Wichita City Council approves TIF district for Union Station

Plans to redevelop Union Station are a step closer.

Developer Gary Oborny with Occidental Management plans a $54 million renovation of the property, which has been vacant for about seven years.

The first stage of renovation could begin by the end of the year if progress continues toward a tax increment financing district.

The Wichita City Council on Tuesday approved 4-1 a TIF district for Union Station downtown.

“We need to do some things to promote our city and make it a place where our young people, millennials, want to be,” Oborny told the council. Union Station “is a part of our heritage,” he said, and “an iconic property.”

“We see this as a project as not just something we’re doing purely from metric economic standpoint but also to create culture and environment downtown that’s going to expand Wichita,” Oborny said.

The TIF district would repay about $17.3 million of the project’s cost over 20 years, according to city documents.

TIFs work by pledging future property tax gains to pay for projects in areas that are considered blighted.

The TIF is a pay-as-you-go proposal, which means the money isn’t available to the developer until after the project is completed and tax revenue has been collected. City Manager Robert Layton said the city will assume no risk on the TIF proposal.

Council member Jeff Longwell was the lone no vote on the TIF measure.

He said the decision by the council to agree to pay $1.5 million toward the acquisition of the public space through the TIF went against the intent of the city’s Downtown Development policy, which states that “proposed public investment is investment in public assets such as parking, streetscaping, parks or other facilities with public benefit beyond the individual project.

Oborny “paid $1.5 million for that property and he’s getting $1.5 million back for that property, which means he’s getting 100 percent reimbursed in his land acquisition cost, which goes against our local policy,” Longwell said after the meeting.

Oborny purchased Union Station for $1.5 million, he confirmed in a phone interview. But he says that is acceptable under state statute and that the city is actually getting all of the public access areas for under the market value.

“The state statute for TIF districts allows you to receive your acquisition costs back,” Oborny said. “When you take that market value of the square footage of all the public access areas, it adds up to the value of about $1.8 million.”

Next step

With the council’s actions, the county and USD 259 now have 30 days to veto the measure. During that time, Oborny will work with city officials on the details of the project, including agreements on the ownership of the project, easements and accessibility. The details will be brought forward in another council meeting for approval, Layton said.

Developer Jason Van Sickle, who also is president of the Old Town Association, spoke during the public hearing in support of the TIF. He said that having Union Station is crucial to downtown revitalization since it will link various projects in the area and improve walkability.

“What we need are connector properties that connect the Old Town area to the arena and to the Commerce Street art district, which aren’t far from WaterWalk and Delano,” he said.

Oborny hopes to begin construction on phase one of the project by the end of the year, particularly since 2014 is the 100-year anniversary of Union Station. The first phase would take eight to 10 months to complete, he said.

The space could have retail, offices and restaurants. Developers envision the plaza in front of Union Station being used to host musical events, street performers, food vendors and farmers markets during lunchtime, in the evenings and on weekends. Oborny also plans to have two new retail buildings and a parking garage built on the property.

Following the meeting, the council went into executive session about the acquisition of property. No action was taken.

Mayor Carl Brewer and council member Lavonta Williams were not present for the meeting. Both are in Africa to explore trade, education, aviation and government exchange opportunities with leaders in Ghana and South Africa. Brewer and Williams are paying for the trip personally and not with city funds.

This story was originally published October 7, 2014 at 12:09 PM with the headline "Wichita City Council approves TIF district for Union Station."