Downtown Wichita is on a roll

09/08/2011 12:00 AM

09/08/2011 7:25 AM

It has been a year since a consultant first rolled out Project Downtown, the master plan to revitalize Wichita's downtown. It has been a year of successes: the Cargill Innovation Center, a flurry of new and renovated hotel rooms, a retooled piece of the river front, a handful of new condominiums. But it also has been a year when city leaders began contemplating a downtown without its largest property owner, the financially strapped Minnesota Guys, who operate as Real Development.

So as Goody Clancy's Project Downtown moves into its second year, officials want to maintain the momentum of the first 12 months while cleaning up some of the challenges that slowed the first year of the master plan.

"The things we were asking for are happening right before our eyes," Mayor Carl Brewer said.

But he acknowledged the challenges ahead.

"I think we're at a point now where everyone involved would agree that each day is a new adventure," he said.

The wins

New commercial projects, and to a smaller extent new residential projects, mark the best of downtown's first year under the new comprehensive plan.

The big-ticket commercial projects are the $29 million Drury Plaza Hotel Broadview renovation along the river, the $14.7 million Cargill Innovation Center and the $13 million Fairfield Inn and Suites at WaterWalk.

On the residential side, Dave Burk's The Flats 324 came online with 68 market-rate apartments, as did the Finn Lofts' 25 apartments in the arts district.

And there are a handful of procedural wins as well: The creation of a 12-bank loan consortium, the establishment of a study group to rework the face of Douglas Avenue and the Wichita Downtown Development Corp.' s Innovation Center.

It's a first year that the plan's chief architect, David Dixon of Boston-based Goody Clancy, says "couldn't be more impressive."

"We're still in the midst of the worst real estate recession the country's been in for a very long time," he said.

Cargill's decision to build the Innovation Center downtown and move some of its employees into the city center "is quite remarkable," said Jeff Fluhr, the WDDC president.

As is the Airbus expansion in Old Town, which will add 100 to 150 engineers.

"Those are the sorts of things that if you look at the market research, it indicates that a lot of the future of office expansion is that type of expansion," said Scott Knebel, the city's downtown revitalization manager.

"It's not necessarily a corporate headquarters relocating downtown and bringing a high-rise with it. More smaller-scale office conversions, historic renovations, lower-rise mixed-use environments."

And over the next year, there are more than $150 million in projects set to open, highlighted by the new $23 million Central Family YMCA, 402 N. Market.

But perhaps the biggest success of the first year was the formation of the 12-bank Wichita loan consortium, which will provide bridge and gap funding to downtown projects that qualify under the city's new application policy.

"When you're dealing with the economic environment nationally, that right there sends a message that downtown Wichita is open for business," Fluhr said.

Dixon said the city's new project review process is equally significant — to avoid a repeat of what is downtown revitalization's darkest cloud: the continued financial problems of Real Development.

"The city now has a process in place for evaluating the capacity of developers financially and in terms of experience before it forms any type of partnership," Dixon said.

"That should prevent any repeat of Minnesota Guys syndrome, and it puts the city in position to deal immediately with serious developers who bring the capability to complete projects."

The dark cloud

There's one piece of unanimity among downtown revitalization officials: The worsening saga of the Minnesota Guys demands a resolution.

Partners Dave Lundberg and Michael Elzufon control a variety of office and residential space downtown, with the centerpiece property the Wichita Executive Centre at 125 N. Market.

Their biggest downtown residential project to date, at Exchange Place, remains hamstrung by financial problems.

"I'm a little disappointed, frankly, that the Minnesota contingency has been and continues to be a problem," said Wichita attorney Dick Honeyman, the WDDC chairman. "That has to come to a head at some point."

Brewer agreed.

"The confidence we had in them is no longer there,'' he said.

Brewer said this week that he thinks Real Development should have to successfully complete the city's new project review process before any other public-private partnership deals go forward.

Lundberg said Wednesday that Real Development will take its downtown facade projects back through the city's project review process.

But he said he's heard nothing about taking the $10.3 million in tax increment financing for Exchange Place back through the review process.

Real Development is waiting to finalize HUD-backed financing for the project, he said.

"We have a development agreement there that calls for us to do certain things, and we intend to do them," Lundberg said, reaffirming the company's commitment to Wichita.

"But if we have to start over on the TIF loan, that just condemns the project."

Despite Real Development's problems, downtown has progressed enough to weather the potential failure of the Minnesota Guys, officials said.

"That would have been a terrible blow before the master plan," Goody Clancy's Dixon said. "But given the other proposals coming forward, it should be viewed as a maturation.

"It would basically free up a bunch of key buildings as we head into an economic recovery of some sort that can take advantage of the markets with investors better positioned to do that."

Brewer agreed.

"It will be an opportunity," the mayor said. "We have individuals interested in Real Development's properties, and on the positive side, Real Development did prove that downtown is viable and people are interested in living and working downtown."

The disappointments

Downtown needs more affordable housing, several officials said.

And it continues to need retail and entertainment development around Intrust Bank Arena, development that admittedly lags as investors gauge its traffic and success.

"I'd weigh in as being somewhat disappointed that some forms of development haven't moved at a quicker pace," said Steve Martens, one of the city's biggest commercial real estate brokers.

"The economy certainly plays a part in that, so it's not necessarily a local thing. My concern is that as time goes on we tend to have short-term memory loss and the further we get from the original plan, the more likely things won't progress according to it."

Honeyman said that downtown needs more people living, working and playing there.

"I would have hoped we'd seen more developments getting people living downtown," Honeyman said.

"There has been some progress made on that with Burk's project and some others. I would have hoped to get more housing closer to the river, but that's kind of minor compared to what we've accomplished."

One year into Project Downtown, Brewer's optimism is undimmed.

"I don't think people realized as the plan was being put together that things were already happening," he said.

"Today, the proof is there."

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