Kory goes public as Oz faces increased opposition

After many months of studiously avoiding the public limelight, Oz developer Robert Kory must have felt it was time to change that strategy. The Oz development, after all, is in trouble. So when Kory stepped behind the podium at the Lenexa Chamber of Commerce luncheon on March 22, the crowd quieted. The business and civic leaders in the audience expected to be sold on Kory’s Wonderful World of Oz theme park, proposed for the 9,065-acre property near De Soto, Kan., where the U.S. Army’s Sunflower Army Ammunition Plant operated for 40 years.

Kory shifted nervously in his near-perfect suit and wiped his brow. The Oz theme park, he said with his signature, boyish smile, “began as a dream for an internationally recognized family entertainment resort. It has become much more than a dream. It has now evolved into a plan. For something of this magnitude to become a plan, there are a multitude of agreements, studies, projections, and more studies.”

Kory had the heat on him. Many people doubt the promises of prosperity for southern Johnson County that come from a man without theme park experience. And Kory may be losing the support he once counted on in the Kansas Legislature. The week previous to the chamber luncheon, Kansas state Rep. John Ballou of Gardner introduced legislation to strip the Kansas Development Finance Authority (KDFA) of its ability to issue up to $250 million in sales tax revenue bonds for the $771 million Oz project. The bill passed with a wide majority in preliminary actions in the Kansas House, where amendments could have been made to the bill before a final draft. A letter from the AFL-CIO sent the next day to legislators applied union pressure in support of the project. The legislature voted down the final draft of the bill on March 21 by a margin of eight votes — far fewer than the overwhelming majorities Oz-related legislation garnered last year.

According to Ballou, the bill was significant because it indicated a growing lack of faith in the Oz Entertainment Co.’s bid to receive 15 square miles of property from the federal government for the Oz theme park. To get the land, Oz has to prove it can provide the money for cleanup of the environmental contamination associated with decades of shell and rocket propellant manufacturing at the Sunflower site.

Kory said, after the luncheon, he was heartened by what he calls “the vote of confidence in the legislature” concerning Ballou’s bill to keep KDFA bonds out of Oz hands. But he says the legislation raised significant issues. “We spent some time meeting with legislators, to answer questions and address issues, and keep communications open.”

Kory claimed during his presentation to have the favor of the KDFA. But Oz stopped working with the KDFA earlier this year. Oz officials decided to present a final financing plan to the KDFA for a yes-or-no decision instead of working through the intricacies of the plan with the agency.

“There are people who think Oz has no intention of building that park,” says Ballou, “that they will come along and get land fairly cheap, decide not to do it, use the revenue bonds to clean and market and develop that land. Oz should come up with their own land or wait for government to clean it and take parcels as they are available. If Kansas issues those bonds, the state is helping someone compete with a private enterprise. It makes the field uneven.”

Kory says Johnson County is the place for Oz. Kansas is a place that has the “economic and social bases that are compatible with Oz values. There is a commitment to education. There are well-developed services needed for the information and entertainment industries. We seek to create a product that appeals to the best in people. We are building a destination, a theme park, based on the Oz stories and the characters. We will network around the world on the Oz concept and the characters.”

“There is no place like home,” Kory adds. “We need one. There is no place like Johnson County.”

Despite the project’s storybook-like appeal, Kory was outwardly nervous at the luncheon. And he didn’t present any new information on the project. But Kory says he is going to be more public because of the nearness of an agreement with state and federal agencies over the transfer of the Sunflower property from the Army to Kansas. The state, with approval from the Kansas Department of Health and Environment (KDHE), the U.S. Environmental Protection Agency, and the governor, will transfer the land to Oz on the condition the environmental contamination will be cleaned up.

Some people at the luncheon left with more doubts than when they arrived. “For a long time, I didn’t pay attention to Oz,” says Jackie Holliger, marketing representative for Wichita Southeast Kansas Transit Inc., a trucking firm. “It just wasn’t what I would be interested in participating in. But I think now, whether I am interested in it or not it, it will take my money. I was not impressed with Kory. He did not have the kind of enthusiasm you would expect from someone who has to work to sell his project to people.”

Real estate agent Sharon Hauser was hoping to hear good things about the Oz project. “I wanted to be left with no doubt that it would go through,” she says. “I did not come out of the luncheon with those feelings. I thought the guy who did the talking (Kory) did not impress me at all. I was disappointed in him, actually. He did not come across as a good talker. Now, maybe he needed someone else to talk for him, but I had the feeling that, for a project that size, he was a little out of his league.”

Express Personnel Services owner Arnold Cole says he likes the Oz idea. However, “I think they are over their heads,” Cole says. “After the lunch, I felt more distrusting. I still think there are questions that should be answered more specifically: How will the area be cleaned up? What about more verification of attendance figures?

“Secondly, I did not feel good about the man. He did not look honest. I felt he wasn’t telling us all he should be. I can get past impressions, but I have not seen numbers, the profit pictures. Have they floated bonds before? What business experience do they have? What did they do in the past? How well did they do it? The investors’ interests are still not revealed. If it is going to be a private project, they have every right not to be named. But they want public money. Everyone who’s involved and how much they are putting in need to come forward if the public is being asked to be an investor. Then everyone in the future who comes on board later needs to have the same transparency.”

Werner Tirre won’t be an investor. Tirre, a German native, has a doctorate in economics from the University of Hamburg. He was working for a small accounting firm in Los Angeles in 1953 when he signed on to do financial analysis for Disney. In 1965, Tirre helped turn around the ailing Cedar Point amusement park in Sandusky, Ohio. He later had problems with upper management that turned into allegations of Tirre’s financial misconduct. Tirre says he did nothing wrong and he left the amusement park business for other business ventures. He kept abreast of the industry for many years, attending meetings with amusement park consultants, researchers, park officials, and economists. Tirre currently does financial reports for Oggi Modern Furnishings in downtown Kansas City, Mo.

He read the Oz feasibility study from the consulting firm Economic Research Associates — the study upon which many of the Oz plans are based. He believes the financial and attendance figures in the study are wrong. “Most of the assumptions in those reports are based on what he (Kory) has furnished,” Tirre says. “People doing the studies work for him. There has not been an independent study of the things that the researchers put together.

“Successful people, people who have some kind of stature, are being bamboozled by this whole deal. They are looking at over $750 million to get this thing going and will have to pay some $75 million a year in interest on that money out of the net profit of the operation of the park. There is not $75 million a year extra in this deal.”

Part of the problem, Tirre says, is that Oz’s projected 185-day season is unrealistic. “There is no way to be open 185 days around here,” he says. “If anything, they could be open about 130 days, and that includes additional days outside the summer months.”

Kory says the Oz Entertainment Co. hired experts to determine attendance and financial feasibility of the park. The company had help from a number of construction, architecture, and engineering firms, including Kansas City’s HNTB Corp. and J.E. Dunn Construction.

Financial information on Wonderful World of Oz investors is difficult to get. Kory, in a press conference after the chamber meeting, wouldn’t answer questions about investors or their participation, saying he respects the “private” aspect of the public/private partnership Oz represents.

Tirre suspects, as Ballou does, that Oz’s real motive is to gain access to 9,065 acres of land in one piece. Estimates for environmental cleanup of the acreage range from $38 million to $120 million — about $4,200 an acre to $13,200 an acre. By comparison, undeveloped housing lots in Johnson County sell for between $40,000 and $80,000 for about a third of an acre.

Answering criticism from Ballou and Tirre that Oz is after cheap land, Kory says, “Our commitment is to the project, and our commitment is to remediate the land.”

Oz officials have said in the past that the theme park needs a significant piece of developable land to create the hotel, resort, and support businesses. Kory says Oz is after the Sunflower property rather than purchasing its own because “a large enough piece of land, available and located on the Kansas side in the metro area, doesn’t exist. Accumulating that much land is more difficult than you might expect. Also, the Sunflower plant, because of its size and because it is one contiguous piece of land, gives us a buffer around the project with parkland. It minimizes some of the off-site impact.”

Kory says Tirre “has not been in the theme park industry lately and can’t know what is happening there. We have hired the most renowned people in the industry to do our work. We are a true theme park, with signature attractions the likes of which only exist in southern California and Florida…. We will be unique in the Midwest and in the country. We are not just dependent on kids in summer.

“Is there a problem being open in April, May, October, and November? Those are great months. It is clear enough here in December for people to come out to the Plaza. If you go April through October, that is already more days than we are projecting right there.”

Oz critics say that though the economy is good now, rising interest rates could negatively affect the development. “One of the things that I tell people is that we don’t speculate on issues,” Kory says over the phone between meetings. “We have a very sophisticated model tracking factors all the time. Given the present economic conditions, we are confident the project will go forward. We can’t know about what is totally unforeseeable. We have to take that unforeseen factor, and it has to be very specifically defined, and put it in the model.” Kory also cites a 1998 letter of confidence from Salomon Smith Barney that says the KDFA-issued bonds are marketable and will be bought by investors.

But Ballou says, “Those bonds are going to be sold as junk bonds. Salomon Smith Barney is not that comfortable with that and are not standing behind them like they would if those were AAA-rated bonds. If Salomon Smith Barney put their name on those bonds and something happened, the investors would look to Salomon Smith Barney. They are not throwing their weight behind it. It’s not like it is a can’t-miss deal.”

Oz is losing support in the legislature and among other Kansas state officials. On March 28, KDHE Director Clyde Graeber introduced legislation to protect his department and the state from being sued in state court. The bill was voted down in preliminary action but was reintroduced and passed the House March 30. Such a radical shift, Ballou says, indicates that legislators want to increase Kansas tourism and are willing to give Oz more time. “But because tourism is what we would really like, we have been blinded by Oz and the possibilities,” he says. “People in Topeka are sticking with it longer than they would with other economic development projects, waiting for new information to see if it will go.”

“The bill to protect the state was not requested by Oz but by the KDHE to protect my agency, my employees, and the state of Kansas,” Graeber says. “We are volunteering to oversee remediation of the environmental problems at Sunflower. If something happens, if someone wants to sue Oz or the contractor they hire, we want to make sure the state does not wind up with any liability because they are overseeing the remediation.”

But the bill only keeps the KDHE and the state from being sued in state court, not in federal court. The Sunflower land is now owned by federal taxpayers under EPA supervision with the possible land transfer handled by the General Services Administration (GSA). If people wanted to sue the state, they could file in federal court.

If Oz support evaporates this year, it can come forward again, Ballou says. “Just as it has many times over the course of the last decade,” he says. “There is a saying down here: ‘It ain’t ever dead.'”

The project may take even longer to get off the ground. On March 30, the 250-member Taxpayers Opposed to Oz (TOTO) filed suit in federal court in Kansas City, Kan., against the GSA. The citizens group wants the GSA to follow its own regulations in transferring the land to Oz, a process they say has been clouded by behind-closed-door negotiations between Oz officials and the government.

The group alleges the GSA did not follow the National Environmental Protection Act in assessing pollution on the Sunflower site, the extent of which remains undetermined, even by U.S. Environmental Protection Agency and GSA officials. TOTO says the government’s environmental assessment of the site did not consider impacts the transfer would have outside the site, including building infrastructure to access the site, possible air and water pollution, and development of the area around the site. The group also says GSA violated the National Historic Preservation Act (NHPA). Only 6.9 percent of the property has been assessed under the NHPA. More than 90 homesteads, three town sites, and Native American cultural and archaeological sites are known to exist on the site. The Oregon and California National Historic trails also cross the property.

As wrangling over Oz continues, Kory divides his time between Kansas City and Los Angeles. “For better or worse,” he says, “the design industry in theme parks is in L.A. That is where the venture capital financing is. When we have the park plans, we will move the entire company to Kansas City. I look forward to moving as soon as we get approval of the transaction.”

Contact Patrick Dobson at 816-218-6777 or patrick.dobson@pitch.com.

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