City of Wichita to buy back two acres it sold to the Wind Surge — and sell them again

Remember the 4 acres of prime riverfront land the city of Wichita sold for $1 apiece to the New Orleans Baby Cakes in an effort to lure a Minor League Baseball team to Wichita?

It’s now buying back two of those acres — at the same price of $1 apiece — and reselling them for the same amount to another development group that’s already been in the mix.

This is the solution to about a year of fragile negotiations the city has had with Wichita Riverfront Limited Partnership — the development group for the team that became the Wichita Wind Surge — and Overland Park-based EPC Real Estate Group.

WRLP is now out of this phase of development.

According to the city’s original 2019 development agreement and an updated 2022 version, WRLP and EPC had to start construction on an initial phase of development by July 7, 2022, and finish by July 7, 2024.

That’s not going to happen even if the Wichita City Council votes in favor of the changes.

On Tuesday, the Council will consider whether to approve the following:

• Buying back almost 2 acres from WRLP for $2

• Selling that property to EPC for $2

• Conveying to WRLP the other acres it purchased for $1 a piece so it can either develop or sell the properties (this was part of the original agreement and needs to be separated from the new deal with EPC)

• Revising the financial terms of a deal that gives WRLP first rights to buy property just north of the Drury Plaza Hotel Broadview (WRLP still would have to pay $1 million for it but would not have to pay $25,000 a year on a set timeline for that option)

“We’re excited about the fact that we’ve come to this point and . . . we are hopeful that this will lead to the development that we’ve all anticipated,” said Assistant City Manager Troy Anderson.

There was a public outcry over the dollar-an-acre deal, and it’s likely there will be questions and criticisms over the latest deal, but Anderson said making a financial trade-off is something cities do nationally for all kinds of important reasons.

He said there’s job creation, economic growth, a broadened tax base and an overall investment in the city.

“We’re getting a return on our investment that is so much greater than just getting market value.”

A new plan

Along with a change in the development team, there are changes to the development itself.

In December 2021, the city, WRLP and EPC announced they were taking the first step in developing the 4 acres with a $65 million project that was to include an eight-story hotel, a six-story office building with an adjoining 200-spot parking structure and riverfront improvements.

Now, multifamily residential will replace the office component, and the total project is north of $100 million. That’s due to rising costs in construction and the cost of reconfiguring the project.

That includes integrating a parking garage that EPC will build, sell to the city and lease back.

There will be approximately 260 stalls that cost $32,000 each, which means that part of the project likely will total more than $8 million.

Anderson said the garage will be an asset within the city’s parking system and be open to tenants, hotel guests, retail customers and ballpark visitors.

Also, a sky bridge that was supposed to go between the hotel and the office complex will be nixed since there won’t be office users needing to visit the hotel.

The state was going to give a $1 million grant for the bridge, but now the city probably will request the money go to riverfront improvements, which are likely to far exceed the $4 million initially planned.

Though it is behind schedule, Anderson said the way the city structured the debt on the stadium means there is less debt retirement in the early years than the later ones. That means there’s a reasonable chance the city won’t be in a difficult position over the length of the repayment.

The deal still includes one of the Dream Hotel Group’s concepts, called Unscripted Hotels, which is meant to be a gathering place for the community.

The 155-room hotel, which will have seven or eight stories, will be situated between McLean and the Arkansas River.

There will be a signature restaurant, a coffee bar, a lobby bar and a rooftop lounge with cocktails and light fare. From there, guests will be able to see into most of the stadium.

There will be a fitness center and conference and event space. A pool is under consideration.

City officials said substituting residential for office makes sense because the office market is soft compared to a hotter multifamily market.

Also, they say, more residential probably makes sense due to the future Wichita Biomedical Center coming downtown.

The heart of the problem

WRLP formally brought in EPC as a partner in 2022 but began working with the group, which previously developed the nearby 225 Sycamore apartments as part of the city’s Delano economic catalyst plan, prior to that.

The city approved the revised deal to include EPC in 2022, but what no one with the city realized — and this has been the heart of the delay in development commencing — is that WRLP and EPC had not reached a formal development agreement between themselves.

To put that into context, real estate developers rarely announce deals when there is isn’t a finalized contract. That’s because no matter how much both sides might want something to work, too much can change if there isn’t a completed contract.

Even though WRLP and EPC didn’t break ground, the groups technically met the terms of their agreement with the city by putting up construction fencing by July 7 last summer.

By November, the fencing disappeared along with a sign touting the development.

Jordan Kobritz, who is CEO of WRLP and at the time was the Wind Surge CEO and an owner in the team, wouldn’t comment on the holdup in 2022 except to say, “Construction was commenced under the definition and terms of the agreement.”

Kobritz didn’t return calls for comment for this story. A representative of EPC declined comment at this time.

The developers had applied for a building permit to begin construction but then rescinded it, and the city began to send WRLP and EPC notices that they were in default of their agreement.

A final notice was issued a few months ago.

Legally, the city had — and still has — the right to take back its 4 acres since the initial phase of development won’t be completed in time, but that was always a last resort.

The city did not want to take WRLP and EPC to court, though that was an increasingly likely option before the parties came to the new agreement, because it needs development to happen quickly so it can pay off debt on the $85 million Riverfront Stadium.

Taxpayers have to pay $75 million of the cost, and the ball club is responsible for almost $10 million.

Legal action against WRLP likely would have taken a couple of years, and then it would take time to find a new developer and reach a new agreement before construction could commence.

That’s why the city has been desperate to keep all parties at the table and work out a deal.

According to those close to the discussions, the negotiations have been more nuanced than any one entity or personality.

At various points in the last year, it looked like a deal was imminent. At various points, each one of the parties — the city, WRLP and EPC — has pulled back.

Much of it came down to one underlying issue: There were agreements in concept that got bogged down in the complexity of legal issues. The parties would think they had an agreement, and then the lawyers would tell them why it wouldn’t work.

But by forging ahead and finally reaching an agreement, Anderson said, it is “exponentially more beneficial to the community.”

Not the plan

It would not be unfair to say that not much has gone as planned for the Wind Surge or the development around its stadium.

The pandemic caused delays in the Wind Surge’s opening season.

Team founder Lou Schwechheimer died from COVID-19 in July 2020.

In December, Diamond Baseball Holdings, which owns numerous Minor League Baseball teams nationally, purchased the Wind Surge.

Diamond is not part of any potential development deals.

Anderson, though, chooses to look at what’s gone right.

“We got a ballpark, and we got . . . probably the most highly coveted park in all of Double-A baseball.”

He also points to “some really exciting things” happening in and around Delano.

“It’s only going to continue to grow our downtown.”

Development is “the only thing that’s lacking now,” said Wind Surge president Jay Miller.

Miller was the team’s first president and helped build the stadium but left after Schwechheimer’s death when Kobritz took over.

“I feel like Lou’s vision and what Lou and I talked about four years ago is happening now,” Miller said.

Under Kobritz’s leadership, there was criticism that the club wasn’t hosting the hundreds of large and small events it promised the city as part of its original agreement to move to Wichita.

Miller said there have been more than 130 events since he and Diamond took over in January, including a food festival, flea markets, high school and college ball games, a lunch for 150 Spirit AeroSystems interns and a camping event that saw a sea of Girl Scouts in tents across the field one night with a movie under the stars.

“Those are all uses of the stadium that Lou and I had envisioned,” Miller said. “Every time we do that, it’s giving the stadium exposure.”

He said he often hears remarks such as, “We had no idea. This place is beautiful. We’re coming back.”

Diamond also cut prices for more economical visits to the park.

Miller said it’s all created a wonderful atmosphere at Riverfront Stadium.

“This has been everything I thought it could be.”

Like Anderson, Miller said there’s already been growth around Delano, too, with new apartments, a hotel and businesses.

“I’ve been impressed with what has been done in the two years I was gone.”

Still, Miller said those 4 acres have to get developed.

“It’s time. . . . Let’s get this development done and make it even better.”