Real Development, the Minnesota group whose downtown Wichita work has been stymied because they say they’re out of money, is proposing a destination resort worth hundreds of million dollars – and partially funded by public incentives – near the Georgia/Florida border.
It’s news that didn’t play well with Wichita City Council members Wednesday. They’re unhappy about the city’s $1.5 million in direct investment in Real Development projects that have been idled for more than two years, and they’re unhappy about a litany of unpaid local vendors.
They might get a chance to vent that displeasure soon. Real Development reportedly is preparing to revive its dormant $65 million Exchange Place apartment project at Douglas and Market.
Wichita Mayor Carl Brewer, who has been publicly skeptical of Real Development’s ability to complete its downtown Wichita work, laughed uproariously Wednesday at the Georgia news.
“You know, the only thing that concerns me is what happens here in the city of Wichita,” Brewer said. “As for the others, I encourage all cities doing business like this to do a very thorough job of due diligence.”
“Certainly raises some questions that need answered,” Vice Mayor Janet Miller said. “How can you spend money in one area like this when you have projects in another town that have been lagging and vendors that have been unpaid? ... It’s a question of good business practices.”
Michael Elzufon, one of the principals in Real Development, made an informational presentation two weeks ago to the Kingsland, Ga., City Council. He proposed the $200 million resort on a 475-acre parcel that Kingsland city planner Ken Kessler called “the premier location on I-95 south of Washington, D.C.”
Elzufon fired back at the Wichita council Wednesday afternoon, saying Real Development is prepared to proceed downtown once the group receives a $30 million HUD loan guarantee and $11 million in tax increment financing from the city of Wichita.
Elzufon described the Georgia project as a “personal investment,” and blamed delays on the HUD front for the group’s idle portfolio and unpaid vendors in Wichita.
“I, too, have a right to survive,” Elzufon said about the decision to proceed in Georgia.
Miller said the Wichita council has a similar right: to demand that Real Development perform on the projects the city has partnered on here.
“And fiduciary responsibility,” the vice mayor said.
The Kingsland plan
Real Development asked the Kingsland council for quick action this month on a tax allocation district – the equivalent of tax increment financing in Wichita – that would generate an estimated $22 million over 10 years. The Kingsland council is slated to act on the request Nov. 26, Kessler said.
The plan, which includes a theme park, water park, hotels and indoor and outdoor sports venues, is targeted at “participation,” said Thor Degelmann of Leisure Entertainment Development and Operations, a California entertainment consultant representing Real Development.
“Everything supports participation, involvement in the activities,” Degelmann said. “Not a lot of the passive things you find at Universal and Disney, where you’re on a boat riding through the Caribbean, things like that. You create your own adventure and experience.”
Kessler and Degelmann said Real Development is finalizing plans to purchase the land along I-95. As of Wednesday, Real Development had not asked the city of Kingsland for financial help acquiring the land, Kessler said.
Elzufon and Dave Lundberg came undercapitalized to Wichita in the middle of the last decade, buying a dozen long-vacant downtown buildings for pennies on the dollar, with the intent of renovating, refinancing, and then selling or leasing them at a large profit. However, credit markets collapsed in 2009, shutting off the Minnesota group’s refinancing. Real Development’s properties fell into disrepair, with a long list of neglected building repairs and unpaid bills as many original investors fell into foreclosure. Some recent refinancing has allowed Real Development to pay some debts and make some critical repairs.
But some local vendors remain unpaid. Dave Wells of Key Construction, who holds a seven-figure unpaid bill with Real Development, said he remains optimistic that Elzufon and Lundberg can put the financing together to finish their Exchange Place apartment project at Douglas and Market, currently a rapidly decaying building.
“Would I continue working with them? Oh, yeah,” he said. “I am actually more optimistic about them than I’ve been in quite awhile.”
Kessler said Kingsland officials are similarly optimistic about the entertainment complex.
“Generally, as long as the financials work, I suspect it will proceed apace,” he said.
However, Allen Bell, the city’s urban development director, was noncommittal about whether Exchange Place will make it back before the city council.
Wichita city officials weren’t as optimistic. Brewer said his council would look at any Real Development projects in the future, but he reiterated his skepticism about the company’s future in Wichita.
“I am of the opinion that if no action has been taken, then a lot of things have changed,” he said. “We’re just going to have to reevaluate everything.”