Real Estate News

August 15, 2014

Union Station developers plan $54 million project

Union Station developer Gary Oborny seeks TIF district to redevelop the former train passenger station and related buildings

Developer Gary Oborny has a $54 million plan for the redevelopment and expansion of downtown’s Union Station that will not only renovate the property’s four existing buildings, but add 150,00 square feet with the expansion of one existing building and the addition of two more.

And Oborny will be seeking a tax-increment financing district to repay $17.3 million of the total project cost expected to last up to 2 1/2 years to complete.

That’s according to Oborny and documents made public Friday by the city.

“It’s very much aligned with downtown Wichita’s (master) design plan,” he said of his plans, which call for a mix of retail, restaurant and office spaces.

Tuesday, the Wichita City Council will consider a resolution that would set a public hearing on Oct. 7 for the establishment of a Union Station TIF district. TIF districts pledge future gains in property taxes — generally over 20 years — to help finance redevelopment projects that are expected to create the added property value.

The district would largely be bounded by Douglas to the north, Waterman to the south, the elevated train tracks to the west and portions of Rock Island and Mead to the east.

Oborny said he is seeking a TIF district since his plan for Union Station, which his company Occidental Management acquired in February 2013, calls for 234,000 square feet of public space and access. That includes public access walkways, a redeveloped plaza area in front of the Union Station terminal that could be used for public events, and a 471-space parking garage that the public can use, he said.

“We believe we’re generating a lot of public value,” he said. “We’re taking a location that (has been) blighted and obsolete for six to seven years now.”

Oborny will use the TIF on a “pay-as-you-go basis.” That means he won’t be able to draw from the TIF until after improvements are made and the increased value of those improvements is reflected on the tax rolls.

“He is assuming all the risk,” Wichita city manager Bob Layton said.

“We are financing it all 100 percent ourselves,” Oborny said. “The city has zero liability, so if we don’t create the value, we don’t get paid any TIF money back. We felt most comfortable this was the best way to do that.”

Oborny said the first phase of the project will include renovation of the two-story Grand Hotel on the eastern-most portion of the property as well as the Rock Island depot and Rock Island freight building and public access areas, including the Union Station plaza, on the western-most portion of the property. Oborny estimates that work will take between seven and eight months.

The second phase will involve renovation of the 57,000-square-foot Union Station terminal, the renovation of the Union Station Express buildings, and addition of a two-story, 80,000-square-foot “track platform building,” and construction of two, two-story, 35,000-square-foot buildings in front of the Union Station Express buildings. The second phase also calls for the construction of the parking garage, which will have a 6,400-square-foot space for office or retail use.

Oborny said the second phase could take between 12 to 18 months to complete.

Jeff Fluhr, president of Wichita Downtown Development Corp., said Union Station is a “major connector between Old Town and the Intrust Bank Arena and Commerce Art district as well as downtown to the west. Its renovation and expansion is important to improving the city’s core, and it could lead to further improvements downtown, he said.

“We definitely see what they’re proposing leading to future projects in and around their development,” Fluhr said.

Oborny said plans are still in place for Neil Bahkta to occupy the Rock Island depot, where he will open his fourth Smoothie King as well as a new restaurant and venue space. Plans for a Scooter’s Coffeehouse in the Grand Hotel building also are still in the works, he said.

Oborny made it clear that TIF financing is key to renovating and expanding the Union Station site. If he isn’t able to get TIF financing, “It’s pretty simple. We would put Union Station on the market and sell it off.”

“I’m re-doing historical buildings,” Oborny said. “And if we want to have historical buildings in our community, it’s expensive. If we’re going to do this, I’m going to do it first-class. And if I can’t, somebody else can take a shot at it.”

Reach Jerry Siebenmark at 316-268-6576 or Follow him on Twitter: @jsiebenmark.

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