Old train stations in KC, OKC may have lessons for Wichita

09/14/2013 4:52 PM

08/06/2014 11:07 AM

It’s noon on a Thursday at Kansas City’s Union Station, and there’s a steady hum about this historic building that more than two decades ago was a likely candidate for a wrecking ball.

Two men in suits talk while they sip drinks at a table outside Parisi Coffee, with Big Band-era music playing faintly on the station’s sound system. Across the way, a dozen or so diners eat at tables outside Harvey’s Restaurant.

A teacher leads a group of 20 elementary school kids through the building — with ceilings that tower 95 feet above them – while dozens of men and women of various ages dressed in business attire make their way through the building, likely going to or from one of the more than a dozen office tenants that also occupy the building, which opened in 1914.

While developer Gary Oborny moves to revitalize the Union Station complex in downtown Wichita with a mix of office, retail and restaurant uses, bigger cities to the north and south have found much different uses for their center-city train stations.

Unlike Kansas City and Oklahoma City, the Wichita project is – so far – a completely private-sector deal. Occidental Management, of which Oborny is chairman and CEO, bought more than 100,000 square feet of space in multiple buildings early this year.

Oborny said last week that he’s considering a variety of options for the distinctive and historic buildings on Douglas across from Old Town that once housed the train terminal, as well as a hotel and the Rock Island Depot. The projects could mean investments ranging anywhere from $25 million to $50 million, he said.

Across the nation, cities large and small have struggled with how to use old train stations that were once the heart of their communities. From New York City’s Grand Central Station to depots that dot small Kansas towns, the structures appeal to those who want to preserve not only the buildings, but the history that they represent.

Kansas City’s station, on the Missouri side and at the southern end of downtown, is a multifaceted operation consisting of entertainment, museums, the Science City annex, private and government offices, restaurants and shops. It sits alongside an active railroad corridor that includes passenger and freight trains.

In contrast, most of Oklahoma City’s downtown station has been vacant for decades, used only partially by Amtrak and a local bakery, although officials there are implementing plans to transform the station into a hub of local and regional transportation operations.

No room for ‘coasting’

Cities that agree to undertake projects to reuse or restore their train stations often face financial hurdles.

Restoration costs are daunting. The size of the facilities can narrow the potential for tenants. And the downtown locations aren’t always seen as an asset.

It took time for Kansas City Union Station to get where it is today: a self-supporting operation that generates enough annual revenue to not only pay its bills, but to put money back into maintaining the property, said George Guastello, CEO of Union Station Kansas City Inc.

Union Station Kansas City is the nonprofit that manages the 850,000-square-foot property, as well as the adjacent Science City and the Kansas City Museum, which is located in a different part of the city.

Today the station boasts 30 tenants that include office users, restaurants and retailers, a 3-D theater, planetarium, railroad and Irish museums, a credit union and the downtown post office. Amtrak also operates offices at the station and runs four daily trains through it.

Bill Dietrich, CEO of the Downtown Council of Kansas City, said the station is an “anchor” on the southern end of downtown.

“Symbolically, it’s a very important part of Kansas City,” Dietrich said.

Once a bustling train station that boasted a record 678,363 travelers in 1945, the building saw train and passenger counts steadily decline beginning in the 1950s. By 1973, passenger traffic had fallen to 32,842.

By 1983, the station had only two tenants: Amtrak and the Lobster Pot, a restaurant.

Amtrak operated its ticket office in the station’s Grand Hall under an inflatable tent, until moving to another nearby building in 1985. The Lobster Pot closed in 1989, leaving the building – which at this point had large parts of the ceiling breaking apart from neglect – vacant.

In 1994 the Union Station Assistance Corp. was created to lead a restoration effort. And after $258 million was raised to restore the station – $118 million of which was paid for by residents of four Kansas City area counties (three in Missouri and one in Kansas) through a bi-state sales tax increase – it reopened in 1999.

The idea, Guastello said, was for Kansas City Museum’s Science City – akin to Wichita’s Exploration Place – to support the revitalized Union Station. But Science City’s attendance at its new home could barely support itself, much less a building that is only about 200,000 square feet smaller than Towne East Square.

“When I got here a $30 (million) to $40 million endowment was gone, spent on operations, and (the station) was about $10 million in debt,” said Guastello, who was hired as Union Station’s CEO in 2008. “And so we were faced with some really difficult challenges.”

“We went through some difficult times, started losing a lot of money (beginning around 2004 and 2005),” said Mike Haverty, former chairman of Union Station Kansas City and executive chairman of Kansas City Southern railroad.

“We didn’t even come close to what the consultants’ projections were (for Science City attendance). We were up against it financially.”

Between its first year in business and 2009, the station had only one year – 2007 – in which it did not run a deficit.

The difficult times included making deep cuts to staffing through five rounds of layoffs – two of them at the direction of Guastello. The job cuts and turning over some of the station’s operations to private companies – including restaurants, security, cleaning and parking – helped rein in costs, Guastello said.

As important as reducing costs was finding additional revenue streams. One such source came from recruiting office tenants that provide a consistent stream of monthly lease payments.

Among the first were two big office tenants: the Kansas City Chamber of Commerce and the Kansas City Area Development Council. Securing those two leases in 2010 – the organizations moved to Union Station in 2011 – marked the beginning of a turnaround that saw the addition of other civic and private office tenants.

A revamped Science City and a renewed focus on traveling exhibits that don’t lose money have also contributed to annual budget surpluses for the station since 2010, Guastello and Haverty said. It also receives money from a tax-increment financing district.

So far 2013 looks to be a repeat of the past three years.

“We’re doing very well right now,” said Haverty, who stepped down as chairman of the station’s board last year but remains a board member. “Financially, we are in great shape.”

But Haverty cautioned that station executives must continue to be aggressive in running it, because “there’s a tremendous amount of capital that has to go into the building.”

“You better never get into a coasting mode on this,” he said. “It’s got to be a constant figuring out how to make money, to look ahead.”

A ‘no-brainer’

Oklahoma City’s downtown train station is a much different situation.

The nearly 21,000-square-foot station was constructed in 1934 for the Atchison, Topeka and Santa Fe Railway. Today it’s called Santa Fe Station and is positioned alongside what officials say is a major train corridor.

There are two occupants on either end of the Art Deco building that is nestled between the Bricktown entertainment district and the Cox Convention Center: Amtrak and a local bakery.

Amtrak is an occupant of the building only in the sense that an Amtrak official is there twice a day to receive and board passengers on the Heartland Flyer – the same train that officials are trying to get to come through Wichita – that terminates in Fort Worth.

On the other end of the building is Pinkitzel, a local cupcake and candy shop that operates daily.

The city is in the process of acquiring the building for $4.5 million through eminent domain from its private owners, officials said.

Plans for the station are to make it a hub for Amtrak, a regional light rail system, and transit and Greyhound buses, said Rick Cain, administrator for the Central Oklahoma Transportation and Parking Authority, and the city’s transit director.

“It was kind of a no-brainer in that regard,” Cain said.

Cain and city officials learned Sept. 6 that parts of a 25-year regional transportation plan developed seven years ago would be accelerated when the U.S. Department of Transportation awarded it $13.6 million to help renovate the station through a federal Transportation Infrastructure Generating Economic Recovery, or TIGER, grant.

Officials weren’t expecting to get that much money for the grant, which requires them to spend it by 2016.

“It was kind of like, ‘Oh, OK, we’re really going to do this thing,’” said Cathy O’Connor, president of the Alliance for Economic Development of Oklahoma City.

In all, $28 million will be spent on the project, which includes money raised from the city’s sales-tax initiative for community improvements and matching funds from the Oklahoma Department of Transportation and the Association of Central Oklahoma Governments.

Work on the station is expected to begin in 2015.

“Basically, the depot had been sitting for years,” Cain said. “It had no use. Even now, it’s just minimal use of the facility.”

Work will include restoration and renovation of the station, including the amenities used by Amtrak such as the passenger boarding area, a new passenger elevator and installation of a pedestrian tunnel through the elevated train tracks that will connect the property to Bricktown. Cain said significant mechanical improvements to the heating, ventilation and air conditioning systems also need to be made.

Cain said his expectations are that unused space in the station could eventually be used for transportation-related functions. If not that, it could be used by additional retail tenants.

For the time being, he said, “Any retail in there would probably continue to stay there.”

Jane Jenkins, president of Downtown Oklahoma City Inc., said that the station’s use as a multi-modal transportation hub would benefit downtown by bringing more people in and through it.

“Anything we can do to streamline and make public transit better is a big deal,” Jenkins said.

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