%. A graph showing the e- commerce share of US retail sales is shown below:

A tabulation of US retail sales versus e-commerce sales is included on the following page. In 4Q 2010, national retail sales broke the $1 trillion level for the first time since 2Q 2008 and remained above that threshold each of the next 17 quarters. Meanwhile, e-commerce sales broke the 5% barrier in 2Q 2012 and continued upward breaking the 6% barrier in 4Q 2013 and approaching 7% in 1Q 2015. Notably, e-commerce sales have not experienced a quarterly decline or decline in the percentage of overall retail sales since 2Q 2011 (15 consecutive quarters).

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U.S. RETAIL SALES & E-COMMERCE – MONTHLY Period Retail Sales ($B) E-Sales ($B) E% Total Sales 1Q 2003 $772,185 $11,928 1.54% 2Q 2003 $858,787 $12,477 1.45% 3Q 2003 $872,506 $13,291 1.52% 4Q 2003 $912,109 $17,512 1.92% 1Q 2004 $834,829 $15,515 1.86% 2Q 2004 $870,480 $16,065 1.85% 3Q 2004 $873,596 $16,952 1.94% 4Q 2004 $938,573 $21,992 2.34% 1Q 2005 $839,112 $19,529 2.33% 2Q 2005 $937,779 $20,141 2.15% 3Q 2005 $947,835 $21,276 2.24% 4Q 2005 $994,452 $27,080 2.72% 1Q 2006 $899,329 $25,846 2.87% 2Q 2006 $993,153 $26,363 2.65% 3Q 2006 $982,936 $29,085 2.96% 4Q 2006 $982,809 $30,592 3.11% 1Q 2007 $999,534 $31,613 3.16% 2Q 2007 $1,012,375 $33,477 3.31% 3Q 2007 $1,020,404 $34,688 3.40% 4Q 2007 $1,072,153 $38,992 3.64% 1Q 2008 $1,025,344 $33,645 3.28% 2Q 2008 $1,015,023 $33,897 3.34% 3Q 2008 $998,082 $33,494 3.36% 4Q 2008 $925,889 $31,482 3.40% 1Q 2009 $909,867 $31,708 3.48% 2Q 2009 $903,784 $34,823 3.85% 3Q 2009 $922,905 $36,587 3.96% 4Q 2009 $938,636 $37,996 4.05% 1Q 2010 $959,264 $38,719 4.04% 2Q 2010 $963,671 $40,419 4.19% 3Q 2010 $972,603 $42,381 4.36% 4Q 2010 $1,003,648 $44,517 4.44% 1Q 2011 $1,016,544 $46,065 4.53% 2Q 2011 $1,047,396 $44,473 4.25% 3Q 2011 $1,044,153 $48,585 4.65% 4Q 2011 $1,065,316 $51,575 4.84% 1Q 2012 $1,081,347 $53,091 4.91% 2Q 2012 $1,075,859 $54,750 5.09% 3Q 2012 $1,089,884 $57,051 5.23% 4Q 2012 $1,104,646 $59,545 5.39% 1Q 2013 $1,118,329 $61,720 5.52% 2Q 2013 $1,112,179 $64,014 5.76% 3Q 2013 $1,120,658 $68,026 6.07% 4Q 2013 $1,126,312 $68,026 6.04% 1Q 2014 $1,133,058 $70,102 6.19% 2Q 2014 $1,160,023 $73,586 6.34% 3Q 2014 $1,167,011 $76,172 6.53% 4Q 2014 $1,168,601 $77,558 6.64% 1Q 2015 $1,151,196 $80,259 6.97%

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The following table and chart provide the annual e-commerce sales figures for the US since 2000.

U.S. RETAIL SALES & E-COMMERCE – ANNUAL Period Retail Sales ($B) E-Sales ($B) E% Total Sales 2000 $3,071,692 $28,349 0.92% 2001 $3,153,315 $34,595 1.10% 2002 $3,245,407 $43,466 1.34% 2003 $3,415,587 $55,208 1.62% 2004 $3,517,478 $70,524 2.00% 2005 $3,719,178 $88,026 2.37% 2006 $3,858,227 $111,886 2.90% 2007 $4,104,466 $138,770 3.38% 2008 $3,964,338 $132,518 3.34% 2009 $3,675,192 $141,114 3.84% 2010 $3,899,186 $166,036 4.26% 2011 $4,173,409 $190,698 4.57% 2012 $4,351,736 $224,437 5.16% 2013 $4,477,478 $261,786 5.85% 2014 $4,628,693 $297,418 6.43%

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Metropolitan Kansas City Trends Following is a summary of combined retail sales (total and per capita) for the six major counties within the Kansas City MSA (Jackson, Platte, and Clay on the Missouri side and Johnson, Wyandotte, and Leavenworth on the Kansas side):

Year Retail Sales Chg. Per Capita Chg. US Per Capita Chg. 2000 $22,053,893,359 -- $13,817 -- $10,573 -- 2001 $22,784,389,693 3.3% $14,125 2.2% $10,746 1.6% 2002 $23,798,208,296 4.4% $14,589 3.3% $10,877 1.2% 2003 $22,782,558,181 -4.3% $13,851 -5.1% $11,247 3.4% 2004 $23,889,742,199 4.9% $14,411 4.0% $11,863 5.5% 2005 $24,662,875,339 3.2% $14,747 2.3% $12,487 5.3% 2006 $25,670,004,875 4.1% $15,171 2.9% $12,984 4.0% 2007 $26,122,859,470 1.8% $15,261 0.6% $13,276 2.2% 2008 $27,625,072,362 5.8% $15,974 4.7% $12,978 -2.2% 2009 $24,701,011,183 -10.6% $14,115 -11.6% $11,834 -8.8% 2010 $24,426,441,170 -1.1% $13,819 -2.1% $12,419 4.9% 2011 $26,001,421,647 6.4% $14,613 5.7% $13,275 6.9% 2012 $27,138,199,253 4.4% $15,129 3.5% $13,831 4.2% 2013 $27,838,930,224 2.6% $15,387 1.7% $14,329 3.6% 2014 $29,453,743,048 5.8% $16,102 4.6% $14,723 2.8%

Retail sales fell precipitously in 2009 (-10.6%) and 2010 (-1.1%) as a result of the economic recession but were followed positive increases in 2011 (6.4%), 2012 (4.4%), 2013 (2.6%), and 2014 (5.8%). Per capita retail sales in Kansas City exceeded the national average by 30.7% in 2000 but that advantage decreased to 12.8% by 2014.

Real Capital Analytics reports in US Capital Trends 2014 Year in Review that the Kansas City retail market (strip centers) had 24 transactions in 2014 with volume of $225.8 million. Sale prices ranged from $74 to $653 per square foot and averaged $133 per square foot, slightly above the Midwest average of $124 per square foot. Overall capitalization rates ranged from 6.3% to 8.5% averaging 7.3%, slightly below the Midwest average of 7.96%.

Lane4 Property Group, one of Kansas City’s leading retail brokers, publishes an annual review (Kansas City Retail Report) and quarterly synopsis (The Orange Report, based upon CoStar figures) of the Kansas City shopping center market. Following is the quarterly performance of the Kansas City retail market as reported by Lane4 over the past 10 quarters:

Quarter GLA Occupancy Rent 4Q 2012 109,342,244 91.0% $12.44 1Q 2013 107,931,410 91.2% $12.43 2Q 2013 108,478,617 91.3% $12.34 3Q 2013 108,830,457 91.5% $12.38 4Q 2013 105,826,378 91.6% $12.24 1Q 2014 108,277,196 91.4% $12.58 2Q 2014 109,087,621 91.5% $12.60 3Q 2014 109,780,093 91.5% $12.39 4Q 2014 109,697,613 91.9% $12.28 1Q 2015 110,364,847 91.7% $12.29

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Despite an addition of 1.85 million square feet of inventory to the retail market the occupancy and average rent have remained fairly steady.

Lane4 (via CoStar) reports higher vacancy for shopping centers. A table of vacancy for Kansas City shopping centers covering the past 12 quarters is included below:

Quarter Vacancy 1Q 2012 13.6% 2Q 2012 12.9% 3Q 2012 12.5% 4Q 2012 12.3% 1Q 2013 11.9% 2Q 2013 11.6% 3Q 2013 11.4% 4Q 2013 11.9% 1Q 2014 11.5% 2Q 2014 11.8% 3Q 2014 11.9% 4Q 2014 11.4%

Shopping center vacancy has declined 2.20 percentage points over the past 12 quarters.

The 2015 Lane4 survey includes an inventory of over 65.0 million square feet in shopping centers of over 50,000 square feet. Lane4 segments the Kansas City metropolitan area into 9 geographic submarkets. (The Northwest and Northeast Kansas City submarkets comprise the Northland/North of the River including Platte and Clay Counties.)

% Of Total Total Vacancy Avg. Lease Submarket Surveyed Sq.Ft. Rate Rate PSF Northwest Kansas City 6.3% 4,161,866 5.3% $13.68 Northeast Kansas City 12.7% 8,308,515 10.3% $11.74 Central Kansas City 3.5% 2,283,462 4.0% $16.95 South Kansas City 7.5% 4,891,595 11.4% $11.35 Southeast Trade Area 8.1% 5,332,542 8.6% $11.74 East Jackson County 16.9% 11,090,234 8.5% $9.91 North Johnson County 17.9% 11,734,861 11.8% $11.93 South Johnson County 20.3% 13,315,169 10.1% $16.30 Wyandotte County 6.8% 4,440,405 18.8% $12.02 TOTAL 100.0% 65,558,649 10.2% $12.85

Citywide retail vacancy decreased to 10.3% in 2011, increased to 11.9% in 2012, decreased to 10.6% in 2013, and decreased again in 2014 to 10.2%. Unfortunately, average rents decreased over the same period from $13.22 to $12.88 to $12.85 per square foot, suggesting owners were exchanging lower rent for higher occupancy.

Block Real Estate Services (BRES), the largest local brokerage serving the Kansas City metropolitan area, also publishes an annual report which covers 8 geographic areas and encompasses 109.8 million square feet. The 2015 market statistics are included in the table on the following page. The Block figures indicate lower metrowide vacancy of 8.5% and lower average rents of $12.39 per square foot.

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Cassidy Turley publishes a 2014 Retail Forecast in which they breakdown retail performance by product type for the Kansas City market:

The Cassidy survey indicates malls with by far the highest occupancy (97.1%) with the other property types bunched at 10.0% to 15.8%. As would be expected average rents at malls ($24.68) also exceed the competing property types ($10.98 to $16.03). Cassidy reports only 350,487 square feet delivered in 2013 and 10,150 square feet under construction.

CoStar Group in their The CoStar Retail Report First-Quarter 2015 National Retail Market provides the following retail market performances figures for the Kansas City area:

Submarket # Bldgs. Total GLA Vacancy Absorption Deliveries UC Rent General Retail 6,163 45,848,961 5.3% 499,566 546,382 182,000 $11.11 Malls 17 12,506,641 9.6% -23,368 93,000 258,910 $24.50 Power Centers 23 10,094,026 5.3% -37,564 8,850 0 $17.16 Shopping Centers 683 40,005,951 11.4% 388,682 396,672 24,000 $11.28 Specialty Center 3 1,245,034 12.8% -4,701 3,000 0 $12.11 Total Retail Market 8,229 109,697,613 8.1% 822,615 1,047,904 464,910 $12.28

Per CoStar, mall vacancy in Kansas City (9.6%) is much higher than nationally (5.7%). General retail also is outperforming the more typical shopping center categories. The overall retail vacancy in Kansas City of 8.1% underperforms the CoStar national figure of 6.1% but outperforms the vacancy reported by REIS (11.6%).

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Early in the recession much of the vacant retail square footage resided in “big-box spaces.” The high level of big-box vacancy resulted from three factors: 1) repositioning as a result of mergers; 2) relocation; and 3) bankruptcies. The RH Johnson Company reported 34 empty big boxes existed at the beginning of 2007. Many of these boxes previously housed Venture, K-Mart, or Payless Cashways. In spite of big-box vacancy, big-box retailers continued to drive new construction in Kansas City. Home Depot, Wal-Mart, Costco, Dick’s Sporting Goods, Sports Authority, Lowe’s, Kohl’s, Target, Cabela’s, Nebraska Furniture Mart, OfficeMax/Office Depot, Best Buy, and Bass Pro were in the process of establishing or expanding their presence in the area and generated considerable new construction prior to the recession. Macy’s also added new department stores and Von Maur entered the market. Menards is currently entering the market. Now much of this empty space has been demolished or redeveloped.

In order to develop a critical mass, national retailers generally have sought to locate in three or more submarkets—usually the Country Club Plaza, Johnson County, Independence/Blue Springs/Lee’s Summit and/or the Northland (Platte and Clay Counties).

Per Lane4, average rental rates (triple net) in the different submarkets range from a low of $9.91 in Eastern Jackson County to $16.95 per square feet in Central Kansas City (dominated by the Country Club Plaza). Block Real Estate Services, LLC provides the following average rents per square foot (net) by retail property type:

Property Type Average Rents Class A Specialty & Lifestyle $27.60–$37.70 Anchored Retail Centers $18.00–$28.00 Class B Small Shops $10.00–$18.00 New Big Box $9.14–$16.25 2nd Generation Big Box $5.00–$9.00

Lane4 provides the following rents by type of center:

Property Type Avg. Rents Community Center $12.90 Lifestyle Center $26.93 Neighborhood Center $10.36 Power Center $15.41 Strip Center $11.88

The retail market in Kansas City experienced decreasing starts between 1996 and 1999. However, significant new development of over 3 million square feet occurred in 2000, 2001, and 2006. The historical trend in new construction is shown in the table on the following page in million of square feet per year:

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KC AREA RETAIL STARTS

Year Starts Change 2002 2.26 -8.8% 2003 1.35 -40.3% 2004 1.04 -23.0% 2005 2.15 106.7% 2006 3.00 39.5% 2007 0.50 -83.3% 2008 1.20 140.0% 2009 1.15 -4.2% 2010 0.40 -65.2% 2011 0.32 -20.0% 2012 0.77 140.6% 2013 0.56 -27.3% 2014 0.53 -5.4%

Construction starts decreased annually from 2001 to 2004, before increasing in 2005 and 2006. Since 2006, the trend has generally been downward (excluding 2008 and 2012). Even in the increase year of 2012, starts were still only 26% of the 2006 figure and a decrease followed again in 2013 and 2014.

Limited retail construction occurred during the recent recession, mostly fast-food and drugstores. Mardel and Hobby Lobby opened at The Falls at Crackerneck in Independence, Missouri in 2010. Development continues to occur at Plaza at the Speedway in Kansas City, Kansas. 39th & Rainbow is a mixed-use project (30,560 Sq.Ft. of retail, 70,000 Sq.Ft. of office/multi-care, and 83 hotel rooms) in Kansas City, Kansas adjoining the KU Medical Center. After stalling Corbin Park (1.1 million Sq.Ft.), City Center Lenexa (400,000 Sq.Ft.), and Prairiefire at Lionsgate (348,000 Sq.Ft. Phase I) are now moving forward again.

The biggest retailing news in 2014 is the opening of the coveted Swedish furniture retailer IKEA (349,000 square feet, 1,200 parking spaces, including 500 covered stalls) in Merriam, Kansas. The store has a 450-seat cafeteria and IKEA employs about 350, with between 60 and 80 food service jobs. IKEA was built on a site adjoining Interstate 35 in Merriam after demolition of new retail structures that had never been occupied. The first Scheels sporting goods megastore (220,000 square feet and 380 employees) in the metropolitan area will open in 2015 in Overland Park, Kansas at Corbin Park.

After obtaining court approval for the demolition of the long vacant Dillard’s space at Metro North Mall, the long-term owner decided to sell the mall to the re-developer of the Blue Ridge Mall and Antioch Malls in April 2015. It is likely the entire mall, except for Macy’s, will be demolished. The Gateway in Mission, Kansas that stalled out for an aquarium anchor has now settled on Walmart and Sprouts Farmers Market to anchor that project. However, construction has still not begun on the long awaited project. Additional planning is underway for a large mixed-use development to be located in the southeast quadrant of Interstate 435 and Missouri Highway 152 just west of Liberty. The struggling Metcalf South Mall and 95 West Shopping Center in Johnson County were purchased by Lane4 Property Group of Kansas City with backing from the Kroenke Group, a venture owned by multibillionaire Stan Kroenke from Columbia, Missouri (husband of the daughter of Sam Walton). The new owners are in the midst of

METRO NORTH CROSSING BLIGHT STUDY PAGE 62 BELKE APPRAISAL & CONSULTING SERVICES, INC. RETAIL MARKET ANALYSIS discussions with the city and neighborhood groups about the redevelopment of the overall site containing 62.11 acres situated at the prominent intersection of Metcalf Avenue and 95th Street.

With perhaps an increase of nearly 14 million square feet of new retail space being added between 2000 and 2005, representing a 32% increase in supply (27.1M to 35.8M square feet per RH Johnson), ICSC reports the Kansas City metropolitan area has 39.6 square feet of retail space per person compared with a national average of 23.8 square feet per capita. These figures suggest an oversupply of retail space in Kansas City as evidenced by the citywide vacancy, as reported by CoStar, of 8.1% versus 6.1% for the nation.

Much of the new retail construction has been encouraged by tax increment financing (TIF). Kansas has a weak TIF law but Missouri has been rather generous in subsidizing new projects. Traditional real estate tax abatements pale in comparison to the subsidy that can be generated by capturing retail sales taxes. While some urban redevelopment projects are being supported by TIF, several suburban ventures are also being TIFed. Suburban TIFs are often justified by the poor funding and design standards of the Missouri Highway Department and the often times difficult topography found in the metro area. Kansas has countered Missouri TIF subsidy with the use of STAR Bonds which allow local governments to use future sales, use and transient guest tax revenue to pay current redevelopment costs. STAR Bonds have enabled development of the Kansas Speedway and Village West Tourism District in western Wyandotte County.

Northland Trends General Retail sales are heavily dependent on disposable income. The following table suggests the strength of household income in Platte and Clay Counties (Northland) compared to other competing jurisdictions:

2010 Median Jurisdiction Household Income Johnson County, KS $80,454 Platte County, MO $71,466 Clay County, MO $62,960 Cass County, MO $62,615 Kansas City CBSA $60,442 Leavenworth, KS $60,235 Miami County, KS $57,649 United States $54,442 State of Kansas $52,386 Jackson County, MO $51,101 State of Missouri $49,074 Lafayette, MO $47,826 Wyandotte County, KS $44,235

Median household income in Platte County is 18% higher than the Kansas City CBSA figure while Clay County is 4% higher.

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Average household retail expenditures in both Platte and Clay Counties are above the metropolitan average:

2010 Avg. Household Jurisdiction Retail Expenditures Johnson County, KS $33,692 Platte County, MO $28,147 Clay County, MO $25,582 Kansas City DMA $25,435 Jackson County, MO $21,556 Wyandotte County, KS $18,232

Platte County garners 6.7% of retail sales amongst the six counties shown above while housing only 5.1% of the population of these six counties. Clay County garners 11.4% of retail sales for the six counties while housing 12.6% of the six county’s population. The opening of Zona Rosa, Parkville Commons, The Shoppes at Boardwalk, Tuileries Plaza, and Tiffany Springs Market Center has fueled retail sales within Platte County while the decline of Metro North Mall has negatively impacted Clay County retail sales.

The following table provides the trend in retail sales for both counties and the combined total since 2000:

Retail Sales Annual Retail Sales Annual Retail Sales Annual Year ($000) Growth Year ($000) Growth Year ($000) Growth Platte County, MO Clay County, MO Combined Platte & Clay 2000 $948,079 10.69% 2000 $2,592,430 2.66% 2000 $3,540,510 4.69% 2001 $1,063,762 12.20% 2001 $2,683,486 3.39% 2001 $3,747,248 5.84% 2002 $1,114,500 4.77% 2002 $2,713,269 1.11% 2002 $3,827,769 2.15% 2003 $1,190,705 6.84% 2003 $2,775,762 2.30% 2003 $3,966,466 3.62% 2004 $1,306,590 9.73% 2004 $2,826,272 1.82% 2004 $4,132,862 4.20% 2005 $1,420,311 8.70% 2005 $2,978,544 5.39% 2005 $4,398,855 6.44% 2006 $1,574,638 10.87% 2006 $3,063,341 2.85% 2006 $4,637,979 5.44% 2007 $1,651,329 4.87% 2007 $3,097,799 1.12% 2007 $4,749,128 2.40% 2008 $1,790,450 8.42% 2008 $3,089,281 -0.27% 2008 $4,879,730 2.75% 2009 $1,678,394 -6.26% 2009 $2,839,003 -8.10% 2009 $4,517,397 -7.43% 2010 $1,675,842 -0.15% 2010 $2,880,742 1.47% 2010 $4,556,584 0.87% 2011 $1,750,119 4.43% 2011 $2,962,719 2.85% 2011 $4,712,838 3.43% 2012 $1,821,813 4.10% 2012 $3,114,996 5.14% 2012 $4,936,809 4.75% 2013 $1,842,630 1.14% 2013 $3,166,908 1.67% 2013 $5,009,538 1.47% 2014 $1,934,565 4.99% 2014 $3,411,680 7.73% 2014 $5,346,245 6.72%

The increase in annual retail sales in Platte County between 2000 and 2014 has been 104.1% at compound annual growth of 5.2%. Over the same period Clay County retail sales increased only 51.0% at compound annual growth of 3.0%.

Per Lane4 Property Group, the combined market area includes 12,470,381 square feet of retail space and is experiencing vacancy of 8.63%, a figure well below the metrowide average of 10.2%. A higher percentage of the vacancy is in Clay County (10.3%) than Platte County (5.3%). Very little new development is under construction. Planning continues on Metro North Mall and Shoal Creek Town Center. Menards has purchased a Northland site (AA Highway and MO-152) but has decided to delay entry into the Kansas City market. Sam’s Wholesale Club recently

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opened a new wholesale club near the interchange of Missouri Highway 152 and Interstate 35 and is reportedly pursuing a site near Missouri Highway 152 and Interstate 29. Average Northland retail rents of $12.41 per square foot are slightly below (-3.4%) the metrowide average of $12.85 per square foot.

Starting in 2008, Lane4 Property Group divides the Northland into Northwest and Northeast submarkets using US 169 Highway. A history of vacancy within the neighborhood, as reported by Lane4, is shown in the table below and graphed thereafter:

North KC Retail Market 2014 2013 2012 2011 2010 2009 2008 Northwest KC Total Retail Sq.Ft. 4,161,866 4,119,346 3,988,047 3,817,357 4,342,901 3,167,628 2,944,039 Vacancy Rate 5.3% 5.2% 7.5% 8.8% 9.7% 4.4% 5.7% Average Lease Rate ($/SF) $13.68 $13.39 $14.72 $17.37 $17.28 $20.24 $14.92 Northeast KC Total Retail Sq.Ft. 8,308,515 8,057,951 7,993,231 7,684,685 7,684,685 5,223,128 5,028,278 Vacancy Rate 10.3% 8.5% 10.2% 11.3% 10.0% 9.7% 6.2% Average Lease Rate ($/SF) $11.14 $10.82 $11.54 $12.06 $12.06 $10.46 $17.49 Northland Total Retail Sq.Ft. 12,470,381 12,177,297 11,981,278 11,502,042 12,027,586 8,390,756 7,972,317 Vacancy Rate 8.63% 7.38% 9.30% 10.5% 9.9% 7.7% 6.0% Average Lease Rate ($/SF) $12.41 $11.71 $12.62 $13.82 $13.94 $14.15 $16.54

DTZ (formerly Cassidy Turley) surveys of the Northland reflect similar vacancy to CoStar but higher average rents. Block Real Estate Services, LLC surveys show higher occupancy than CoStar but lower average rents. Year-end surveys for DTZ and Block are included on the following page.

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CASSIDY TURLEY – 4Q 2014 RETAIL MARKET

DTZ reports 4Q 2014 vacancy in the Northland of 8.7% (amongst 9,393,000 Sq.Ft.) just below the metropolitan average of 8.8% while average rents in the Northland ($13.27) trailed the metropolitan average rent ($13.90) by 4.5%.

BLOCK REAL ESTATE SERVICES – 2015 REAL ESTATE REPORT

Block reports 4Q 2014 vacancy in the Northland of 7.9% (amongst 17,368,609 Sq.Ft.) below the metropolitan average of 8.5% while average rents in the Northland ($11.80) trailed the metropolitan average rent ($12.39) by 4.8%.

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Clay County The Metro North regional shopping mall (built 1973 to 1976), located at US 169 Highway and Barry Road in western Clay County, contains 1,240,318 square feet. However, the mall fell on difficult times the past decade, and the mall was closed on April 15, 2014 when only two tenants remained open. Macy’s, the only remaining anchor (Montgomery Wards, JCPenney, and Dillard’s have vacated), remains open. The demise of Metro North is due in large part to the success of Zona Rosa (new urbanist) in westerly adjoining Platte County. In late 2006, it was announced by the owners that Alberta Development Partners LLC (a suburban Denver-based developer) would guide the redevelopment of the mall (to be renamed The Streets at Barry Towne) and preliminary plans called for a 2.1 million-square-foot retail, residential, restaurant and entertainment facility with a theater, commons area for community events and park-like areas. In early 2008, Alberta withdrew from the redevelopment. The owners then announced plans to redevelop the mall themselves (proposed $200 million investment) and won condemnation rights for space not owned and planned to demolish all of the mall but Macy’s. However, the long-term owner decided to sell the property in April 2015 to the re-developer of the Blue Ridge Mall and Antioch Mall for $6 million.

Toys 'R Us and Children’s Mercy Hospital are other uses in the Metro North neighborhood. Best Buy closed the Metro North store after opening new stores at Shoal Creek Plaza (KCMO but associated with Liberty) and Tiffany Springs Market Center in Platte County. The space recently re-open as PowerPlay Family Entertainment Center.

Kohl’s Department Stores opened an 85,000-square foot store in Barry Towne, across US 169 Highway to the west of Metro North in 1996. Target, Circuit City, Linen N’ Things, Dick’s Sport, Babies R’ US, and Michael’s soon followed. A number of smaller strip retail buildings have also been added. Dick’s Sport and Michael’s subsequently departed Barry Towne for stand- alone buildings at Zona Rosa. (Dillard’s department store also moved to a new stand-alone store at Zone Rosa). Circuit City closed all of their Kansas City stores in mid-2008. Linen N’ Things went out of business in late 2008. Subsequently, Babies R’ US intended to leave the center but has hesitated in their departure.

The City of Liberty has created a TIF District in an attempt to redevelop the 88 acres of land encompassed in the Liberty Triangledefined by I-35 on the west, MO-152 on the south, and MO-291 on the east. The triangle encompasses 33 land owners. Lowe’s Home Improvement Warehouse constructed a store containing 134,574 square feet of enclosed warehouse space and 27,099 square feet of garden center on a 20-acre site. Lowe’s reportedly assembled their 20-acre site for roundly $5.9 million or $6.77 per square foot. However, Lowe’s anticipated about $2.6 million of the acquisition to be subsidized through the tax increment financing. The adjusted purchase price would be approximately $3.80 per square foot. CB Richard Ellis and Star Development were chosen as co-redevelopers for the remaining portion of the 68 acres. An estimated 400,000 square feet of development could be built within the triangle in addition to Lowe’s. The original TIF plan projected $95.6 million in total redevelopment costs, of which about $16.5 million would qualify as reimbursable costs. Additional development includes a two-story office building containing 26,000 square feet and the initial retail buildings comprising The Shoppes at Liberty. Tenants include Texas Roadhouse, Olive Garden, Pizza Ranch, Starbucks Coffee, Red Robin, Planet Sub, Discount Tire, SportClip,

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Vintage Stock, Cricket Wireless, Inkstop, and Chick-fil-a. Hy-Vee re-located across MO-152 to the center in January 2011 (a new building containing 87,315 Sq.Ft.) and a buyer for their former space (61,000 Sq.Ft.) quickly emerged (an adjoining user). Dick’s Sporting Goods opened in 2011 and Capital Federal Savings open to the west of Hy-Vee in 2012. On the south side of Missouri Highway 152, CVS, Culver’s, US Bank, and a dual tenant retail building have opened facilities.

At the southwest quadrant of the interchange of Interstate 35 and Missouri Highway 152 is the Barry Pointe commercial development. Barry Pointe began developing in the early 1990s with

METRO NORTH CROSSING BLIGHT STUDY PAGE 68 BELKE APPRAISAL & CONSULTING SERVICES, INC. MARKET ANALYSIS the arrival of Walmart, Phillips 66, Country Kitchen, and McDonalds. Later additions include Applebee’s, Cracker Barrel Old Country Store, 54th Street Grill, Golden Corral, Corner Café, Smoke Stack Bar-B-Que, Kentucky Fried Chicken, First Bank of Missouri, NTB, Crossley Ford, Christian Brothers Automotive, Fairfield Inn, and Comfort Suites. Considerable vacant land remains at the south end of the development (away from MO 152). Sam’s Club opened a new wholesale club on June 26, 2014 containing 136,000 square feet at 8130 N Church Road. A petroleum facility was developed alongside the wholesale club and the two improvements will provide 130 new jobs. The Wild Oak Apartments (2001; 348 units) and Clay Terrace (2008; 324 units) is just south of Barry Pointe.

At the northwest quadrant of the interchange of Interstate 35 and Missouri Highway 152, Block & Company Inc. Realtors is completing Phase III of Wilshire Plaza, a $60 million, 600,000- square-foot power center. Wilshire Plaza is anchored by SuperTarget, The Home Depot, Michaels, Office Depot, Bed Bath & Beyond, Kohl’s, T.J. Maxx, PetsMart, Pier 1 Imports, Famous Footwear, and Dress Barn. Restaurants within Wilshire Plaza include Bob Evans, Panera Bread, Quizno’s, Longhorn Steakhouse, Burger King, Waffle House, Subway, Pizza Shoppe, Steak N Shake, Chili’s, Schlotzsky’s Deli, and Freddy’s. Non-restaurant strip tenants include Radio Shack, Jiffy Lube, Fantastic Sam’s, Cingular, Game Stop, Payless Shoe Source, Party America, H & R Block, Mayfair Cleaners, Salon Oasis, Hallmark Cards, Sprint, and a Great Clips. BankLiberty just renovated/expanded a banking facility. Lodging development includes a Hampton Inn (3 stories). The Carrington Place at Shoal Creek Apartments (2007; 270 units) is located just west of Flintlock Road.

Spurred by the success of Wilshire Plaza, Block & Company Inc. is developing The Shoppes at Shoal Creek (125,000 Sq.Ft.) in the northwest corner of N Flintlock Road and Missouri Highway 152 and Plaza at Shoal Creek (475,000 Sq.Ft.) in the southwest corner at a combined cost of $100 million. The Shoppes at Shoal Creek includes freestanding buildings for Best Buy (30,000 Sq.Ft.), OfficeMax, Jose Peppers, a failed restaurant converted to a two-tenant retail building (AT&T and Liberty Dental Care), Community America, and two strip buildings with Title Boxing Club, Chipotle, Super Cuts, Pride Cleaners, and Wild Birds. A La-Z-Boy store (15,600 Sq.Ft.) is now under construction. Block & Company sold the center in November 2013 to Pine Tree Commercial Realty (Northbrook, IL) for $17.6 million or $135.38 per square foot. North of The Shoppes is a new building for Shoal Creek Veterinary Clinic. Plaza at Shoal Creek has developed a number of free-standing buildings and small strip buildings. Tenants include JCPenney, Gold’s Gym (former Circuit City), Mattress Factory, Verizon, Aldi grocery, and numerous restaurants.

Two additional projects were announced for Liberty in 2007. CBL & Associates Properties, Inc., the owners of Kansas City’s most successful super regional mall (Oak Park), had been chosen to develop Whitehall Station, a 600,000-square-foot lifestyle center planned on 68 acres at the south end of Liberty along Interstate 35. The city of Liberty committed to $40 in TIF for the project which never materialized. At the north end of Liberty, Whittaker Builders, Inc. (St. Louis developer) had 939 acres under contract from Hallmark Cards and was planning a $2 billion mixed-use community named New Town at Liberty. The New Urbanist development would be the largest in the city’s history and would likely double the population of the city over the course of two decades. Whittaker Builders, Inc. filed for bankruptcy on October 15, 2009.

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Platte County Historically, Platte County had been notorious for its retail sales leakage, which was exemplified by being one of the few counties in the country to not have a Walmart. The situation began to be corrected when BarryWoods Crossing opened in the fall of 1997 at Barry Road and Interstate 29. The power center contains 245,000 square feet and is anchored by a 24-screen AMC movie theater. The center also included Platte County’s first national soft goods retailers including Bed, Bath & Beyond, Stein Mart, and Old Navy. Walmart and Lowes opened at Barry Center North at the northeast quadrant of Interstate 29 and Missouri Highway 152 in 2000. The Shoppes at Boardwalk opened in the southeast quadrant of Missouri Highway 152 and Interstate 29 (just north of Walmart and Lowe’s) on August 5, 2003. A number of upscale clothing stores leased space in the 124,000-square-foot lifestyle center including Talbot’s, Coldwater Creek, J. Jill, Chico’s, Christopher & Banks, Maurices, Joseph A. Bank. Restaurants at The Shops included Chipotle Mexican Grill, Houlihans, Planet Sub, and Borders Cafe. Leasing at the center set a new standard for the Northland. Rates ranged from $25 to $32 per square foot on a net basis with CAM reimbursements of $5.80 per square foot. A Chicago REIT purchased the center in 2004 for a reported $36 million or approximately $290 per square foot.

Zona Rosa, a “new urbanist” retail/office/residential development opened on 93 acres at the northwest quadrant of the interchange of Interstate 29 and Barry Road in June 2004. Zona Rosa was the hottest retail story in the metropolitan area in 2004. The first phase of Zona Rosa contained nearly 1 million square feet with such national retailers as:

Abercrombie & Fitch Cache Forever 21 Marshall’s N More Aeropostale Childrens Palace Gamestop PacSun American Eagle Cingular Wireless Helzberg Jewelers Perfume Pizazz Ann Taylor Loft Claire’s HOLLISTER CO. Sprint Avalon Salons Cold Stone Creamery Hot Topic Stride Rite Barnes & Noble Dick’s Sporting Goods Kay Jewelers Tomfooleries Bath & Body Works DSW Lenscrafters Ted’s Montana Grill Bravo Express/Express Men Lids Victoria’s Secret Buckle Flat Wok Limited Too Zales Jewelers

Phase II opened in 2008 with Dillard’s department store leaving Metro North Mall for a new freestanding building. Staples, Old Navy, CVS pharmacy, Chico’s, Coldwater Creek, and Citizens Bank (office), AT&T, Charlotte Russe, Charming Charlie, Aveda, Avon, Complete Nutrition, Gymboree, Lane Bryant, GNC, Men’s Warehouse, Sephora, Topsy’s Popcorn, Vintage Stock, and T-Mobile were subsequent major additions.

Zona Rosa now has 24 dining options (local and national) including Hereford House, Granite City Food & Brewery, Smokehouse BBQ, Bravo! Cucina Italiana, 54th Street Grill, Bar Louie, Bo Lings, Noodles & Company, and Stone Canyon Pizza.

Cousins Properties Inc. (Atlanta, GA) opened the Tiffany Springs Market Center in the northeast quadrant of Interstate 29 and Missouri Highway 152 in Platte County in mid-2008. The power center contains 680,000 square feet with a tenant roster including Target, The Home Depot, Best Buy, JCPenney, The Sports Authority, PetsMart, Famous Footwear, Great Clips, Jason's Deli, Justice, Lifeway Christian Bookstore, Ulta, Mattress Firm, Five Guys, Oreck, Dickey’s, and ProfessioNail. The major spaces are full and only small shops remain to be leased.

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Tuileries Plaza was being developed on 50 acres along the south side of Tom Watson Parkway just west of Interstate 35. The project was to feature 227,000 square feet of upscale shopping and dining opportunities, 40,000 square feet of office space, and 88 condominium units. Much of the commercial development was completed but the recession and the design of the center (all small shops lacking anchor tenancy) resulted in foreclosure by multiple lenders. Briarcliff Realty purchased the overall property (retail, offices, and vacant land) from the consortium of lenders in early 2012 for a total investment of $16,214,224. The project was renamed The Village At Burlington Creek, rents were lowered, and the project has now reached stable occupancy. The new owner added a Culver’s restaurant and Sprouts Market, developed luxury apartments (Residences At Burlington Creek) and a retail/residential mixed-use building (Denton Building), and is nearing completion of a branch bank for Bank of Weston.

The Parkville Commons shopping center at Missouri Highways 9 and 45 replaced the aged Parkville Heights center. TIF and NID are two redevelopment tools being utilized to create the project. Parkville Commons will contain 250,000 square feet of commercial and office space at completion. McKeever’s Price Chopper anchors the new center with a full-service grocery store containing 73,000 square feet. Nick & Jake’s provides upscale dining and several strip buildings are completed and are fairly well occupied. The developers donated ground to be used for a new Platte County community center operated by the YMCA. The center contains 60,000 square feet including an indoor pool facility, walking/running track, full-sized gym, steam room and sauna (and will soon undergo expansion). The City of Parkville also built a new city hall and police station on the grounds of the center. A medical office building and dental building have recently opened along the Missouri Highway 9 frontage. An animal clinic that leased an older property along Missouri Highway 9 has purchased a site to the west within the center and constructed a new building.

Briarcliff Village opened in 2007 adding the retail component to the Briarcliff West mixed-use project which enjoys dynamic views of the downtown skyline. Four office buildings containing nearly 385,000 square feet are nearly continuously 100% occupied. Significant residential back- up exists with homes ranging to over $10 million. Briarcliff Village adds 130,000 square feet of Tuscan-theme retail space with 55,000 square feet of office space above. The retail space was 95% preleased and the office space was 100% preleased. Retail space rents range from $20 to $30 per square foot with restaurants rents at $30 per square foot. The developer of Briarcliff Village created an eclectic mix of local tenants that included Tivol Jewelers, Nell Hill’s, GreenAcres Organic Grocery, and various restaurants (Piropos, Trezzo Marre, The Café, and Philly Time). Some turnover has occurred (Tivol departed) as would be expected with local tenants and a difficult economy. Jose Peppers recently opened in the former The Café space.

The aging Park Plaza strip center located at the northwest corner of Interstate 29 and NW 64th Street was demolished in 2011 to make way for a newly completed grocery store (Hy-Vee) and drugstore (CVS pharmacy). A medical office opened behind CVS in 2013. Menards purchased a site of 52 acres located in the northeast corner of AA Highway and Missouri Highway 152 but has postponed entry into the Kansas City market. Sam’s Real Estate Business Trust purchased 18.56 acres adjoining the Tiffany Market Center in December 2013 but has yet to begin development of a proposed Sam’s Wholesale Club.

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Conclusion U.S. retail sales have increased 5 consecutive years following 2 years of recession-influenced declines. Although retail vacancy increased due to the recession through 2010, vacancy has held steady or decreased in each of the past 11 quarters. Overall, the S&P Retail Index grew 40% over the course of the year, outperforming the broader S&P 500. Market analysts believe the retail market will improve during 2015; however, consensus is lacking as to how widespread and how deep recovery will be. The 2011, 2012, and 2013 holiday seasons were generally viewed as positive but not as strong as some hoped. US retail sales continued to accelerate in the first half of 2014 and remained strong through the beginning of December. Ryan McCullough, real estate economist for CoStar opines, “We have seen real estate investors rotating back into retail due to its higher yields relative to other property types, and also due to improving fundamentals. This has boosted both liquidity and pricing. In dollar terms, the market has never been as liquid as it is today. With fundamentals tightening and lending standards loosening, we expect 2015 will come in even more aggressively. We anticipate that 2015 will be a record year for retail investment.”

Kansas City lost a number of retailers between 2008 and 2010 as evidenced by vacancy increasing from 8.3% to 12.2%. At the close of 2014 vacancy had retreated to 8.50%. The poor performance of the South Kansas City (13.4%) and Wyandotte County/KCK (9.3%) submarkets inflated the citywide average as vacancy in the other seven submarkets was much lower (at 5.0% to 8.6%). Unfortunately, average rents have decreased the past four years and are well below the pre-recession high ($12.85 vs. $14.20). Shopping center sales activity has increased noticeably and retail experts are looking for stronger improvement through 2015.

Retail vacancy in the overall Northland submarket (7.4%) is lower than the metropolitan average (10.6%), and some observers believe the Northland is still underserved compared to Johnson County, Kansas and Eastern Jackson County, Missouri. (Average retail expenditures per household in the Northland exceed the metro average by nearly 4%.) Retail rents in the Northland lag the metrowide average by 8.9% (mostly due to aging inventory in Clay County). Several national retailers opened Northland stores in 2008 and 2009 for the first time and several others are adding new stores. New construction in 2011-2014 was fairly limited (Dick’s Sporting Goods, Sports Authority, two Hy-Vee grocery stores, Dress Barn), except for pad users. Sam’s Club added a new wholesale club in the southwest quadrant of I-35/MO-152 in Clay County and is planning a third Northland location in the northeast quadrant of I-29/MO-152 in Platte County. Menards has plans for a new store in the northeast quadrant of AA Highway and Missouri Highway 152.

Metro North Mall, once the Northland’s premiere retailing location, fell victim to changing retail dynamics and advancing age that afflicted many older malls locally and across the nation. As recently as 2004, even after the Montgomery Ward closure, the mall was thriving and reached its peak county assessment. However, the demise of Metro North was fairly quick and precipitous as just 10 years later at closure in April 2014, only two mall small shops and Macy’s remained open. As a result of the decline of the mall, retail occupancy in the immediate neighborhood has declined from near roundly 90% occupancy to only 35.8% occupancy amongst 1,962,853 square feet of retail space.

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BLIGHT ANALYSIS

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BLIGHT ANALYSIS

Required Finding Pursuant to Missouri Revised Statutes (Section 99.805(1) a municipality may not adopt a redevelopment plan without a finding that the redevelopment area on the whole is a blighted area. It is important to note that the finding of blight is based on the area as a whole and not on a parcel by parcel basis, although each parcel must be analyzed individually for blight.

Blight Defined Section 99.805(1) of the Missouri Revised Statutes define a “blighted area” as follows:

An area which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete plating, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use.

The various components of the definitions serve as the basis for further discussion concerning whether the proposed Metro North Crossing redevelopment area qualifies as a blighted area.

Court Decisions Several court cases provide additional direction in the consideration of blight:

 The courts have determined that it is not necessary for an area to be what commonly would be considered a “slum” in order to be blighted. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, 518 S.W.2d 11, 15 (Mo. 1974).

 An otherwise viable use of a property may be considered blighted if it is an economic underutilization of the property. Crestwood Commons Redevelopment Corporation v. 66 Drive-In, Inc., 812 S.W.2d 903, 910 (MO.App.E.D. 1991).

 It is not necessary for every property within an area designated as blighted to conform to the blight definition. A preponderance of blight conditions is adequate to designate an area for redevelopment. Maryland Plaza Redevelopment Corporation v. Greenberg, 594 S.W.2d 284, 288 (MO.App.E.D. 1979).

 The courts have determined that in order to make a finding of blight for a defined redevelopment area, the total square footage of the area is to be considered and not a preponderance of the individual parcels. Allright Properties, Inc. v. Tax Increment Financing Commission of Kansas City, 240 S.W.3d 777 (MO.App.W.D. 2007).

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Blighting Factor #1: Defective or Inadequate Street Layout Factors typically associated with defective or inadequate street layout include the following:

 Poor linkage  Inability to carry traffic load  Difficult access  Poor circulation (vehicular or pedestrian)  Substandard design or construction  Inadequate signage

The proposed redevelopment area is centrally located and thus has good linkage to other portions of the metropolitan area. US Highway 169 and nearby Missouri Highway 152 provide convenient access to the metropolitan area highway system.

The mall complex has numerous entrances from the roadway encircling the property. However, during heavy shopping periods when the mall was successful the main entrance just east of US Highway 169 could be quite congested even causing backup onto the US Highway 169 exit ramp. North Summit Street, which adjoins the west side of the proposed redevelopment area (one-way north) is an attempt to allow residents in the neighborhood north of Metro North to bypass the mall. The result is westbound traffic on Metro North Mall Drive is somewhat circuitous. Several of the curbcuts along the north portion of Metro North Mall Drive (near the theater) are offset rather than aligned which can create safety issues during heavy traffic periods.

The portion of the proposed redevelopment area along the north side of NW Barry Road lacks pedestrian sidewalks, except for the small area fronting the McDonald’s quick-serve restaurant. Most of the south side of NW Barry Road across from the proposed redevelopment area does have sidewalks. Likewise, N Wyandotte Street along the east side of the redevelopment area, Metro North Mall Drive along the north side of the redevelopment area, and Metro North Mall Drive and N Summit Street along the west side all lack pedestrian sidewalks. The approved area plan points out the need for improved “pedestrian friendliness” and “wide sidewalks.”

The neighborhood lacks good signage concerning the existence of the mall and the best methods of access. No signage exists on the highway and primary arterials with respect to the mall. Additional signage would help resolve any confusion concerning the mall, access, or circulation.

Blight Factor #1 Conclusion The above indicates that defective and inadequate street layouts result in numerous concerns for the proposed redevelopment area. Essentially the overall proposed redevelopment area bears the brunt of these factors. However, it should be noted the mall functioned for many decades despite these factors and these factors are not considered determinative factors in the demise of the shopping mall. Still, the blighting factors do contribute to the overall dysfunction of the proposed redevelopment area and many of these issues would likely be addressed/resolved in future redevelopment of the plan area. (See blight photographs on the following pages.)

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DEFECTIVE OR INADEQUATE STREET LAYOUT

Poor Pedestrian Circulation – Lack Of Sidewalks Along NW Barry Road

Poor Pedestrian Circulation – Lack Of Sidewalks Along Both Sides Of Metro North Drive

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DEFECTIVE OR INADEQUATE STREET LAYOUT

Poor Pedestrian Circulation – Lack Of Sidewalks Along Both Sides Of N Wyandotte Street

Poor Pedestrian Circulation – Lack Of Sidewalks Along Summit & Metro North Mall Drive

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DEFECTIVE OR INADEQUATE STREET LAYOUT

Poor Traffic Circulation – Offset Curbcuts Along N Wyandotte Street & Metro North Mall Drive (NEC of the Proposed Redevelopment Area)

Confusing Intersections of N Summit, Metro North Drive & Metro North Mall Drive (NWC of the Proposed Redevelopment Area)

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Blighting Factor #2: Unsanitary Or Unsafe Conditions Multiple unsanitary or unsafe conditions are considered to contribute noticeable blighting influence within the proposed redevelopment area as outlined below.

Blighting Factor #1 Most of the considerations discussed above under Blighting Factor #1 result in unsafe conditions for pedestrians, bicyclists or vehicles.

Topography & Drainage Topography differentials in different portions of the mall site create the need for high retaining walls. Although metal railings are present, the railing near Montgomery Ward is completely loose and is secured to a metal stake by a chain (allowing a foot of sway in the railing). The north Macy’s parking lot is formed in a bowl which can create ponding (a flat metal grate drain is present but can become clogged). Much of the west portion of the mall drains to the southwest corner of the proposed redevelopment area. The sign shown in the photograph below cautions the danger of high water.

Over the years the consultant has seen vehicles stranded in this high water. The flow of water also causes the ground and concrete surrounding the storm sewer drain to heave. (See photograph on the following page.) Consultant computations suggest the proposed redevelopment area contains roundly 66 acres of impervious paving (asphalt or concrete) with no detention provision.

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Concrete Slab Covering Erosion

Damaged & Poorly Designed Storm Water Manhole

Pictures demonstrating the following unsanitary or unsafe blight factors are included at the end of this section.

Deteriorated/Poorly Designed/Non ADA Compliant Sidewalks Beyond the lack of sidewalks serving the proposed redevelopment area, existing sidewalks surrounding the mall are deteriorated, have exposed rebar, are overgrown with weeds, or are not code compliant or ADA compliant.

Failed/Failing Exterior Wall Units Exterior walls along the entire mall and anchor spaces exhibit failed or failing components. An entire section of the upper northeast mall wall has collapsed. Lack of maintenance and tuckpointing has allowed wall units to separate (completely or partially).

Failed Roof Systems The roof over Dillard’s and Montgomery Ward (anchor space and automotive center) are original tar and gravel provision. Significant water penetration into the interior has resulted in collapsed ceilings, light fixtures, and other ceiling-mounted objects, as well as damaged walls and floor coverings (carpet, tile, and wood). Standing water was present in numerous portions of the mall concourse, mall small shops, MC Sports, Dillard’s, Montgomery Ward, and the Montgomery Ward Automotive Center. The standing water has resulted in extensive mold. The roof over JCPenney was replaced in 2004 but has not been maintained since 2008 and minor damage was noted. Due to improper slope or clogged drains, during the inspection a large amount of standing water was viewed on the Macy’s roof.

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Ceiling/Floor Failure Of special concern is the apparent impending failure of a portion of the sidewalk along the east side of the Montgomery Ward space. The sidewalk fronts the entrances but is above interior space on the lower level. These areas were difficult to photograph due to the lack of light and electricity.

Electrical Systems Unsafe conditions exist where electrical systems are susceptible to excessive water penetration. Ceiling leaks over electrical panels were prevalent. In the Montgomery Ward space a “hot” circular floor electrical plug was sizzling and emitting smoke due to water penetration.

Environmental Mold is a considerable environmental (health) issue. The extensive wet portions of the mall interior are now saturated with mold. The smell is evident in essentially all portions of the improvements except Macy’s. Asbestos is reportedly present in the blown on textured ceiling in portions of the mall (some of which is compromised by the roof leaks). Two 20,000-gallon oil tanks are located near the backup generator. The tanks were reportedly checked the last time 5 years ago. On the north side of the former Montgomery Ward Automotive Center (right next to Metro North Mall Drive) are two underground storage tanks (discarded oil and waste water). The cover to neither of these tanks are secured and the consultant was easily able to open.

Vermin Dead mice, birds and bird carcasses were found throughout the interior of the property. A recently deceased falcon was found inside the MC Sports place (a lower level space). An infestation of brown recluse spiders is also present. Goose nests are present on the roof.

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Vandalism/Loitering/Security Although the mall ownership retains security and Ford Motor Company maintains security for their vehicle storage areas, policing a complex the size of Metro North (82.15 acres) is difficult when essentially no pedestrian traffic exists. Empty alcohol containers were observed, trash, graffiti, youth have been caught accessing the roof, and a number of windows have been broken. A vehicle crashed through the east façade of the Montgomery Ward Automotive Center and continued through one section of interior wall.

Blight Factor #2 Conclusion Unsanitary and unsafe conditions are considered strong blighting influences for all portions of the proposed redevelopment area, except the three food-related parcels (Olive Garden, Red Lobster, and McDonalds).

See blight photographs on the following pages.

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UNSANITARY OR UNSAFE CONDITIONS

Failed Wall Systems Section Of Brick Wall Collapse (Upper Mall Wall)

Failing Wall Systems Failing Wall Systems

Failing Wall Systems Failing Wall Systems

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UNSANITARY OR UNSAFE CONDITIONS

Standing Water – Very Slippery Tiles – East Mall Failing Ceiling Structure – Unfinished Food Court

Improperly Disconnect Electrical – Food Court Standing Water (Mold, Slippery Tile) – Food Court

Water Leakage Around Electrical Equipment Water Leakage Around Electrical Equipment

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UNSANITARY OR UNSAFE CONDITIONS

Failing Ceiling/Floor Structure – Montgomery Ward Vermin

Black Mold – Montgomery Ward Sizzling & Smoking (Hot) Electric Floor Fixture

Black Mold – Montgomery Ward Black Mold – Montgomery Ward

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UNSANITARY OR UNSAFE CONDITIONS

Mold – East Mall Upper Level Mold – East Mall Lower Level

Black Mold – East Mall Service Hall Black Mold – Mongomery Ward

Collapsing Ceiling & Light Fixtures – Mall Shop Black Mold – East Mall Small Shop

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UNSANITARY OR UNSAFE CONDITIONS

Black Mold – East Mall Small Shop Black Mold – East Mall Small Shop

Black Mold – East Mall Small Shop Standing Water East Mall

Mold In Carpet Inside JCPenney Space Falling Light Fixture Inside JCPenney

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UNSANITARY OR UNSAFE CONDITIONS

JCPenney Black Mold Vermin & Brown Recluse Spider Infestation

Abandoned Merchandise Abandoned Storage Boxes

Abandoned Storage Boxes Black Mold – West End Mall Small Shop

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UNSANITARY OR UNSAFE CONDITIONS

Failed Ceiling Sytem & Mold – Dillard’s Space Failed Ceiling System & Mold – Dillard’s Space

Shattered Glass – Dillard’s Space Failed Ceiling System – Dillard’s Space

Dead Bird – Dillard’s Dead Falcon – Former MC Sports Space

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UNSANITARY OR UNSAFE CONDITIONS

Abandoned Underground Tanks – Unsecured Black Mold – Former Ward Automotive Center

Dead Birds – Former Ward Automotive Center Shattered Store Front – Former Ward Automotive

Failing Ceiling & Walls Systems – Ward Automotive Failing Ceiling System – Mall Concourse

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UNSANITARY OR UNSAFE CONDITIONS

Black Mold – Former MC Sports Space Black Mold – Former MC Sports Space

Failing Ceiling System – Former MC Sports Loitering

Loose Retaining Wall Railing Failing Tile Canopy Face – Montgomery Ward Held By Stake & Chain

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UNSANITARY OR UNSAFE CONDITIONS

Black Mold – Former Firestone Store Failing Ceiling System – Mall Concourse

Black Mold – Mall Small Shops Black Mold – Mall Small Shops

Bird Carcasses Compromised Asbestos Ceiling Texture

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Blighting Factor #3: Deterioration Of Site Improvements Roadways & Drives & Sidewalks Metro North Mall Drive and the internal circulatory drives are in very poor condition. Curbing and sidewalks have also deteriorated. Parking lot light posts need painting.

Surface Parking Lots All of the surface parking lots are in extremely poor condition. Computations suggest about 66 acres of the proposed redevelopment area is covered with asphalt or concrete paving nearly all of which needs to be replaced.

Landscaping Although the mall is closed, ownership continues minimal landscape maintenance. Landscaping outside and inside the mall is in poor to fair condition. The landscaping provision is minimal at best.

Mall Exterior Roofs The tar and gravel roofs over Dillard’s and Montgomery Ward (anchor and automotive) are the original provision and significant leakage is occurring. (During the inspections it sounded like rain was falling inside although it was not raining outside.) The JCPenney roof (membrane) was placed in 2004 but has not been maintained since 2008. Some areas of minor leaks have occurred. The roof over Macy’s (tar and gravel) was replaced in 2002. However, significant standing water was observed on the roof due to clogged drains or improper slopes. The mall roof (small shops and concourse) is a membrane that has sustained significant deterioration. Areas which are not currently leaking are also in the process of delaminating.

Walls The exterior brick walls have not been maintained, have failed, are in process of failing, or need tuckpointing. An entire section of upper mall wall failed. The adjoining section is now exposed and advancing toward failure. The most susceptible areas are walls exposed on two sides (docks, breaks, canopy supports, and mechanical enclosures).

Canopies & Foyers Canopies at entrances and enclosed foyers are in poor condition. Rusting metal, delaminating tile, and cracked brick are in evidence on the canopies and due to water leaks the ceilings, walls and floors of the foyers are heavily damaged (particularly Dillard’s).

Mall Interior Mall Concourse Water damage is extensive in the east and west portions of the mall concourse due to ceiling leaks. The extensive skylight system over the central fountain area is also leaking. The mall concourses are rather bland.

Mall Small Shops The small shops in the east and west portions of the mall have also sustained heavy damage due to ceiling water leaks. Most small shop finish is dated and tired.

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Mall Anchors The interior finish of Dillard’s and Montgomery Ward are a total loss due to the extensive water infiltration and failure of ceiling systems. Walls and flooring has also been extensively damaged. Any finish not damaged is dated and useless. MC Sports, a portion of the lower Dillard’s space, is also a total loss. The JCPenney interior finish is dated and much of the floorcovering has been removed.

Montgomery Ward Automotive Center Due to the roof failure and the vehicle crash damage the interior of this building is a total loss (ceiling, walls, and flooring). Refuse, deteriorating personal property, and construction materials fill the building. All utilities have been turned off. The doors (overhead and pedestrian) are damaged or need painting. Storefronts are cracked. The signage is falling off the building. Underground storage tanks are unsecured.

Firestone The exterior of the Firestone building needs to be sealed. The north (shaded) wall particularly appears to be a wet wall. The interior is dated (particularly the flooring). Minor roof leaks exist (and mold).

Conclusion – Blight Factor #3 The Montgomery Ward buildings (anchor and automotive) have been vacant for 11 years. Dillard’s and JCPenney have been vacant for 7 years. Firestone has been vacant for just over a year. The mall was closed on April 15, 2014. Over the intervening years lack of maintenance has resulted in extensive deterioration to nearly all site improvements (roads and drives, curbs, sidewalks, parking lot lighting, landscaping, retaining walls, exterior walls, roofs, skylights, windows, canopies, docks, ceilings, walls, and flooring). Generally, undamaged interior finish is dated and tired. Much of the building systems including water pipes, electrical, chillers, boilers, and cooling towers are original and are dated and obsolete (and some have not been operated for many years).

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SITE DETERIORATION – ROADS & DRIVES

Metro North Nall Drive (West) Metro North Mall Drive (West)

Metro North Nall Drive (Southwest) Metro North Nall Drive (Southwest)

Macy’s Driveway JCPenney Driveway

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SITE DETERIORATION – ROADS & DRIVES

Southwest Mall Driveway Southwest Mall Driveway

JCPenney Driveway JCPenney Driveway

JCPenney Driveway Olive Garden Driveway

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SITE DETERIORATION – ROADS & DRIVES

Metro North Mall Drive (South) Metro North Mall Drive (South)

JCPenney Dock Drive JCPenney Driveway

Montgomery Ward Automotive Driveway Entrance To McDonald’s Quick-Serve Restuarant

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SITE DETERIORATION – ROADS & DRIVES

Montgomery Ward Driveway (Southeast) Southeast Mall Driveway

Montgomery Ward Driveway (Northeast) Northeast Mall Entrance Drive

Montgomery Ward Driveway (Northeast) Montgomery Ward Driveway (Northeast)

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SITE DETERIORATION – ROADS & DRIVES

North Side Mall Driveway Dillard’s East Driveway

Dillard’s Central Driveway Dillard’s West Side Driveway

Metro North Mall Entrance Drive (Wyandotte St.) North Central Mall Driveway

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SITE DETERIORATION – PARKING LOTS

Macy’s North Side Parking Lot Macy’s North Side Parking Lot

Overflow Parking Macy’s North Side Macy’s North Side Parking Lot

Macy’s North Side Parking Lot Macy’s & Mall South Side Parking Lot

METRO NORTH CROSSING BLIGHT STUDY PAGE 100 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – PARKING LOTS

Former Firestone Parking Lot Olive Garden Parking Lot

Olive Garden Parking Lot Red Lobster Parking Lot

Red Lobster Curbing Former Montgomery Ward Automotive Parking Lot

METRO NORTH CROSSING BLIGHT STUDY PAGE 101 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – PARKING LOTS

Former Montgomery Ward Automotive Parking Lot Former Montgomery Ward Automotive Parking Lot

Former Dillard’s Parking Lot Former Dillard’s Parking Lot

Damaged Dock Paving Elevated Manhole Cover In Mall Driveway

METRO NORTH CROSSING BLIGHT STUDY PAGE 102 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – SIDEWALKS

Erosion Beneath Macy’s Sidewalk Sidewalk Damaged Near Former JCPenney

Sidewalk Damaged – JCPenney West Entrance Sidewalk Damaged – JCPenney West Entrance

Sidewalk Damaged Near JCPenney Dock & Drive Sidewalk Damaged Near Ward South Entrance

METRO NORTH CROSSING BLIGHT STUDY PAGE 103 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – SIDEWALKS

Mall Sidewalk Damage Sidewalk & Curbing Damage Near Dillard’s

Sidewalk & Curbing Damage – Dillard’s East Side Sidewalk Damage Dillard’s South Side Entrance

Mall Sidewalk Damage Northeast Mall Entrance Sidewalk Deterioration

METRO NORTH CROSSING BLIGHT STUDY PAGE 104 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – SIDEWALKS

Damaged Mall Sidewalk & Curbing Damaged Sidewalk Northeast Mall Sidewalk

Cracked Sidewalk South Side Mall Damaged Sidewalk JCPenney

Discolored Sidewalk Fronting Montgomery Ward Sidewalks Sinking & Separating From Wall (Ward)

METRO NORTH CROSSING BLIGHT STUDY PAGE 105 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – LANDSCAPING

Mall Exterior Planter Poor Landscaping

Unsightly Landscaping Unsightly Mall Entrance (Illegal Dumping)

Mall Interior Planter Mall Interior Planter

METRO NORTH CROSSING BLIGHT STUDY PAGE 106 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Damaged Wall – Olive Garden Deteriorating Retaining Wall – South Parking Lot

Damaged Wall – Macy’s Damaged Wall – Macy’s

Damaged Wall – Macy’s Damaged Wall – Screening Wall

METRO NORTH CROSSING BLIGHT STUDY PAGE 107 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Damaged Wall – Screening Wall Damaged Wall – Screening Wall

Wall Damage - JCPenney Wall Damage – Montgomery Ward

Damaged Wall North Mall Dock Area Wet Wall (Needs Sealing) – Former Firestone

METRO NORTH CROSSING BLIGHT STUDY PAGE 108 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Location Of Wall Collapse & Damaged Flashing Damaged Mall Dock Wall

Needed Tuckpointing (North Side Mall Wall) Failing Brick Wall North Side Mall

Damaged North Side Mall Wall Cracked Shop Wall

METRO NORTH CROSSING BLIGHT STUDY PAGE 109 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Damaged South Side Mall Dock Wall Cracked Canopy Pillar South Side Mall Entrance

Cracked South Side Mall Wall Damaged South Side Mall Wall

Needed Tuckpointing (South Side Mall Wall) Cracked Wall Northeast Mall Wall

METRO NORTH CROSSING BLIGHT STUDY PAGE 110 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Cracked Mall Wall Damaged Stucco – JCPenney

Damaged Support Column – JCPenney Clogged Retaining Wall Drains

Cracked Wall Transformer Protection Wall Separating Transformer Protection Wall

METRO NORTH CROSSING BLIGHT STUDY PAGE 111 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Cracked Support Column Southeast Mall Entrance Cracked Support Column Southeast Mall Entrance

Damaged Southeast Mall Wall Delaminating Wall West Side Montgomery Ward

Wall Damaged Montgomery Ward Northeast Dock Wall Damage

METRO NORTH CROSSING BLIGHT STUDY PAGE 112 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Failing Wall Structure Failing Wall Structure

Cracked Wall Structure – Montgomery Ward Damaged Wall Structure – Montgomery Ward

Need For Tuckpointing Collapsed/Failing Wall Section North-Central Dock

METRO NORTH CROSSING BLIGHT STUDY PAGE 113 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – EXTERIOR WALLS

Dillard’s East Side Wall Cracks Cracked Wall North Side Mall

Delaminating North-Central Dock Wall Cracked North-Central Dock Wall

Deteriorating Mall Entrance Canopy Support Deteriorating Mall Entrance Canopy Support

METRO NORTH CROSSING BLIGHT STUDY PAGE 114 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – DAMAGED EXTERIOR GLASS

North Side Dillard’s Entrance East Side Dillard’s Entrance

West Side Dillard’s Entrance East Side Montgomery Ward Entrance

East Side Montgomery Ward Entrance South Side Montgomery Ward Automotive Center

METRO NORTH CROSSING BLIGHT STUDY PAGE 115 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

SITE DETERIORATION – DOCK DAMAGE

Deteriorating Dillard’s Dock Area Damaged Mall Dock Paving

Damaged Dock Area – Dillard’s Damaged Dock Area – Montgomery Ward

Clogged Drains At JCPenney Dock Deteriorating Mall Shops Dock

METRO NORTH CROSSING BLIGHT STUDY PAGE 116 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – ROOFS

Deteriorating Mall Roof Deteriorating Mall Roof

Deteriorating Mall Roof Deteriorating Mall Roof

Deteriorating Mall Roof Deteriorating Mall Roof

METRO NORTH CROSSING BLIGHT STUDY PAGE 117 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – ROOFS

Deteriorating Mall Roof Deteriorating Mall Roof

Deteriorating Mall Roof Deteriorating Mall Roof

Deteriorating Mall Roof Canopy Deteriorating Mall Mechanical Penthouse

METRO NORTH CROSSING BLIGHT STUDY PAGE 118 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – ROOFS

Original Dillard’s Roof Original Dillard’s Roof

Deteriorating Cooling Tower On Dillard’s Roof Original Montgomery Ward Main Roof

Original Montgomery Ward Main Roof Deteriorated Roof Screen On Montgomery Ward

METRO NORTH CROSSING BLIGHT STUDY PAGE 119 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – ROOFS

Montgomery Ward Dock Roof Montgomery Ward Original Lower Roof

Standing Water On Macy’s Roof Standing Water On Macy’s Roof

JCPenney Roof JCPenney Roof

METRO NORTH CROSSING BLIGHT STUDY PAGE 120 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – CANOPIES

Montgomery Ward Cracking Canopy Support Mall Entrance Canopy Deterioration

Mall South Side Entrance Canopy Deteriorating Mall Canopy

Montgomery Ward Northeast Canopy Wall Montgomery Ward Southeast Canopy

METRO NORTH CROSSING BLIGHT STUDY PAGE 121 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – CANOPIES

Dillard’s West Entrance Canopy Dillard’s West Entrance Foyer

Montgomery Ward Northeast Entrance Canopy Montgomery Ward Southeast Entrance Canopy

Dillard’s North Side Entrance Canopy Dillard’s North Side Entrance Foyer

METRO NORTH CROSSING BLIGHT STUDY PAGE 122 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – MISCELLANEOUS

Deteriorating/Unsightly Building Signage Unsightly Doors Facing Barry Road (Ward Auto)

Cemetary Surrounded By The Mall Improvements Unsightly Mall Wall Drains & Wall Cracks

Deteriorating Deposit Box Rust/Delaminating Curb Guard Former Firestone

METRO NORTH CROSSING BLIGHT STUDY PAGE 123 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – MISCELLANEOUS

Deteriorating/Unsightly Building Signage Rusting Mall Loading Door

Rusting Mall Loading Door Poor Drainage Design & Resulting Rust (JCPenney)

Parking Lot Damage Due To Water Line Break Standing Water & Dirt From Water Line Break

METRO NORTH CROSSING BLIGHT STUDY PAGE 124 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Damaged Mall Concourse Ceiling Damage Beneath Mall Concourse Escalator

Water Damage In Mall Concourse Damaged Mall Concourse Ceiling

Water Damage In Mall Concourse Water Damage In Mall Concourse

METRO NORTH CROSSING BLIGHT STUDY PAGE 125 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Ceiling Damage In Mall Concourse Ceiling Damage In Mall Concourse

Ceiling Damage In Mall Concourse Ceiling Damage In Mall Concourse

Ceiling Damage In Mall Concourse Ceiling Damage In Mall Concourse

METRO NORTH CROSSING BLIGHT STUDY PAGE 126 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Water Damage In Former Montgomery Ward Space Water Damage In Former Montgomery Ward Space

Water Damage In Former Montgomery Ward Space Water Damage In Former Montgomery Ward Space

Water Damage In Former Montgomery Ward Space Water Damage In Former Montgomery Ward Space

METRO NORTH CROSSING BLIGHT STUDY PAGE 127 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Water Damage In Former Montgomery Ward Space Water Damage In Former Montgomery Ward Space

Water Damaged Mall Small Shop Space Water Damaged Mall Small Shop Space

Water Damaged Mall Small Shop Space Water Damaged Mall Small Shop Space

METRO NORTH CROSSING BLIGHT STUDY PAGE 128 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Dillard’s Ceiling Collapse & Flooring Damage Dillard’s Ceiling Water Damage

Dillard’s Water Damage Dillard’s Water Damage

Dillard’s Water Damage Dillard’s Water Damage

METRO NORTH CROSSING BLIGHT STUDY PAGE 129 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Dillard’s Water Damage Dillard’s Water Damage

Dillard’s Water Damage Dillard’s Water Damage

Dillard’s Water Damage Original Chiller – Dillard’s

METRO NORTH CROSSING BLIGHT STUDY PAGE 130 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Macy’s Unused Space Macy’s Unused Space

Macy’s Unused Space Damaged Mall Small Shop Space

Damaged Mall Small Shop Space Damaged Mall Small Shop Space

METRO NORTH CROSSING BLIGHT STUDY PAGE 131 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

JCPenney Carpet Damage & Dated Finish Mold In Carpet – JCPenney

No Floor Cover – JCPenney Fallen Light Fixture/No Floor Cover – JCPenney

Ceiling Damage JCPenney Frozen Water Pipe Damage - JCPenney

METRO NORTH CROSSING BLIGHT STUDY PAGE 132 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATION OF SITE IMPROVEMENTS – INTERIOR

Damaged Mall Small Shop Space Damaged Mall Small Shop Space

Damaged Mall Small Shop Space Damaged Mall Small Shop Space

Damaged Mall Small Shop Space Damaged Mall Small Shop Space

METRO NORTH CROSSING BLIGHT STUDY PAGE 133 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATING SITE IMPROVEMENTS – INTERIOR

Former MC Sports Space Former MC Sports Space

Former MC Sports Space Former MC Sports Space

Former MC Sports Space Former MC Sports Space

METRO NORTH CROSSING BLIGHT STUDY PAGE 134 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATING SITE IMPROVEMENTS – INTERIOR

Montgomery Ward Automotive Sales Area Montgomery Ward Automotive Office Area

Montgomery Ward Automotive Office Area Montgomery Ward Automotive Sales Area

Montgomery Ward Automotive Office Area Montgomery Ward Automotive Sales Area

METRO NORTH CROSSING BLIGHT STUDY PAGE 135 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATING SITE IMPROVEMENTS – INTERIOR

Montgomery Ward Automotive Office Area Montgomery Ward Automotive Office Area

Montgomery Ward Automotive Sales Area Montgomery Ward Automotive Office Area

Montgomery Ward Automotive Office Area Montgomery Ward Automotive Service Area

METRO NORTH CROSSING BLIGHT STUDY PAGE 136 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATING SITE IMPROVEMENTS – INTERIOR

Montgomery Ward Automotive Service Area Montgomery Ward Automotive Service Area

Former Firestone Sales Area Former Firestone Restroom

Former Firestone Restroom Former Firestone Office Area

METRO NORTH CROSSING BLIGHT STUDY PAGE 137 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATING SITE IMPROVEMENTS – INTERIOR

Former Firestone Mechanical Area Former Firestone Storage Area

Former Firestone Office Area Former Firestone Sales Area

Former Firestone Customer Area Former Firestone Office Area

METRO NORTH CROSSING BLIGHT STUDY PAGE 138 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

DETERIORATING SITE IMPROVEMENTS – INTERIOR

Mall Food Court – Water Damage Mall Food Court – Water Damage

Mall Office – Dated Finish Mall Shop Ceiling Damage

Mall Shop Wall Damage Mechanical Pit – Standing Water & Moss

METRO NORTH CROSSING BLIGHT STUDY PAGE 139 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

Blighting Factor #4: Improper Subdivision Or Obsolete Platting This component of blight generally applies to urban settings where fractionated interests prohibit development of modern functional structures (e.g., numerous 25-foot wide city lots must be combined to create a footprint for an office building). Additionally, parcels (ownerships) of unusual configuration (elongated, triangular) or lacking access or frontage are negative influences.

The proposed redevelopment area includes eight tax parcels (seven in a single ownership) of unusual configuration to separate the mall anchors from the mall proper and including the automotive service centers. (Although, the configuration is not necessarily atypical for regional shopping malls.) The very unusual shape of the McDonald’s fast-food parcel results in unusable area at the north end of the site. If the proposed redevelopment area is eventually redeveloped, re- platting will clearly be necessary.

METRO NORTH MALL PLATTING

N

Improper subdivision/platting is considered a future redevelopment issue that contributes to the cost of redevelopment of the proposed redevelopment area.

METRO NORTH CROSSING BLIGHT STUDY PAGE 140 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

Blighting Factor #5: Endangerment By Fire Or Other Causes Numerous fire hydrants are spread throughout the proposed redevelopment area. Most all of the improvements within the proposed redevelopment area are protected by fire sprinkler systems (some of which have been decommissioned). Multiple issues discussed previously result in endangerment including high water in the southwest corner of the mall parking lot, deteriorating parking lots and sidewalks, very high retaining walls (one with a loose railing) required by topography changes, deteriorating exterior walls that have failed or are failing, leaking roofs causing ceiling collapses, leaking ceilings around electrical equipment, improperly disconnected electrical lines, excessive black mold, asbestos, broken glass, vermin, vandalism, and unmonitored underground storage tanks (some unsecured).

A rather unusual feature of the mall is that the main switchgear for the entire mall is located in the south parking lot with no security guards or fence:

The signs on either side of the switchgear warn not to pile snow in front of the panels. Typical electrical provisions are located inside structures or shielded by walls. The unusual set up is considered both dysfunctional and a safety concern.

These issues presently combine to create considerable blighting influence that could become even more of an issue in the future if oversight and maintenance continues to lag.

METRO NORTH CROSSING BLIGHT STUDY PAGE 141 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

Blight Factors Conclusion The predominance of blighting factors within the proposed redevelopment area is established by the presence of all five blight factors described by Section 99.805(1) RSMo. and the depth of blight resulting from certain of these factors. The tables below provide review of the blighting factors by tax parcel and use. Blighting influences may range from minor (endangerment at the parking lot) to excessive (parking lots, exterior walls, roofs, interior finish, water infiltration and mold). All portions of the proposed redevelopment area suffer from modest to extensive blighting influence from each of the five factors provided by the statutory definition. Macy’s has issues that would be judged deferred maintenance at this point rather than blight. Likewise, the three food outlets have some maintenance issues but continue to operate feasibly. Clearly, Macy’s and the food outlets would profit from an active functioning mall and suffer financial loss (leading to loss of taxation and commerce). The mall tract, JCPenney, Dillard’s, and Montgomery Ward all suffer from extensive blighting influences. For 2015, the Clay County Assessor has determined no contributory improvement value in the JCPenney, Dillard’s, Montgomery Ward, two automotive centers, or mall parcels.

Streets Safety Site Plat Endanger Tax Parcel Number Use #1 #2 #3 #4 #5 Predominance 13-216-00-04-001.00 Macys Y N Y N N N 13-216-00-04-002.00 Mall Tract Y Y Y Y Y Y 13-216-00-04-003.00 JC Penney & Firestone N Y Y Y Y Y 13-216-00-04-004.00 Olive Garden N N N N N N 13-216-00-04-005.00 Dillard’s Y Y Y Y Y Y 13-313-00-05-001.00 Ward & Automotive Y Y Y Y Y Y 13-313-00-05-004.00 Red Lobster N N N N N N 13-313-00-07-002.00 McDonalds N N N Y N N Blight Extent Modest Extensive Extensive Modest Extensive Extensive

Tax Parcel Number Use Predominance Land SF Imp. SF 13-216-00-04-001.00 Macys N 656,014 202,323 13-216-00-04-002.00 Mall Tract Y 911,711 563,716 13-216-00-04-003.00 JC Penney & Firestone Y 667,339 171,110 13-216-00-04-004.00 Olive Garden N 145,490 9,140 13-216-00-04-005.00 Dillard’s Y 466,528 150,327 13-313-00-05-001.00 Ward & Automotive Y 571,507 152,842 13-313-00-05-004.00 Red Lobster N 89,298 8,300 13-313-00-07-002.00 McDonalds N 70,567 3,201 Total Sq.Ft. Land or Improvements 3,578,454 1,260,959 Blighted Sq.Ft. Land or Improvements 2,617,085 1,037,995 Blight Percentage Extensive 73% 82%

All told, based on land area 73% of the proposed redevelopment area suffers from extensive blight while 82% of the improvement area suffers from extensive blight. Again it should be emphasized that although Macy’s, Olive Garden, Red Lobster, and McDonald’s were not blighted of themselves the closure of the mall, Montgomery Ward, JCPenney, and Dillard’s and the ensuing deterioration is a strong negative influence. When functioning at its peak the mall reportedly housed 2,000 employees and hundreds of thousands of shoppers annually. The

METRO NORTH CROSSING BLIGHT STUDY PAGE 142 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS increased traffic generated by a functional use would generate additional traffic for the operating businesses. Discussions with one of the restaurant managers indicated a noticeable decline in business as the mall failed and closed.

Therefore, a clear predominance of blighting influence exists within the proposed redevelopment area and examination follows as to whether these five blighting factors result in the three blighting conditions defined by the statute.

Blighting Condition #1: Hindrance to Housing Accommodation The intent of this component of the blight definition appears to deal with the natural process of growth and development of a neighborhood. Metro North Mall provided impetus and growth to the neighborhood from the 1970s through the early 2000s. With the construction of new retailing competition, changes in retailing styles, changing demographics, and advancing age, the mall and the neighborhood has entered a marked stage of decline. It is likely that if the proposed redevelopment area were redeveloped some component of housing would be likely (high density residential perhaps over retail and office).

Considering all factors above, the proposed redevelopment area in its present condition and use is a hindrance to the vitality and continued growth and development of the neighborhood in which it resides and so heavily influences.

Blighting Condition #2: Economic Or Social Liabilities Declining & Low Assessment Previously in the report, it was also shown that the appraised value of the proposed redevelopment area peaked at $54,742,938 ($43.41 per Sq.Ft.) in 2003 but has now decreased 81.4% to $10,165,700 ($8.06 per Sq.Ft.) in 2015. In fact, the 2015 assessment is now 64.1% lower than the 1990 figure from 25 year ago.

METRO NORTH CROSSING BLIGHT STUDY PAGE 143 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

For 2015, the Clay County Assessor has included the mall tract, Dillard’s, the JCPenney anchor space and automotive center, and the Montgomery Ward anchor space and automotive center only as land value. The 2015 assessment includes $5,121,200 in land value ($1.43 per Sq.Ft. of land) and only $5,044,500 in improvement value ($4.00 per Sq.Ft. of building) for 1,260,959 square feet.

Declining & Low Real Estate Taxes Previously in the report, it was also shown that the real estate taxes collected within the proposed redevelopment area peaked at $1,230,804.79 ($0.98 per Sq.Ft.) in 2004 but has now decreased 56.5% to $534,960.05 ($0.42 per Sq.Ft.) in 2014. The collection will be even lower in 2015 after levies are set as the assessed valuation declined 47.2% from 2014. The slight increase at the end of the chart line below is a misperception due to the fact no taxes were levied against the Dillard’s space in 2012 or 2013 but were levied again in 2014. Here again, the lower assessment in 2015 will drive the line lower.

In the present condition as a closed mall the proposed redevelopment area is not generating nearly the levels of sales, real estate, personal property, utility, e-tax, and perhaps lodging tax that should be generated from an 82.15-acre tract of prime commercial land. Therefore, the property is not contributing its appropriate share of taxation to offset municipal, county, state, and federal services.

Economic Underutilization The Missouri Supreme Court has determined that “the concept of urban redevelopment has gone far beyond ‘slum clearance’ and the concept of economic underutilization is a valid one.” Other than Macy’s and the three small restaurants, the prime Metro North tract is presently being utilized for new vehicle parking by Ford Motor Company, a poor reflection of the highest and best use of this well located commercial tract.

METRO NORTH CROSSING BLIGHT STUDY PAGE 144 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

At the time of inspection, the proposed redevelopment area encompassed 3,578,454 square feet of land area that is improved with only 222,964 square feet of operating uses, indicating an extremely underutilized land-to-building ratio (LBR) of 16.0 : 1 (equating to a FAR of 0.06 : 1). By contrast, nearby Zona Rosa is operating at a density (LBR) of 2.6 : 1 (1,097,000 Sq.Ft. of improvements on 2,901,662 Sq.Ft. of land).

The proposed redevelopment area encompasses approximately 1,260,959 square feet of improvements of which 82.3% or 1,037,995 square feet is vacant, leaving 222,964 square feet (17.7%) of occupied space. The decline of Metro North Mall is a main contributing factor (amongst other factors) to the declining occupancy and vibrancy of the overall Metro North neighborhood. The table below provides the current occupancy for the five major retail developments within the Metro North Mall neighborhood:

Development Name Built Age Acres Sq.Ft. Occupancy Vacancy Metro North Mall 1976 39 105.20 1,286,927 17.3% 82.7% Metro North Square 1978 37 34.16 210,000 78.5% 21.5% Metro North Commons 1984 31 3.62 30,000 68.4% 31.6% Metro North Plaza 1986 29 2.64 21,600 100.0% 0.0% Barry Towne Center 1998 17 156.56 414,326 66.0% 34.0% Total/Average 1981 34 302.18 1,962,853 35.8% 64.2%

The 302.18 acres encompass approximately 1,962,853 square feet of retail development of which only 35.8% (703,364 Sq.Ft.) is presently occupied while 64.2% (1,259,489 Sq.Ft.) remains vacant. The poor level of occupancy negatively affects assessment and taxation and the ability of the neighborhood to justify needed levels of municipal services.

The following photograph depicts the lack of patronage at Macy’s at 11:00 AM on Tuesday June 2, 2015:

METRO NORTH CROSSING BLIGHT STUDY PAGE 145 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

As mentioned earlier in the report, the Gashland/Nashua Area Plan identifies Metro North Mall as the #1 recommended priority area to “target for revitalization and/or redevelopment in order to ensure the long-term health and sustainability of the Plan Area.” The current plan was adopted on January 5, 2012 and in the intervening 3 years the mall has continued to decline eventually closing on April 15, 2015. The plan further identifies the mall location as a primary gateway to the planning area and states “Prominent locations should be anchored with buildings with unique architecture” whereas the existing mall improvements are quite bland. The plan also notes the need for “pedestrian friendly streets” and “wide sidewalks” in the area near Metro North Mall.

Social Liabilities Multiple issues have been discussed above concerning safety issues (including high water in the southwest corner of the mall parking lot, deteriorating parking lots and sidewalks, very high retaining walls (one with a loose railing) required by topography changes, deteriorating exterior walls that have failed or are failing, leaking roofs causing ceiling collapses, leaking ceilings around electrical equipment, improperly disconnected electrical lines, excessive black mold, asbestos, broken glass, vermin, and underground storage tanks some which are unsecured). The property operations manager also reports issues of vagrancy, youths accessing the roof near Montgomery Ward, vandalism (broken windows), graffiti, illegal dumping, and vehicles driven into buildings.

The varied and extensive blighting factors clearly result in blighting conditions of marked economic and social liability.

Blighting Condition #3: Menace To The Public Health, Safety, Morals, Or Welfare Here again, the varied and extensive blighting factors and conditions discussed above contribute menace to the public health (mold, asbestos, vermin), safety (high water, failing walls, ceilings, and roofs, unsecured underground storage tanks, wet or improperly disconnected electrical lines, broken glass, high retaining walls with loose railings), morals (graffiti, vandalism, loitering), or welfare (excessive vacancy, low assessment and taxation, and economic underutilization).

Study Conclusion All five components of the blight definition found in Chapters 99 of the Missouri Revised Statutes are present in the proposed Metro North Crossing TIF Plan redevelopment area. The blighting influences include:

 Defective or inadequate street layout (unusual intersections, lack of signage and sidewalks, offset curbcuts)

 Unsanitary or unsafe conditions (high water, unsecured underground storage tanks, broken glass, loose railings, failing roof and wall systems, water infiltration and mold, asbestos, vermin, vandalism, loitering, and graffiti)

 Aging and deteriorating site improvements (drives, curbs, sidewalks, retaining walls, landscaping, loading docks, exterior walls, windows, roof, dated or damaged interior finish, obsolete building systems)

METRO NORTH CROSSING BLIGHT STUDY PAGE 146 BELKE APPRAISAL & CONSULTING SERVICES, INC. BLIGHT ANALYSIS

 Improper subdivision or obsolete platting (dysfunctional parcel configurations)

 Conditions which endanger life or property by fire or other causes (high water, trespassing and difficulty in policing/monitoring, illegal dumping, failing roof, wall, and ceiling systems, water infiltration, standing water, black mold, asbestos, failing retaining walls and guard rail supports, vandalism)

A predominance of these factors leads to three clearly observable blighting conditions:

 Retarded growth and development of the area (lack of new development, low density, and economic underutilization)

 Economic liabilities (underutilization, low and declining assessment and taxation (including real estate, personal property, sales, e-tax, and utility), and excessive vacancy within both the proposed redevelopment area and the surrounding neighborhood)

 Social liabilities (high water, trespassing and difficulty in policing/monitoring, illegal dumping, graffiti, trash, failing roof, wall, and ceiling systems, water infiltration, standing water, black mold, asbestos, failing retaining walls and guard rail supports, loitering and alcohol consumption)

The proposed redevelopment area was previously determined to be blighted in April 2010 (PIEA of Kansas City, Missouri). Since that time, the mall has closed, deterioration and damage has increased, and the neighborhood has continued to suffer economically and socially.

Therefore, the consultant has determined that the proposed Metro North Crossing Redevelopment Area in Kansas City, Missouri, as of June 1, 2015, qualifies as a “blighted area” according to the definition provided in Missouri Revised Statutes Section 99.805(1) and that four of the eight tax parcels contained in the proposed redevelopment area are individually blighted of themselves reflecting 73% of the land area (2,617,085 of 3,578,454 Sq.Ft.) within the proposed redevelopment area and 82% of the improvement area (1,037,995 of 1,260,959 Sq.Ft.). Parcels and uses not directly blighted suffer the influence of the closed and deteriorating mall complex.

It has been a distinct pleasure to serve you in this assignment.

Sincerely, BELKE APPRAISAL & CONSULTING SERVICES, INC.

Scott J. Belke, MAI President Missouri State Certified General Real Estate Appraiser (Certificate No. RA 001868) Kansas Certified General Real Property Appraiser (Certificate No. G-1214)

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CERTIFICATE

I certify that, to the best of my knowledge and belief...

1) The statements of fact contained in this report are true and correct. 2) The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. 3) I have no present or prospective interest in the property that is the subject of this study, and I have no personal interest with respect to the parties involved. 4) I have no bias with respect to the property that is the subject of this study or to the parties involved with this assignment. 5) My compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this study. 6) My analyses, opinions, and conclusions were developed, and this study has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and with the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. 7) I certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 8) As of the date of this report, Scott J. Belke, MAI has completed the requirements of the continuing education program of The Appraisal Institute. 9) Scott J. Belke, MAI made several personal inspections of the proposed redevelopment area that is the subject of this report during May and June 2015. The effective date of this study is June 1, 2015. 10) No one provided significant professional assistance to the person signing this report.

11) I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

Scott J. Belke, MAI President Missouri State Certified General Real Estate Appraiser (Certificate No. RA 001868) Kansas Certified General Real Property Appraiser (Certificate No. G-1214)

METRO NORTH CROSSING BLIGHT STUDY PAGE 148 BELKE APPRAISAL & CONSULTING SERVICES, INC. ASSUMPTIONS & LIMITING CONDITIONS

GENERAL ASSUMPTIONS & LIMITING CONDITIONS

This study is subject to the following assumptions and limiting conditions:

1) The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy. 2) Possession of this study or a copy thereof, does not imply the right of publication or use for any purpose by any other than the addressee, without the written consent of the consultant. 3) The consultant is not required to give testimony or attendance in court by reason of this study, unless prior agreements have been made in writing. 4) Neither all nor any part of the contents of this study, especially any conclusions as to blight, the identity of the consultant or the firm with which he is connected, or any reference to the Appraisal Institute or to the MAI designation shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication without the prior written consent and approval of the undersigned.

Scott J. Belke, MAI

METRO NORTH CROSSING BLIGHT STUDY PAGE 149 BELKE APPRAISAL & CONSULTING SERVICES, INC.

ADDENDA

METRO NORTH CROSSING BLIGHT STUDY PAGE 150 BELKE APPRAISAL & CONSULTING SERVICES, INC. LAST DEED

METRO NORTH CROSSING BLIGHT STUDY PAGE 151 BELKE APPRAISAL & CONSULTING SERVICES, INC. LAST DEED

METRO NORTH CROSSING BLIGHT STUDY PAGE 152 BELKE APPRAISAL & CONSULTING SERVICES, INC. LAST DEED

METRO NORTH CROSSING BLIGHT STUDY PAGE 153 BELKE APPRAISAL & CONSULTING SERVICES, INC. COUNTY ASSESSMENT & TAXATION

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METRO NORTH CROSSING BLIGHT STUDY PAGE 170 BELKE APPRAISAL & CONSULTING SERVICES, INC. SCOTT J. BELKE, MAI

QUALIFICATIONS OF SCOTT J. BELKE, MAI

Education Colorado School of Mines, Golden, Colorado, Petroleum Engineering Studies (1975–1977) William Jewell College, Liberty, Missouri, Bachelor of Arts, Religion (1978–1979) St. Peter’s College, Oxford University, Oxford, England, Theological/Historical Studies (1979–1980) Denver Seminary, Denver, Colorado, Master of Divinity (1980–1983)

The Appraisal Institute Designation Scott completed all of his course work for the MAI designation between 1985 and 1990. He obtained the MAI designation in 1990.

Continuing Education Analyzing Commercial Lease Clauses Litigation Valuation Analyzing Operating Expenses Mark to Market Seminar Appraisal Institute–Business Practices & Ethics Market Analysis and the STDB Appraisal Consulting Mortgage Fraud Awareness Appraising Distressed Real Estate Rates, Ratios and Reasonableness Appraising From Blueprints and Specifications Retail Valuation Appraising The Appraisal (Appraisal Review) Scope of Work Case Studies in Commercial HBU Small Hotel/Motel Valuation Comprehensive Examination Workshop Standards of Professional Practice, Part A Cost Approach to Commercial Appraising Standards of Professional Practice, Part B Effective Appraisal Writing Standards of Professional Practice, Part C Eminent Domain & Condemnation Appraising Supporting Capitalization Rates Evaluating Commercial Construction The High-Tech Appraisal Office Feasibility Analyst & Highest And Best Use The Internet and Appraising Gramm-Leach-Bliley Act The Road Less Traveled: Special Purpose Properties HP12C Financial Calculator USPAP Update Income Property Demonstration Appraisal Understanding and Using DCF Software Industrial Valuation Understanding and Using Investor Surveys Effectively Internet Search Strategies Valuation of Detrimental Conditions in Real Estate Employment Belke Appraisal & Consulting Services, Inc., President (10/00 to present) Rule & Company, Incorporated, Kansas City, Missouri, Principal (1/85 to 9/00) United Parcel Service, Denver, CO, Driver (various periods from 1983–1985) Purolator Armored, Denver, CO, Driver, Vault Worker (1978–1982)

Affiliations Certified General Real Estate Appraiser in Missouri (Certificate No. RA 001868) Certified General Real Property Appraiser in Kansas (Certificate No. G-1214) Professional Scott has served the Kansas City Chapter of the Appraisal Institute in various capacities including Exam Proctor, Committee Chair Admissions-General, Director, Treasurer, Secretary, Vice President, and President (2007), Peer Review Committee (Grievance & Ethics).

METRO NORTH CROSSING BLIGHT STUDY PAGE 171 BELKE APPRAISAL & CONSULTING SERVICES, INC. REDEVELOPMENT CONSULTING

REDEVELOPMENT CONSULTING PROJECTS

Scott J. Belke, MAI has provided consulting services on the following redevelopment projects:

Kansas City, MO Ward Parkway & Roanoke Conservation District (Ch. 99); Feb-96 Traders On Grand Blight Study (Ch. 353); Jul-97 63rd & Troost TIF Blight Study (Ch. 99); Aug-97 2028 Baltimore Blight Study (Ch. 353); Mar-98 Bannister & Holmes Mine Blight Study (Ch. 353); Sep-98 Mark Twain Building Blight Study (Ch. 353); Feb-99 Nettleton Home Blight Study (Ch. 353); Sep-99 Commerce Trust Building Blight Study (Ch. 353); Sep-99 Critical Link Blight Study (Ch. 353); Mar-00 18th & Vine Blight Study (Ch. 353); Apr-00 Briarcliff West TIF North Expansion (Ch. 99); Aug-00 1528 Walnut Blight Study (Ch. 353); Jun-01 Blue Ridge Mall Blight Study (Ch. 353); May-02 Crossroads Blight Study/General Development Plan (PIEA, Ch. 100); Aug-02 Ellison/Knickerbocker Blight Study/GDP (PIEA, Ch. 100); Feb-03 Folger Coffee Blight Study/GDP (PIEA, Ch. 100); Jul-03 Stuart Hall/HD Lee Blight Study (PIEA, Ch. 100); Nov-03 Santa Fe TIF Expansion Area Blight Study (Ch. 99); Nov-03 Briarcliff West TIF South Expansion (Ch. 99); Jan-04 Manchester Business Center Blight Study/GDP (PIEA, Ch. 100); Mar-04 Southwest Boulevard PIEA Blight Study/GDP (PIEA, Ch. 100); Mar-04 Blue Ridge Mall TIF Expansion (Ch. 99); Jun-04 87th Street & Hillcrest Road TIF Plan (Ch. 99); Dec-04 Stuart Hall/HD Lee Blight Study (PIEA, Ch. 100); Feb-05 Armour/Gillham Blight Study/GDP (PIEA, Ch. 100); Apr-05 Truman Road Business Park Blight Study/GDP (PIEA, Ch. 100); Jun-05 39th & Main Blight Study/GDP (PIEA, Ch. 100); Sep-05 Guinotte PIEA Blight Study/GDP (PIEA, Ch. 100); Oct-05 Downtown Loop PIEA Blight Study/GDP (PIEA, Ch. 100); Oct-05 Northeast Bottoms PIEA Blight Study/GDP (PIEA, Ch. 100), Jun-06 Rivergate Business Center But For/Economic Impact (Ch. 353), Jul-06 Old Federal Courthouse PIEA Blight Study/GDP (PIEA, Ch. 100), Aug-06 Promenade TIF Conservation Area Analysis (Ch. 353), Sep-06 Rivergate Business Center (But For/Economic Impact); Oct-06

METRO NORTH CROSSING BLIGHT STUDY PAGE 172 BELKE APPRAISAL & CONSULTING SERVICES, INC. REDEVELOPMENT CONSULTING

Trinity Hospital PIEA Blight Study/GDP (PIEA, Ch. 100); Kansas City, MO (Jul-07) Hillside Materials TIF Blight Study (Ch. 353); Kansas City, MO (Sep-07) PIEA Consultant on Economic Development & Incentive Policy, Economic Modeling, Cost Benefit Analysis, and But For Analysis; Kansas City, MO (Nov-Dec 2007) NNSA/Honeywell PIEA Blight Study/GDP (PIEA, Ch. 100), Tax Impact Analysis, But For Analysis; Kansas City, MO (May-08) Economic Development Incentive & Policy Workshops; Nov-08, Nov-09 1220 Washington Property Value Maximization Scenario Consultations; Apr-12 9th & Central TIF Blight Study (Ch. 99); Aug-13 Wornall-Bannister EDC Blight Study (Chs. 99, 100, and 353); Sep-13 Hillside Materials TIF Expansion (Ch. 353); Nov-13 Bannister & Wornall TIF Blight Study (Ch. 99); Mar-14 KC Power & Light TIF Blight Study (Chs. 99 and 100); Apr-14 14th & Baltimore PIEA Blight Study/GDP (Ch. 100); May-14 First Amendment Bannister & I-435 TIF Plan Blight Study (Ch. 99); Jul-14 20th & Main TIF Blight Study (Ch. 99); Aug-14 Grand Reserve TIF Plan Conservation Area (Ch. 99); Dec-14 Mark Twain KC Chapter 353 Advisory Board Blight Study (Ch. 353); Feb-15

Independence, MO Lee’s Summit Road/I-70 TIF Blight Study (Ch. 99); Feb-95

Blue Springs, MO Blue Springs, Missouri Downtown Blight Study (Ch. 353); Nov-00

North Kansas City, MO Harbor Town Blight Study (Ch. 353); Mar-95 Handy Stop Blight Study (Ch. 353), Aug-04 1815 Burlington Avenue (Ch. 353), Jun-06

Sugar Creek, MO Carefree Mine TIF Blight Study (Ch. 99); May-01 Carefree Mine Expansion Blight Study (Ch. 353); Jan-03

Parkville, MO Parkview Heights TIF Blight Study (Ch. 99); Oct-01

Westwood, KS Woodside Village Conservation Area/Valuation (Ch. 12); Sep-11

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COMPANY PROFILE

Over the past 30 years Scott J. Belke, MAI has valued or consulted on over 1,800 properties in the Kansas City metropolitan area and 14 surrounding states. The first 16 years of Scott’s valuation experience were at Rule & Company, Inc., where Scott became a principal. Belke Appraisal & Consulting Services, Inc. can provide you with a variety of commercial real estate analyses including market value and value in use determinations, blight analysis, general development plans, tax appeal, litigation support, market analysis, and highest and best use analysis. Scott’s broad-based background includes the following:

Traditional Uses:

Office, Industrial, Retail, Lodging, Multifamily, Residential Subdivisions, All Types Of Vacant Land

Special Uses:

Churches, College Campuses, LIH Apartments, Riverboat Gaming Facilities, Convenience Stores/Service Stations, Computer Centers, Medical Offices, Secondary Use of Limestone Caves, Mini Storage, Refrigerated/Freezer Storage, Parking Garages, Car/Truck Dealerships, Truck Stops, Restaurants, Bowling Alleys, Golf Courses/Mini Golf/Driving Ranges, Funeral Homes, Racquet Clubs, Nursing Homes, Skating Rinks, Truck Terminals, Indoor Soccer Facilities, Animal Research, Retirement Homes, Day-Care Centers, Fitness Centers

Consulting:

Blight Analysis, General Development Plans, Tax Impact Analysis, Economic Impact, “But For” Analysis, Market Studies, Highest & Best Use Analysis, Tax Appeal, Rent Analysis, Litigation Support

Though Scott’s experience is focused on the greater Kansas City metropolitan area, he has also appraised property in the following states:

Missouri Kansas Iowa Texas Nebraska Arkansas Oklahoma Georgia Virginia Indiana Illinois Pennsylvania Ohio Florida Wisconsin

METRO NORTH CROSSING BLIGHT STUDY PAGE 174 BELKE APPRAISAL & CONSULTING SERVICES, INC. COMPANY PROFILE

Scott is a 30-year resident of the Northland and specializes in Platte and Clay Counties.

Scott completed all of his course work for the MAI designation between 1985 and 1990. He obtained the MAI designation in 1990. Scott strives to stay abreast of developments within the profession as indicated by the following continuing education:

Analyzing Commercial Lease Clauses Appraisal Consulting Appraising Distressed Real Estate Appraising From Blueprints and Specifications Appraising The Appraisal (The Art of Appraisal Review) Appraisal Institute – Business Practices & Ethics Case Studies in Commercial Highest and Best Use Comprehensive Examination Workshop Cost Approach to Commercial Appraising Effective Appraisal Writing Eminent Domain & Condemnation Appraising Evaluating Commercial Construction Feasibility Analyst & Highest And Best Use Forecasting Revenue Gramm-Leach-Bliley Act HP12C Financial Calculator HVS – Hotel Appraisal Seminar Income Property Demonstration Appraisal Industrial Valuation Internet Search Strategies Litigation Valuation Mark to Market Seminar Market Analysis and the STDB Mortgage Fraud Awareness Rates, Ratios and Reasonableness Retail Valuation Scope of Work Small Hotel/Motel Valuation Standards of Professional Practice, Part A Standards of Professional Practice, Part B Standards of Professional Practice, Part C Supporting Capitalization Rates The High-Tech Appraisal Office The Internet and Appraising The Road Less Traveled: Special Purpose Properties USPAP Update Understanding and Using DCF Software Understanding and Using Investor Surveys Effectively Valuation of Detrimental Conditions in Real Estate

METRO NORTH CROSSING BLIGHT STUDY PAGE 175 BELKE APPRAISAL & CONSULTING SERVICES, INC. COMPANY PROFILE

The following summarizes Scott’s educational background:

Colorado School of Mines, Golden, Colorado, Petroleum Engineering Studies, (1975–1977) William Jewell College, Liberty, Missouri, Bachelor of Arts, (1978–1979) St. Peter’s College, Oxford University, Oxford, England, (1979–1980) Denver Seminary, Denver, Colorado, Master of Divinity, (1980–1983)

Current certifications:

Certified General Real Estate Appraiser in Missouri, (Certificate No. RA 001868) Certified General Real Property Appraiser in Kansas, (Certificate No. G-1214)

Professional service:

Scott has served the Kansas City Chapter of the Appraisal Institute in various capacities including:

Exam Proctor Committee Chair Admissions-General Director Treasurer Secretary Vice President President (2007) Peer Review Committee (Grievance & Ethics)

METRO NORTH CROSSING BLIGHT STUDY PAGE 176

TAX INCREMENT FINANCING DEVELOPER APPLICATION

METRO NORTH CROSSING REDEVELOPMENT PROJECT

Submitted by:

Metro North Crossing, LLC

June 8, 2015

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TAX INCREMENT FINANCING DEVELOPER APPLICATION METRO NORTH CROSSING REDEVELOPMENT PROJECT

1. DEFINITIONS

As used in this Tax Increment Financing Developer Application, the following terms shall have the following meanings:

A. “Act”: The Real Property Tax Increment Allocation Redevelopment Act, Section 99.800, et seq., Revised Statutes of Missouri, as amended.

B. “Application”: This Tax Increment Financing Developer Application for the Metro North Crossing Redevelopment Project.

C. “City”: City of Kansas City, Missouri.

D. “Commission”: The Tax Increment Financing Commission of Kansas City, Missouri.

E. “Project Area”: The areas more specifically described in Section 5 of this Application, which constitutes the Redevelopment Area.

F. “Project Improvements”: Those development activities undertaken within the Redevelopment Area intended to accomplish the objectives contained within the Application.

G. “Redeveloper”: The business organization or other entity selected by the Commission to implement the purposes of one or more Redevelopment Project(s).

H. “Redevelopment Area”: The entire area included within this Application, as more specifically described in Section 3A of this Application. Note that the Applicant does not own the entire Redevelopment Area.

I. “Redevelopment Project”: Any development project located within the Redevelopment Area that is in furtherance of the objectives of this Application and that is approved pursuant to the Act.

2. APPLICATION INFORMATION

A. Applicant Name: Metro North Crossing, LLC

i. Contact Person: Patrick Hayes/David Horn

ii. Business Phone: 816-351-1390 x 201 (Hayes) 816-454-1200 x 1 (Horn)

iii. Fax: 816-356-7605

iv. E-mail Address: [email protected]

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[email protected]

B. Representative authorized to sign/execute documents: Patrick Hayes/David Horn

i. Address: 4240 Blue Ridge Boulevard, Suite 900, Kansas City, Missouri, 64133

ii. Business Phone: See 2(A)(ii) Fax: See 2(A)(iii)

C. General Contractor: To be determined by Applicant

D. Previous development projects or experience of the organization: The principals and staff of the Applicant have participated in a variety of commercial development and redevelopment projects over the last thirty (30) years. Most recently in the Kansas City Metropolitan Area, the principals of the Applicant were responsible for the development of (i) Blue Ridge Crossing, a redevelopment of the former Blue Ridge Mall Shopping Center located in Kansas City and Independence, Missouri; and (ii) Antioch Crossing, a redevelopment of the former Antioch Mall Shopping Center located in Kansas City, Missouri.

3. LOCATION OF THE REDEVELOPMENT AREA

A. General Boundaries: The subject property is bounded by US 169 Highway (Arrowhead Trafficway) to the west, NW Barry Road to the south, N Wyandotte Street to the east (except for one out parcel), and and NW Metro N Drive to the north (except that one portion of the Redevelopment Area will encompass property north of NW Metro N Drive, extending to the approximate dead-end of N Jefferson St).

B. County: Clay

C. Council District: 2nd

D. Total Acreage: Approximately 90 acres

E. Legal Description: The legal description of the Redevelopment Area is attached as Addendum A-1.

F. Maps: The Redevelopment Area is depicted as the “New TIF Plan” areas on Addendum A-2.

4. DESCRIPTIVE SUMMARY OF PROJECT

The Applicant plans to redevelop the area in and around the existing Metro North Mall in Clay County, Kansas City, Missouri. The Redevelopment Project will include the partial demolition of the existing Metro North Mall; all parts of the existing Metro North Mall except for the existing Macy’s will be demolished. The current Olive Garden, Red Lobster, and McDonald’s restaurants will also remain.

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After demolition of the existing Metro North Mall, the Applicant plans to construct a modern, up-scale, mixed-use development within the Redevelopment Area, including the necessary public improvements and infrastructure (parking, utilities, and streetscaping) as well as typical amenities found in newer mixed-use developments. A major design element within the Redevelopment Project is a substantially-sized courtyard and gathering area for future community events such as concerts, meetings, street fairs, and community use. Retail uses planned for the Redevelopment Project include several restaurants (both sit-down and fast-food restaurants), a grocery store, and retail stores. The retail components will include both anchors and junior anchors, as well as smaller stores. The planned retail users will be a complementary mix of local, regional, and national users. The façade of the existing Macy’s store will likely be upgraded and the parking areas around the Macy’s site will be reconfigured. The Redevelopment Area is expected to include approximately 60,000 square feet of office space above a portion of the retailers and a multi-family residential component with approximately 150 units. A limited-service hotel with approximately 100 units is expected to be constructed within the heart of the Redevelopment Project.

The construction of the Redevelopment Project will likely be phased, however, the phasing cannot be determined at this point in the redevelopment process. For purposes of projections, the expected opening dates of the improvements are noted on the Project Summary, attached as Addendum C.

5. PROJECT DESCRIPTION

The proposed Redevelopment Project for Metro North Crossing currently consists of one Project Area. The Redevelopment Project will likely be divided into multiple Project Areas in the future, however, at this stage in the process, Project Areas cannot be determined.

i. Boundary of Project Area. The Project Area is legally described on Addendum A-1 attached hereto. The Project Area consists of a total of approximately 90 acres. A map showing the boundaries of the Project Area is included on Addendum A-2.

ii. Proposed Land Use. The use of Lots 1 through 21 (as the Lots are defined for reference on the Project Summary attached as Addendum C and shown on Addendum B-2) includes retail, office and residential uses. The buildings proposed for Lots 1, 4, 5, 7, 9, 13, 14, 15, 16, and 20 will contain retail uses; the Macy’s store on Lot 3 will continue to be a retail user. The Applicant does not own the real property on which the Macy’s is located but expects that the façade of the Macy’s building will be updated during the Redevelopment Project. The buildings proposed for Lots 8, 12, and 17 are planned for restaurant users; Lots 10, 11, and 22 contain the existing restaurant users (Olive Garden, Red Lobster, and McDonald’s). The Applicant has no plans to remodel the existing restaurant users. The use planned for Lot 6 is a grocery store. Lot 2 is planned for a new cinema. Lot 21 will be office use, above some of the retail users. Lot 19 is {00014539-3 } 3 | Page

planned for a limited-service hotel, with approximately 15,000 square feet of retail use on the first floor (that retail use is also defined as Lot 20). The multi-family residential component is planned for Lot 18 (with approximately 150 units about some of the retail users).

B. Current Land Use and Zoning. The current land use of the Redevelopment Area is classified as “2100 – Commercial (Non-office)” and “5212 – Paved Parking/Other Paved Lots” and is the site of the Metro North Mall and surrounding outparcels, which host the Olive Garden, Red Lobster, and McDonald’s restaurant. The current zoning classification of the Redevelopment Area is B3-2 (Community Business), with one tract zoned collectively as B3-2 (Community Business), B2-2 (Neighborhood Business – 2) and R-7.5 (Residential – 7.5).

C. Proposed Zoning. The Applicant will seek a rezoning of the property contained within the Redevelopment Area to an Urban Redevelopment zone (“UR”) as dictated by the City of Kansas City, Missouri Zoning and Development Code. The Applicant’s request for the UR rezoning approval will be submitted shortly after the submission of this Tax Increment Financing Application. The Applicant has previously met with the City Planning Department staff to discuss the proposed Redevelopment Project and rezoning application.

D. Off-Site Public Improvements. It is anticipated that the Applicant will need to modify the existing transportation and infrastructure surrounding the Redevelopment Area so that the infrastructure will be able to support the proposed project. The Applicant expects, at a minimum, to realign Summit Avenue and the streets along the northern boundary of the Redevelopment Area.

E. Development Schedule. The demolition of the Metro North Mall will be the first work completed within the Redevelopment Area and is anticipated to commence in Fall 2015 with occupancy and opening of the retail sites to the public beginning to occur in Spring 2017. The work necessary for demolition and construction as proposed by the Redevelopment Project is anticipated to occur over an approximately three (3) year period.

F. Historical Properties or Districts. No historical properties or districts exist within the Project Area.

G. Design Plans. Addendum B-1 contains the Site Plan for the Redevelopment Area.

H. Project Area Parcels. Addendum D contains the values, ownership, and legal description information related to the Redevelopment Area.

I. Parcels to be Acquired. The Applicant will not require the acquisition of any additional real property for this Redevelopment Project.

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J. Businesses within Redevelopment Area.

BUSINESS ADDRESS

Macy’s (Metro North Mall) 400 N.W. Barry Road Kansas City, MO 64155 Olive Garden 500 NW Barry Road Kansas City, MO 64155

Red Lobster 450 NW Barry Road Kansas City, MO 64155

McDonald’s 150 NW Barry Road Kansas City, MO 64155

K. Personal Property Information. None

L. Utility Information. None

6. PROJECT BUDGET

A. Development Pro Forma. The Sources and Uses Projections, attached as Addendum G, include the total estimated development costs. Addendum E includes the Applicant’s Internal Rate of Return Projections.

B. Operating Pro Forma. An Operating Pro Forma showing expected revenue and expenses over a ten (10) year period is included in Addendum F.

C. Amount and Sources of Equity. The amount and sources of equity financing are included in Addendum G.

D. Amount and Terms of Private Financing. The amount of private debt is included in Addendum G. Also included as Addendum H is evidence of a private lender’s interest in financing the work for the Redevelopment Project. At this preliminary stage, it is not feasible to obtain a loan commitment.

Name of Lender: Commerce Bank

Lender’s Interest Letter: See Addendum H

7. CONSTRUCTION TOTALS BY PROJECT AREA

The following table summarizes the amounts of new construction, existing facilities to remain, existing facilities to be rehabilitated and existing facilities to be demolished.

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SQUARE NEW EXISTING EXISTING TOTAL EXISTING FEET/UNITS CONSTRUCTION STRUCTURES STRUCTURES STRUCTURES TO REMAIN TO BE TO BE (WITHOUT REHABBED DEMOLISHED REHAB) Office SF 60,000 0 0 60,000 0 Retail SF 605,000 221,175 0 826,175 896,874 Institutional SF 0 0 0 0 0 Industrial SF 0 0 0 0 0 Residential SF 187,500 0 0 187,500 0 Hotel SF 60,000 0 0 60,000 0 TOTAL SF 912,500 221,175 0 1,133,675 896,874

NEW EXISTING EXISTING TOTAL EXISTING CONSTRUCTION STRUCTURES STRUCTURES STRUCTURES TO REMAIN TO BE TO BE (WITHOUT REHABBED DEMOLISHED REHAB) Number of 150 0 0 150 0 Dwelling Units Number of 100 0 0 100 0 Motel Rooms Number of 4,750 0 0 4,750 7,200 Parking Spaces

8. EMPLOYMENT INFORMATION

A. The following is a summary of the estimated jobs to be created and retained in Kansas City as a result of the proposed Redevelopment Project within the Redevelopment Area.

Permanent Jobs CREATED in Kansas City 1,127 Permanent Jobs RELOCATED to Kansas City 0 Permanent Jobs RETAINED in Kansas City 154 TOTAL 1,281 Anticipated Annual Payroll $26,902,281 Estimated number of construction workers to 2,200 be hired during construction phase Estimated construction payroll in all $20,000,000 construction phases

9. ECONOMIC IMPACT

A. Existing Economic Activity Taxes. There are some Economic Activity Taxes generated currently by virtue of the existing Macy’s & restaurants, however as a private developer we do not have access to the Economic Activity Taxes generated by those users.

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B. Anticipated EATS. See Addendum I for projections of incremental Economic Activity Taxes.

C. Anticipated PILOTS. See Addendum I for projections of Payments in Lieu of Taxes.

10. CONTROL OF PROPERTY

A. Ownership. The Applicant owns all of the real property included in the Redevelopment Area, with the exception of the Macy’s store, which is owned by The May Department Stores Co. (Macy’s). The Applicant owns the real property ground leased to Olive Garden, Red Lobster, and McDonald’s.

B. Date of Purchase. April 21, 2015

C. Mortgage. The purchase was partially financed with a mortgage loan in the amount of $4,800,000 from Commerce Bank.

D. Financing Documents. Copies of the promissory note, deed of trust and deed are included in Addendum J.

11. LAND ACQUISITION

The Redevelopment Projects proposed under this Application do not include the purchase of any additional real property and no use of eminent domain is anticipated for land acquisition.

12. TAX ABATEMENT

No tax abatement is requested for the Redevelopment Project.

13. COMPLIANCE WITH THE AFFIRMATIVE ACTION POLICY

A. Utilization Goals. The Applicant will obtain the utilization goals from the Human Relations Department of the City of Kansas City, Missouri for this Redevelopment Project and will discuss the proposed Redevelopment Project with Affirmative Action Compliance Officer Sandra Rayford. The Applicant has familiarity with the utilization goals prompted by the City through the Applicant’s redevelopment experience in the City of Kansas City. The Utilization Certifications for Construction Services and Professional Services are attached hereto in Addendum K-1.

B. Officer’s Certificate. The Officer’s Certificate certified by the Applicant is attached as Addendum K-2.

14. ECONOMIC DEVELOPMENT AND INCENTIVE POLICY

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Economic Development and Incentive Policy Rating Factors Policy Measurement Policy Objectives Yes No N/A Reduce or remove blight Quality of Life X Jobs and/or development targeted Strengthen Economy X to economically distressed areas Generate net new jobs for Create Quality Jobs X unemployed residents Generate net new Quality Jobs Create Quality Jobs X High ratio of public to private Stewardship of City X investment Resources Project focused on building small Strengthen Economy X business or microenterprises Preserve, enhance, or build Quality of Life X infrastructure in priority areas as defined by the City Results of City fiscal model show Stewardship of City new positive benefits to the City Resources Mitigates potential financial Stewardship of City X impacts on other taxing Resources jurisdictions/provides an immediate share of increment to schools & others Offers workforce development Create Quality Jobs X activities (job training, advance opportunities, skill development) Produce affordable housing Affordable Housing X opportunities Project minimizes negative Strengthen Economy X impacts on existing Kansas City businesses Promote crime reduction and Quality of Life X enhance perception of safety Promotes environmental Quality of Life X protection, conservation and the protection of natural resources Protect or enhance existing Affordable Housing X housing stock Provide direct support for Education X primary, secondary, post- secondary, vocational or technical education in Kansas City Requests less than the maximum Stewardship of City X duration and extent of incentives Resources available Promote access to and financial Quality of Life X support for public transit Proposed development adjacent to Strengthen the Economy X areas of existing development activity Provide workforce support to Create Quality Jobs X employees (day care, housing, transportation) Enhance the cultural and arts Quality of Life X

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environment of the City Project complements existing Strengthen Economy X Kansas City business/contributes to existing business cluster

15. DEVELOPER’S NARRATIVE

A. Reduce or remove blight. The Redevelopment Project proposes to demolish the majority of the existing Metro North Mall, which has become an eyesore in the local community and has little to no future use in its existing state.

B. Jobs and/or development targeted to economically distressed areas. The construction of the retail, office, and residential uses will create approximately 2,200 short-term jobs and will create approximately 1,127 new permanent positions for the local area. The redevelopment will also retain approximately 154 jobs which could likely be terminated in the future without the Redevelopment Project. The redevelopment will also provide new life to a currently distressed area, which may lead to additional investment and improvement.

C. Generate net new jobs for unemployed residents. As shown in Section 8 of this Application, the Redevelopment Project is expected to generate 1,127 new jobs, as well as 2,200 construction positions.

D. Generate net new Quality Jobs. The jobs generated by the Redevelopment Projects will be both full-time and part-time and the wages are expected to be consistent with the wages paid to employees in the applicable industries. The jobs created by the office uses will likely generate a higher salary than the standard retail jobs, however, there will be numerous managerial positions within the retail portions of the project that will also generate a higher salary.

E. High ratio of public to private investment. Addendum G highlights the fact that $115,830,152 of total private investment have been or will be contributed to the project.

F. Preserve, enhance, or build infrastructure in priority areas as defined by the City. The Redevelopment Project is located within the Gashland/Nashua Area Plan. According to the Land Use and Development portion of the Gashland/Nashua Area Plan (Page 15, as adopted by the City), “Metro North Mall” is identified as a priority area for revitalization and/or redevelopment.

G. Results of City fiscal model show new positive benefits to the City. Commission to complete assessment of project under fiscal model.

H. Mitigates potential financial impacts on other taxing jurisdictions/provides an immediate share of increment to school & others. A payment in lieu of tax is not expected to be made to any taxing jurisdictions.

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I. Project minimizes negative impacts on existing Kansas City businesses. There are few businesses currently existing within the Redevelopment Area, so there will be no negative effect on businesses within the Redevelopment Project. There are numerous businesses within the geographic area surrounding the Redevelopment Project, but it is expected that the project will be bringing new users to the area that complement the existing businesses and the planned users will not be replacing or directly competing with existing businesses. Therefore, although the Redevelopment Project will create new businesses and offer a variety of options to local residents, there will be little to no negative impact on existing Kansas City businesses.

J. Promote crime reduction and enhance perception of safety. The current disrepair and vacancy of the Metro North Mall makes it a target for crime, loitering, and safety issues. Since the redevelopment expects to decrease the vacancy rate and increase the number of visitors to the Redevelopment Area, the factors leading to unsafe conditions will be virtually eliminated, thus enhancing a perception of safety and likely reducing crime.

K. Promotes environmental protection, conservation and the protection of natural resources. As a component of the Applicant’s redevelopment of the Project Area, the Applicant has applied for the State of Missouri, Department of Natural Resources Brownfields Program. Under its involvement and obligations in the Brownfields Program, the Applicant will be taking steps to remediate environmental issues currently affecting the real property in the Redevelopment Area. Further, demolition and redevelopment on an existing site leads to less urban sprawl and is a form of urban recycling.

L. Protect or enhance existing housing stock. The Applicant plans to construct approximately 150 units of market-rate multi-family housing (apartments) within the Redevelopment Area. Approximately 250 additional units of market-rate multi-family residential housing is planned to be constructed by the Applicant outside of the Redevelopment Area and is not included within the TIF. The housing to be constructed within the Redevelopment Area is to be located within the interior of the Redevelopment Project, in close proximity to the community common area, parking and retail users, including the grocery store. Further, the Applicant expects the residents of the multi-family units to have easy access to public transportation stations and will work with the KCATA to ensure the same.

M. Promote access to and financial support for public transit. The KCATA currently has a terminal within the Redevelopment Area and while that terminal will likely be relocated within the Redevelopment Area, a terminal within the Redevelopment Area will remain and will allow for visitors and employees of the Redevelopment Project to access the site by public transportation.

N. Proposed development adjacent to areas of existing development activity. The Redevelopment Area is located in an area with little existing development activity. {00014539-3 } 10 | Page

O. Provide workforce support to employees (day care, housing, transportation). As described above, the KCATA terminal is expected to remain within the Redevelopment Area. This terminal will provide a public transportation option to employees of the retail, office, and residential components within the Redevelopment Project. Further, the new residential components within the project will provide more housing options for employees working within the Redevelopment Area.

P. Enhance the cultural and arts environment of the City. The large common area proposed for the center of the Redevelopment Project is planned for community events, including concerts, art exhibits, and other cultural events.

Q. Project complements existing Kansas City business/contributes to existing business cluster. The Redevelopment Project is expected to draw large numbers of visitors to the area, which will promote existing businesses in the Northland, including those located within close proximity to Barry Road.

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ADDENDUM A-1

Redevelopment Area Legal Description

The Redevelopment Area consists of all of the following real property:

Property Description:

Part of the Northeast Quarter of Section 10 and the Northwest Quarter of Section 11, Township 51 North, Range 33 West of the 5th Principal Meridian and all of Tract 3, 4, 5, 6, 7, 8 and 9 and part of Tracts 1 and 2, METRO NORTH, a subdivision of land in Kansas City, Clay County, Missouri being bounded and described as follows: Beginning at the Southeast corner of said Tract 9, said corner also being a point on the North right-of-way line of NW Barry Road, as now established; thence North 89°46'07" West, along said North right-of-way line, 170.30 feet; thence South 85°05'35" West, continuing along said North right-of-way line, 111.66 feet; thence North 89°46'07" West, continuing along said North right-of-way line, 355.87 feet to the Southeast corner of an existing cemetery; thence North 00°41'09" East, along the East line of said cemetery, 163.70 feet to the Northeast corner of an existing cemetery; thence North 89°46'07" West, along the North line of said cemetery, 106.01 feet to the Northwest corner of said cemetery; thence South 00°41'09" West, along the West line of said cemetery, 163.70 feet to the Southwest corner of said cemetery, said corner also being a point on said North right-of-way line; thence North 89°29'04" West, continuing along said North right-of-way line, 196.77 feet; thence North 87°45'58" West, continuing along said North right-of-way line, 100.05 feet; thence North 82°04'39" West, continuing along said North right-of-way line, 100.84 feet; thence North 89°29'04" West, continuing along said North right-of-way line, 207.50 feet; thence South 85°52'03" West, continuing along said North right-of-way line, 67.82 feet; thence North 00°30'56" East, continuing along said North right-of-way line, 9.50 feet; thence North 89°29'04" West, continuing along said North right-of-way line, 589.90 feet to a point on the East right-of-way line of US Highway 169, as now established; thence North 05°38'11" West, along said East right- of-way line, 518.45 feet; thence North 00°40'22" East, continuing along said East right-of-way line, 1,564.54 feet; thence South 89°29'04" East, 876.00 feet; thence South 00°30'56" West, 250.00 feet to a point on the centerline of Metro North Drive, as now established; thence South 89°29'04" East, along said centerline, 837.11 feet; thence Southeasterly, continuing along said centerline, on a curve to the right, being tangent to the last described course with a radius of 280.00 feet, a central angle of 72°51'31" and an arc distance of 356.05 feet to a point on the centerline of North Wyandotte Avenue, as now established; thence South 16°37'33" East, along said centerline, 545.90 feet; thence Southerly, continuing along said centerline, on a curve to the right, being tangent to the last described course with a radius of 300.00 feet, a central angle of 17°08'29" and an arc distance of 89.75 feet; thence South 00°30'56" West, continuing along said centerline, 351.29 feet; thence South 03°13'09" West, 142.43 feet to the Northeast corner of said Tract 9; thence South 00°41'09" West, along the East line of said Tract 9, 117.81 feet; thence North 89°46'07" West, continuing along said East line, 90.23 feet; thence South 00°41'09" West, continuing along said East line, 416.95 feet to the Point of Beginning. Containing 4,016,463 square feet or 92.21 acres, more or less.

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ADDENDUM A-2

Redevelopment Area Map

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ADDENDUM B-1

Site Plan

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Site Plan marked with Users

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ADDENDUM B-2

Site Plan Marked with Lots

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ADDENDUM C

Project Summary

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ADDENDUM D

Project Area Parcel Information

COUNTY ID NUMBER CURRENT ASSESSED ASSESSED OWNER’S NAME OWNER’S COMMON ASSESSED LAND IMPROVE CONTACT ADDRESS** VALUE* VALUE MENT INFORMATION VALUE 13216000301700 220,420 220,420 N/A Metro North 4240 Blue Ridge 400 NW Barry (Only a portion of Crossing, LLC Boulevard, Suite Road, Kansas City, this tax parcel is to 900, Kansas Missouri 64155 be included within City, Missouri the Redevelopment Area) 13216000400100 1,648,860 264,832 1,384,032 May Department c/o Macy’s 400 NW Barry Stores Co. Incorporated Tax Road, Kansas City, Dep’t, 7 W 7th Missouri 64155 Street, Cincinnati, Ohio 45202 13216000400500 143,680 143,680 N/A Metro North 4240 Blue Ridge 400 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri 13216000400200 280,770 280,770 N/A Metro North 4240 Blue Ridge 400 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri 13313000500100 176,000 176,000 N/A Metro North 4240 Blue Ridge 400 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri

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13216000400300 205,500 205,500 N/A Metro North 4240 Blue Ridge 400 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri 13216000400400 296,260 253,000 43,260 Metro North 4240 Blue Ridge 400 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri 13313000500400 300,670 160,990 139,680 Metro North 4240 Blue Ridge 450 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri 13216000301800 120 120 0 Metro North 4240 Blue Ridge 400 NW Barry Crossing, LLC Boulevard, Suite Road, Kansas City, 900, Kansas Missouri 64155 City, Missouri 13313000700200 201,250 154,020 47,230 Metro North 4240 Blue Ridge 150 NW Barry Crossing, LLC Boulevard, Suite Road., Kansas City, 900, Kansas Missouri 64155 City, Missouri

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*County Assessor’s 2015 Assessment Values.

** Legal Description of the Project Area is contained on Addendum A-1.

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Map depicting Parcels by Tax Identification Number

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ADDENDUM E

Internal Rate of Return Analysis

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ADDENDUM F

Operating Pro Forma

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ADDENDUM G

Sources and Uses

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ADDENDUM H

Lender Interest Letter

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ADDENDUM I

EATS and PILOT Projections

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ADDENDUM J

Existing Loan Documents

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ADDENDUM K-1

Utilization Certificates

UTILIZATION PLAN FOR CONSTRUCTION SERVICES

Metro North Crossing Redevelopment Tax Increment Financing Plan

Metro North Crossing, LLC (“Redeveloper”)

State of Missouri ) County of )

Comes now , of lawful age and being duly sworn upon his/her oath, states as follows:

1. I am the (position) of Redeveloper and am authorized to make this statement on its behalf. This affidavit is for the purpose of complying with the TIF Commission’s Affirmative Action Policy requirements for utilization of Minority/Women Business Enterprises (MBE/WBE), as MBE’s and WBE’s are defined by the TIF Commission’s Affirmative Action Policy, for construction services.

2. The Redeveloper acknowledges and agrees that the aggregate amount it intends to spend on construction services in connection with the implementation of the above- mentioned project is $ .

3. The Human Relations Department has established and the Redeveloper that agrees there should be a minimum of ______percent (______%) Minority Business Enterprise (MBE) and _____ percent (______%) Women’s Business Enterprise (WBE) construction service participation in the above-named project.

4. In order to meet the Utilization Goals for construction services, the following is a true and accurate list of the professional services providers, regardless of tier, with whom Redeveloper intends to contract:

a. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

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b. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

c. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

d. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

e. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

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REDEVELOPER

By: Name:

Subscribed and sworn to before me, a Notary Public, this _____ day of ______, 201_.

Notary Public

My Commission expires:

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UTILIZATION PLAN FOR PROFESSIONAL SERVICES

Metro North Crossing Redevelopment Tax Increment Financing Plan

Metro North Crossing, LLC (“Redeveloper”)

State of Missouri ) County of )

Comes now , of lawful age and being duly sworn upon his/her oath, states as follows:

5. I am the (position) of Redeveloper and am authorized to make this statement on its behalf. This affidavit is for the purpose of complying with the TIF Commission’s Affirmative Action Policy requirements for utilization of Minority/Women Business Enterprises (MBE/WBE), as MBE’s and WBE’s are defined by the TIF Commission’s Affirmative Action Policy, for professional services.

6. The Redeveloper acknowledges and agrees that the aggregate amount it intends to spend on professional services in connection with the implementation of the above- mentioned project is $ .

7. The Human Relations Department has established and the Redeveloper that agrees there should be a minimum of ____ percent (____%) Minority Business Enterprise (MBE) and ____ percent (____%) Women’s Business Enterprise (WBE) professional service participation in the above-named project.

8. In order to meet the Utilization Goals for professional services, the following is a true and accurate list of the professional services providers, regardless of tier, with whom Redeveloper intends to contract:

a. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

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b. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

c. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

d. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

e. Name of M/WBE Company: Address:

Phone Number: Contact Person: I.R.S. No. Race, ethnic origin, or gender Area/Scope of Work Dollar amount

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REDEVELOPER

By: Name:

Subscribed and sworn to before me, a Notary Public, this _____ day of ______, 201_.

Notary Public

My Commission expires:

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ADDENDUM K-2

Officer Certificate

OFFICER'S CERTIFICATE

I, , of Metro North Crossing, LLC, a Missouri limited liability company (the "Developer"), in connection with the Developer's Proposal (the "Proposal") to develop the Redevelopment Area of the Metro North Crossing Redevelopment Tax Increment Financing Plan, as amended (the "Plan") hereby certify that:

1. The Developer has received a copy and reviewed the terms of the Affirmative Action Policy (the "Policy") of the Tax Increment Financing Commission of Kansas City, Missouri (the "Commission") and has had an opportunity to discuss and ask questions of the staff of the Commission and the Human Relations Department of the City of Kansas City, Missouri (the "Department") with respect to the Policy.

2. All capitalized terms within this Certificate that are not defined shall have the meanings ascribed to them in the Policy.

3. The Developer acknowledges that the Policy, a copy of which is attached hereto as Exhibit A, is intended to implement the goals established by the Department (the "Utilization Goals") with respect to the utilization of Minority Business Enterprises ("MBEs") and Women Business Enterprises ("WBEs"), which have been certified by the Department, in providing (i) Professional Services and Construction Services and (ii) an equal opportunity for minorities and women to be employed in the workforces of all contractors, subcontractors and assignees of the Developer in connection with the implementation of the Plan.

4. The Developer agrees to (i) comply with all record keeping and reporting requirements referenced in the Policy, as such requirements may change from time to time, (ii) contractually require each contractor, subcontractor and assignee of the Developer to comply with the Policy and (iii) enforce such contractual provisions.

5. The Developer acknowledges that although the Utilization Goals established by the Department, which may change from time to time, are not "set-asides" nor requirements, the Developer agrees to (i) exert a best faith effort, as determined by the Commission, to meet such Utilization Goals, (ii) contractually require each contractor, subcontractor and assignee of the Developer to exert a best faith effort to meet the Utilization Goals and (iii) enforce such contractual provisions.

6. The Developer acknowledges and agrees that a best faith effort to meet the Utilization Goals requires, at least, the following:

i. Request in writing the assistance of the Department with respect to efforts to promote the utilization of MBE/WBE' s.

ii. Solicit in writing proposals from known MBE/WBE' s, at least 15 calendar days prior to the utilization of any Professional or Construction Services {00014539-3 }

in furtherance of each Redevelopment Project, setting forth in sufficient detail a description of the Plan, identification of the Developer or contractor, the amount and scope of work to be performed, the time frame of the performance so that meaningful proposals may be submitted sufficiently in advance to be considered prior to awarding of contracts.

iii. Advertise in Minority/Women's Trade Association Newsletters and/or minority owned media, at least 15 calendar days prior to the utilization of any Professional or Construction Services in furtherance of the Plan, identifying specific opportunities, at least equal to the Utilization Goals (but not a reserved set-aside) and maintain a log or copies of such ads showing the date of publication and identifying the publication.

iv. Adequately segment the work request for proposal documents or any other communication or publication intended to solicit Professional or Construction Services in furtherance of the Plan to be subcontracted to the extent consistent with the size and capability of MBE/WBEs in order to provide reasonable subcontracting opportunities.

v. Notify in writing Minority/Women Contractor Associations, at least 15 calendar days prior to the utilization of Professional or Construction Services in furtherance of the of the availability of specific opportunities, at least equal to the percentage set forth in the Utilization Goals.

vi. Make telephone calls to MBE/WBE contractors and make a log thereof, including date, time, name of the person talked to and subject of discussion.

vii. Conduct good faith negotiations with those MBE/WBE' s from whom proposals were received in an effort to reach a mutually acceptable agreement. Documentation in support thereof must include (a) copies of solicitation letters, (b) bid price of MBE/WBE, (c) bid price of the non-MBE/WBE bidder and (d) reason for non-selection of the MBE/WBE bidder.

7. The Developer acknowledges and agrees that if the Commission finds, after due notice and hearing, that the Developer has not made a best faith effort to meet the goals set forth in the Policy, the Commission may take such action as it deems appropriate, including but not limited to the temporary suspension of development rights, ordering a cessation of development activity, noting such non-compliance in any future applications by Developer to implement any future redevelopment plans or projects or any such other remedy for a breach under a Redevelopment Agreement between the Commission and the Developer for the implementation of the Additionally, the Developer acknowledges and agrees to the amount of liquidated damages, as set forth in the Policy, that the Developer may be obligated to pay, if the Commission finds the Developer has not complied with the Policy.

8. The Developer acknowledges and agrees that prior to reimbursement of any eligible redevelopment project costs identified in the Plan, as amended, that the Developer shall

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have (i) entered into a Teaming Agreement, in a form substantially similar to Exhibit B, attached hereto, with an MBE or WBE, which shall provide, inter alia, that such MBE or WBE shall provide Professional Services, on behalf of the Developer, in connection with the implementation of the Plan or delivered to the Commission letters from MBEs and WBEs evidencing their participation in the project proposed under the Plan and (ii) delivered to the Commission written evidence that the Department has approved the Utilization Plans for Construction Services, Professional Services and Workforce in connection with the implementation of the project proposed under the Plan.

9. The Developer acknowledges and agrees that prior to reimbursement of any eligible redevelopment costs identified in the Plan, as amended, that (i) the Department has certified compliance with the Policy and (ii) the Commission’s independent cost certifier has certified all expenditures paid to MBEs and WBEs.

10. The undersigned has delivered this Officer’s Certificate to the Commission in consideration of the Commission’s review and approval of the Proposal. The undersigned acknowledges and agrees that this Certificate is being materially relied upon by the Commission in connection with the approval of the Proposal and a redevelopment agreement to the implement the same and, to the extent any statement or representation made herein is not true and correct in all material respects, the Commission may withdraw the Developer's development rights with respect to the implementation of the Proposal and terminate any agreement entered into between the Developer and the Commission regarding the implementation of the project proposed under the Plan

[Signature page follows.]

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of , 201_.

DEVELOPER:

By: Name: Title:

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