Your Tax Dollars Not at Work
Behind Benni Ewing’s house, there’s a festering, empty expanse where a shiny new shopping center should be.
The area looks like an abandoned dumping ground. Hip-high weeds blanket awkward mounds of dirt. Unruly vines creep up half-toppled utility poles. Huge piles of rubble sit next to streets with no houses.
On the northeast end of the 35-acre tract, a crumpled stretch of chain-link fence arches up from the ground like the skeleton of some prehistoric beast. In the middle of the raw landscape, one boarded-up white house stands like a ghost of the former neighborhood.
The place looks like a forgotten war zone, not the site of one of the largest taxpayer-backed projects ever in Kansas City.
Behind a standing portion of the chain-link fence, signs read “COMING SOON: CITADEL PLAZA.” But it has been seven years since an organization called the Community Development Corporation of Kansas City started this project at 63rd Street and Prospect. Construction on the 300,000-square-foot shopping center was supposed to be finished by the end of 2007.
Ewing lives in a five-bedroom house on Park Avenue, where homes were to be leveled to make way for Citadel Plaza. The 40-year-old Sprint employee says she got a letter from the Community Development Corporation of Kansas City in October 2006, telling her that the developers intended to buy her out. Ewing says her house has been in her family for 37 years, so when the CDC-KC offered her $42,000 to move, she said, “No way.”
She expected a negotiation. But in the past year, she hasn’t heard again from the CDC-KC. She has listened to the rumble of backhoes and bulldozers, though, as the organization continued demolition on her street. “They call our neighborhood blight, but look what they’ve turned it into,” she says.
She points to the ripped-up sidewalk in front of her house. Down the block, orange pylons spill into the street, next to muddy lots. An oversized tumbleweed of discarded plastic fencing spasms in the wind. An explosion of trash — a splintered television, a rolled-up rug, a handful of black garbage bags — has been splayed over the curb for months.
“Why are they doing this to my family?” Ewing asks. “Why are they making us live like this and not communicating with us?”
The man who could answer those questions is William Threatt Jr., president of the CDC-KC. If you ask him, the area is evidence of a groundbreaking achievement to bring big-name retailers to an underserved community. He’ll tell you that the CDC-KC just needs the city to front it $45 million to make sure the project doesn’t fall through.
But if the recent past is any indication, that would be a risky investment.
Before Terry Riley was the city councilman for the 5th District, he was an AmeriCorps volunteer in 1994 and 1995 in one of Kansas City’s toughest neighborhoods. The Blue Hills neighborhood — bounded by Prospect on the east, Paseo on the west, 47th Street on the north and 63rd Street on the south — was a neglected and dangerous slice of the urban core.
“Blue Hills Park was known as a gang park. It had bullet holes in the backboard of the basketball goal,” Riley says.
Volunteers worked to shut down crack houses and start block watches; they began to improve the housing stock and encourage homeownership.
In 1994, City Hall marked the southeast corner of the neighborhood as part of a massive tax-increment-financing plan — a 14-project initiative that would front developers some future tax revenues if they would help revive blighted areas. Riley says the blocks around the intersection of 63rd Street and Prospect were perfect for city incentives.
[page]
“I mean, it’s everything you can possibly imagine: the blight, the crime, the land, the poverty levels, everything,” he says. “It fits the criteria like none other.”
Finding someone to redevelop the area wasn’t easy, though. Residents wanted a full-service grocery store and other retailers. Will McCarther, now the vice president for community affairs at Research Medical Center, was part of the original team tasked with getting the project off the ground. He says he met with the city’s big-name developers, but they weren’t interested in taking on the Citadel Plaza.
The CDC-KC seemed like a good fit. The idea of community-development corporations grew out of a federal push, in the 1960s, to revitalize declining inner-city communities. CDCs use public funds to jump-start new projects in blighted areas that traditional developers and private funders consider risky investments.
Established in 1974, the CDC-KC is one of more than 4,000 such entities across the country. But like many of them, the CDC-KC is small. Threatt, who makes $92,000 a year, according to the group’s most recent tax filing, says it has only five full-time employees, down from as many as 30 in the late 1990s. For the most part, Threatt says, the CDC-KC contracts with outside experts for specific projects.
When it came to finding a developer for the Citadel Plaza, the CDC-KC wasn’t a stranger to the neighborhood. In recent years, it had developed the Linwood shopping center at 31st Street and Prospect and the Metro Plaza at 63rd and Paseo.
But Citadel would be a much larger undertaking than anything the CDC-KC had done. Spanning seven city blocks, the new shopping center would include more than 320,000 square feet of retail space — more than three times the size of the CDC-KC’s biggest previous project. With millions spent on street beautification and redesigning a portion of 63rd Street, the total price tag would exceed $80 million — considerably more than the $12 million spent on Linwood.
Maps and diagrams fill the small conference room in the CDC-KC’s office on Linwood. According to project outlines, the Citadel Plaza will include staple goods and services, such as a supermarket, a shoe store and clothing retailers. But it will also include a day spa, a fitness center and an art gallery. Threatt won’t divulge company names, but he says the CDC-KC has secured letters of intent from businesses that will occupy more than 70 percent of the space, including an anchor tenant.
Market studies commissioned by the CDC-KC indicate that area residents have more than enough buying power to make the center profitable. According to a study by St. Louis-based Development Strategies, people living within three miles of the site spend more than $1 billion every year on the same goods and services envisioned for Citadel Plaza. No longer will urban residents have to drive to midtown or Independence to get fresh vegetables and baked goods, Threatt says. The development will draw from traffic along U.S. Highway 71 and thousands of employees at nearby Research Medical Center.
In 2001 and 2002, the federal Department of Housing and Urban Development awarded the CDC-KC nearly $3 million in grants to buy properties and demolish them. Kansas City lent the CDC-KC $1 million in late 2005 and another $200,000 in early 2006. The city also advanced $3.5 million in TIF funds in 2007. Threatt says Citadel Plaza has plenty of private backing as well, though he won’t name names. Of the $80 million price tag, Threatt says, less than 6 percent will come from taxpayers.
[page]
Based on the scarred and trash-strewn landscape at 63rd Street and Prospect, Citadel has a way to go. But Threatt thinks his group deserves congratulations. This project, he says, is far more difficult than the typical shopping-center development. The typical developer, Threatt says, buys empty plots from a single owner and starts leveling the land. But the CDC-KC has had to knock on the doors of more than 150 houses and businesses, negotiate with scores of homeowners and banks, then tear down dozens of structures.
There are only a few properties left to be acquired, a handful of structures left to demolish.
“The risk is over,” Threatt says. “They said it couldn’t get done, and we’ve done it.”
But that’s far from the truth.
ill Threatt is a somber man who speaks with the slow, methodical cadence of a professor lecturing first-year students.
When it comes to the Citadel Plaza, Threatt deflects criticism with indignant certainty of the project’s merits and his organization’s progress.
Threatt has a long history in housing and public service. He worked for HUD in the late 1970s and early 1980s. As an associate superintendent for the Kansas City, Missouri, School District, he oversaw the security and management of the district’s many buildings. He did consulting work for the CDC-KC before he stepped in as president in 2000.
But Threatt and the CDC-KC have some troubled spots on their development records.
In 1988, Threatt was a representative for a development company called 7th Street Investors. That year, the now-defunct Housing and Economic Development Financing Corporation (a nonprofit agency that managed the city’s spending of federal housing funds) lent the group $82,000 to renovate two apartment buildings in the 5900 block of Benton Boulevard. The term of the loan was 15 years, but from 1988 to 2003, Threatt’s investment group didn’t make a single payment. In 2004, taxpayers recovered little more than half the amount when 7th Street Investors paid off $50,000 and the loan was settled.
Later, there were more loan problems. Shortly after he took the reins in 2000, Threatt says, city officials asked the CDC-KC to renovate an apartment building at 2901 East Linwood. The group used $102,000 of the city’s federal housing money to buy the building and assess its rehab potential. In August 2004, though, the structure was placed on the city’s dangerous-buildings list after neighbors complained about vagrants squatting there.
Nathan Pare, manager of the city’s dangerous-buildings department, says that when the city inspected the property, the roof was shot, the foundation was separated and the building was wasting away from years of neglect.
For three years, city officials sent the CDC-KC letters, posted notifications on the structure itself and filed notices with Jackson County. “We never had any feedback from them whatsoever,” Pare says of the CDC-KC.
In November, the city tore down the building at a cost to taxpayers of $21,825.
Around the same time that 2901 East Linwood went on the dangerous-buildings list, another CDC-KC property burned.
Carolyn Turner purchased a home on East 61st Street from the CDC-KC for $97,500 in 1999. But the CDC-KC hired a builder — Nelson Construction — that installed the wrong countertops in the kitchen, laid the wrong floor in the downstairs bathroom and hung octagonal windows in square holes.
“I wrote to everybody at CDC, and they kept telling me I need to talk to somebody else,” Turner says. “Everyone kept passing the buck.”
On July 2, 2004, Turner’s son came home to discover that the house was on fire. In 2006, she filed suit against the CDC-KC to recoup the repair costs; according to court documents, an investigator concluded that the fire was linked to improper wiring for the microwave. In December 2007, a judge ordered the CDC-KC to pay Turner $3,300 to fix the exterior of her house.
[page]
That’s not the only time that the CDC-KC has been to court in the past two years. In 2006, Douglass National Bank sued the CDC-KC after it defaulted on a $500,000 promissory note. A circuit judge ordered the CDC-KC to repay the note plus $50,000 to cover interest, late fees and attorneys’ costs.
Three months after the ruling, the CDC-KC handed over $200,000 to settle another lawsuit in federal court. That dispute dated back to 2004, when the Aldi supermarket chain contracted with the CDC-KC to assemble property near 30th Street and Prospect for a new grocery store. Aldi pulled out of the deal and for two years tried to recoup $200,000 it had put in trust. The CDC-KC ignored or denied Aldi’s requests to release the money. In June 2007, the CDC-KC returned the money and the case was dismissed.
The CDC-KC was held in contempt of court last year. That dispute had to do with the CDC-KC’s partner in the Citadel Plaza development: New Markets LLC, based in Las Vegas. In 2003, New Markets failed to pay a Pittsburgh architectural firm $64,000 for design services. Attempting to recover its costs, the architectural firm sued to garnish New Markets’ stake in the Citadel Plaza.
The CDC-KC and Citadel Plaza LLC were decidedly uncooperative. For months, Citadel Plaza LLC — represented by Phillip Kusnetzky, also the attorney for the CDC-KC — ignored the court’s order to respond to questions. In March 2007, Threatt didn’t show up to his deposition, even after being served with subpoenas and rescheduling the deposition three times. In September, a Jackson County judge held the CDC-KC and Citadel Plaza in contempt. (New Markets satisfied its debt with the Pittsburgh firm in late October 2007, and the contempt charge against CDC-KC was dropped.)
Threatt says the New Markets lawsuit was nothing more than lawyers fighting with each other, and that his attorney told him not to attend the deposition. He says there was no wrongdoing in the case of the 7th Street Investors loan, and because the money stopped flowing from the city, the CDC-KC had inadequate financial resources to deal with the now-demolished building at 2901 East Linwood. Threatt also insists that Turner’s lawsuit was without merit and that, in the supermarket case, it was the Aldi chain that violated the contract, not the CDC-KC.
Lawsuits and loans aside, even CDC-KC’s successes have been qualified — most notably, the Linwood shopping center at 31st Street and Prospect.
Threatt acknowledges that the original concept — to create a shopping center featuring only mom-and-pop retailers — failed. In recent years, though, Threatt says the CDC-KC has lured regional and national chains to the center and invested $4 million to improve the look of the decade-old development.
“These shopping centers have been a resounding success,” Threatt says. “Go into Ashley Stewart or Foot Action, and you don’t know if you’re at 31st and Prospect or Oak Park Mall.”
Outside, it’s a different story. On the west side of the street, the parking lot undulates with uneven pavement, and a security guard lingers in front of the abandoned anchor-tenant space. The former grocery store is empty and dark but for a few forgotten shopping carts and discarded buckets. It’s been more than six months since the supermarket closed. Threatt says the CDC-KC is looking for a replacement.
Hearing that Threatt calls the shopping center a “resounding success” worries Pat Keeling. A former president of the Blue Hills Neighborhood Association, she doesn’t want the Citadel Plaza development to end up like Linwood.
[page]
“For the life of me, I don’t see why they’re allowed to continue,” she says of the CDC-KC. “They did that Linwood shopping center, and it’s a disaster. And I’ve said from the very beginning that we didn’t want an extension of that here.”
What they got has been much worse.
In the late 1990s, Keeling was excited about the promise of a new shopping center that would spur development along Prospect. A longtime neighborhood advocate, she’s proud — and protective — of Blue Hills. So it galls her that the Citadel Plaza project has faltered over the past seven years.
After the CDC-KC started buying and tearing down houses, the area turned into an eyesore, residents say. The CDC-KC bought homes and let them sit vacant for months. Criminal activity flourished around the abandoned structures, and the ghost blocks turned into illegal dumping grounds. Paul Tancredi, the current president of Blue Hills Neighborhood Association, says it got so bad that the fire department and SWAT teams used the structures for training.
When workers finally tore down the houses, they didn’t bother to clean them out, recalls resident Janet Boggess. “Debris, furniture, toys,” she says with disgust. “It was a mess, a literal nightmare.”
Threatt doesn’t deny that the first phase was disjointed. “Their concern was valid,” he says of the neighbors. “What occurred was, in those days, you’d get some funds in, and the money wouldn’t go as far as you thought.”
But the CDC-KC made mistakes that had little to do with having enough money. In January 2005, the CDC-KC agreed to pay Joseph Witherspoon $63,000 for his home on Wabash. Two months passed, and the CDC never closed the deal. After consulting a lawyer, Witherspoon assumed that the contract was void.
One day in late March, Witherspoon got a frantic call from his son, who was living in the Wabash home. A demolition crew had started ripping into the Witherspoon’s still-inhabited house. Workers busted down the back door and began to strip the siding.
“Before we’d come to any kind of settlement, they started to destroy my house,” Witherspoon says.
The infuriated homeowner filed suit against the CDC-KC. The case was settled out of court. Witherspoon says he was compensated for the damage.
Threatt insists that the crew only “clipped the side of his house.” Photos from Witherspoon’s case file, however, show one side of the home mostly torn off.
Demolitions continued during the summer of 2006 — and the fallout was far more serious.
In June, inspectors from the city health department determined that the CDC-KC was tearing down houses that contained asbestos.
When Thomas Gerleman, a public health specialist, visited the Citadel Plaza site on June 8 and 9, the area was scattered with debris. Eight men were loading lumber from a dilapidated house into the back of a station wagon. When he started taking photographs, Gerleman noted in his report, the demolition workers “became belligerent and threatening.”
Gerleman reported that the owner of the demolition company, Delroy Fadell, “could not produce any documents or permits authorizing him to demolish any of the structures, nor was he aware if any environmental surveys had been done.” The scene raised suspicions of widespread asbestos contamination.
“It looks like a hurricane or tornado did the demolition,” Gerleman concluded.
In a letter to City Manager Wayne Cauthen, Threatt complained that the CDC-KC was being made a “scapegoat” and said he was “completely flabbergasted” at allegations that he had failed to abide by federal and state laws requiring special handling of asbestos. He wrote that media attention and the investigation by the health department were “designed to embarrass the City of KCMO and damage the credibility of the CDC-KC and the economics of the project.”
[page]
A year later, Threatt still scoffed about reports of asbestos contamination. “It’s a technical item,” he told The Pitch in May 2007. “We’re talking about charred little pieces of hard asbestos siding or floor tiles that should have been — we find out after the fact — remediated, taken off before and, for various reasons, wasn’t.”
Despite Threatt’s claims, the contamination proved real and extensive. Kingston Environmental Services found asbestos in 11 of 12 standing structures and on nearly all of the recently cleared lots. Kingston also found asbestos buried as deep as 6 inches underground and suggested that there could be hidden contamination on older lots overgrown with vegetation.
Threatt expects the cleanup to cost $250,000. The state estimates a $300,000 price tag.
Threatt also told The Pitch in May that the CDC-KC had the financial resources to deal with the problem and that the cleanup would start soon. In fact, it would be another six months before the city and the state signed off on Kingston’s cleanup proposal. According to city documents, the effort was slated to begin November 5 and wrap up by the end of that month.
To date, no dirt has moved on the site.
In October, Threatt acknowledged that the CDC-KC had made a mistake and said his organization had paid the price. “Were there private financiers and banks concerned by all the negative publicity? Yes. Have we lost some loan commitments, lost some investment commitments? Yes. It is one of the major reasons why the time frame has elongated,” he says.
Even if the cleanup moves forward, the CDC-KC faces stiff state penalties for failing to properly dispose of the asbestos. The Missouri Department of Natural Resources issued citations in early 2007; in September, the still-unresolved issue moved up the legal chain to the state Attorney General’s Office.
Steve Feeler, chief of the DNR’s enforcement section, says there were two reasons for the escalation. First, the complexity of the situation raised some legal issues best left to the state’s top attorneys. The second reason: “I was ignored by counsel for CDC-KC for about four months,” Feeler tells The Pitch in an e-mail.
In mid-December, the state signed off on a settlement that requires the CDC-KC to pay a $50,000 fine and invest more than $400,000 in community environmental projects and eco-friendly design elements at the Citadel Plaza.
An investigation by the U.S. Environmental Protection Agency is ongoing.
Through all of the discussion of asbestos contamination, Benni Ewing says she has never received a letter from the CDC-KC regarding the health issues or how it was handling the cleanup. She wonders if that empty white house behind her property is still standing because it’s full of asbestos. Whenever a pile of demolition debris shows up on her block, she can’t help but wonder: Is that rubble contaminated?
Keeling says that over the years, she has tried many times to speak with Threatt and the CDC-KC staff, mostly to no avail. Tancredi says the Blue Hills Neighborhood Association invited the CDC-KC, along with other organizations, to a meeting this past summer, but no one from the CDC-KC showed up.
Threatt tells The Pitch that the CDC-KC was not informed of that meeting. In July, though, he did receive a strongly worded letter signed by the Southtown Council, Research Medical Center and the Blue Hills Neighborhood Association. That letter outlined the groups’ previous support for the project and emphasized that they were “extremely concerned” about the lack of progress.
[page]
“Unfortunately, not only have positive outcomes not been forthcoming in a reasonable fashion, but collectively we are experiencing significant issues and challenges resulting from CDC-KC’s lack of performance,” the letter noted.
It took the CDC nearly four months to reply in writing. In his November 7 response, Threatt outlined the progress of the project and blamed City Hall for the delay.
Two days after Threatt sent that letter, though, the CDC-KC was hit with another lawsuit.
Adnan Khan owns a Valero gas station on 63rd Street, just west of Prospect. Earlier this year, the CDC-KC agreed to pay him $775,000 for his property. In October, Threatt sent Khan a letter giving him 18 days to vacate the premises. The CDC-KC then changed its story and said Khan could stay until the end of November if he paid $9,000 rent. More than the rent requirement, Khan was struck by the CDC-KC’s insistence that he “not remove anything from the location.”
Ron Bodinson, Khan’s attorney, says his client has no problem turning over the property when the CDC-KC is ready to clear the land and start developing. “But he does object to them turning over the property to a competitor and them being able to sit there, using his equipment, making money,” Bodinson says.
Threatt says the CDC-KC bought Khan’s entire operation, not just the land.
Now, he says, the only thing holding up further development is a financing agreement with the city — an agreement lending the CDC-KC $45 million in taxpayer-backed bonds.
Threatt says he hopes that the City Council will authorize that $45 million early this year. “It has been very frustrating,” he says of his negotiation with the city.
But if the city lends Threatt $45 million and Citadel Plaza doesn’t break ground, or if it isn’t as successful as the CDC-KC projects, the public will be left with the debt.
Along the way, Citadel Plaza’s troubles have stirred unusual tensions at City Hall.
That much was clear back on February 21, 2007, at what should have been another boring meeting.
That day, Threatt and a gallery of CDC-KC lawyers and financial backers sat before the City Council’s Finance and Audit Committee. Their goal: Secure permission to negotiate a deal with the city manager — a deal for $55 million in city-backed bonds to start construction on the Citadel Plaza.
City Finance Director Deb Hinsvark told the committee that staffers from her department had been meeting frequently with the CDC-KC and that the two parties had “dramatically” different projections for how much revenue the Citadel Plaza would produce. The city’s financial advisers believed that Citadel Plaza would ring up $55 million in TIF revenues over 20 years; the CDC-KC projected $101 million over the same length of time. The finance staffers suggested an independent study.
“We’ve been working very hard with this developer, and this does feel like a surprise end run around our staff,” Hinsvark said of the CDC-KC’s effort to negotiate a deal directly with Cauthen.
Riley accused Hinsvark of impeding the project. Other council members had to cut in to keep the meeting on track.
At one point, Hinsvark approached the microphone while council members were speaking. “I need to correct something I said earlier,” she said.
“Hold on real quick,” Riley interjected. “Never before have we had a staff member who, while the council is talking, abruptly gets up and interrupts and says, ‘No, I want to talk right now.’ That’s totally inappropriate. I was trying to say something, and she just runs up to the microphone and arbitrarily cuts me out.”
[page]
“I apologize, Councilman Riley,” Hinsvark said when the committee chair allowed her to continue.
“From the finger pointing in my face earlier this morning to the interruptions …” Riley trailed off.
“He and I have been arguing all morning,” Hinsvark acknowledged.
Hinsvark left City Hall abruptly in September 2007.
Riley still bristles at what he considers to be unfair scrutiny of the project by city staffers.
Cindy Circo, Riley’s fellow 5th District council member, did not return calls from The Pitch seeking comment on Citadel Plaza.
Threatt says the city has forced the CDC-KC to jump through hoops that other developers haven’t had to, such as the third-party study.
“We’re not trying to say we did everything perfectly,” Threatt says. “We have a cross to bear. But that’s not what the holdup is in this project. There are items prohibiting it moving forward.”
But he won’t specify what those items are.
Neither will LaTrisha Underhill, the assistant city manager working on the CDC-KC agreement.
In October, Underhill told The Pitch that the Citadel Plaza situation was “an emotional issue for a lot of people.”
But when pressed for specific issues delaying the agreement, she was unwilling to provide details. “They’ve been various and sundry,” she said.
Underhill left her job at City Hall on December 20, after news reports that she had sent sexually explicit e-mails.
Tancredi is adamant that, before the city puts taxpayer money on the line, the CDC-KC must convince the city that it can be trusted. The CDC-KC should fully explain how things got so bad, how it intends to clean up its financial and environmental mess, and how it will complete the project, Tancredi says.
“I don’t think they ought to rely on the argument, ‘Hey, we’re on the east side, no one else is doing much over here, so back us up.’ They should be able to say, ‘These are our abilities and this is how we’ll get it done.'”
Ewing and neighbor Janet Boggess are starting yet another year wondering what’s going to happen to what used to be their neighborhood. They’re thinking about suing the CDC-KC or the city — if they can figure out which to blame.
