A downtown grocery store got a boost this morning when the Kansas Department of Commerce approved $2.5 million in bonding authority for the Exchange Place Market & Deli, a Real Development project at Douglas and Market.
But the city's vice mayor raised doubt today that Real Development can untangle its finances at Exchange Place in time to utilize the federal money.
The allocation gives the Wichita City Council authority to issue the Recovery Zone Facility Bonds to help finance the project, considered a cornerstone of downtown Wichita's revitalization.
The bonding authority is part of $92.3 million in Recovery Zone Facility Bonds and Recovery Zone Economic Development Bonds allocated by the state this week. The biggest beneficiaries are in northeast Kansas, which received about $73 million of the total.
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But Wichita Vice-Mayor Jeff Longwell said Monday afternoon he doubts that Real Development can address a trail of financial problems in time to access the bonds, whose issuance must be approved by the Wichita City Council.
"Although the state recognized that there's a need for a downtown grocer, I just don't know that these guys, with everything they've got going on, can pull it off."
As the Eagle reported last week, Real Development faces a string of still-pending refinancings, unpaid bills and loans that must be settled to pull off the Exchange Place project, which was supposed to break ground this month.
Exchange Place remains on hold as Real Development tries to complete the multi-million-dollar refinancing of the Wichita Executive Centre, 125 N. Market.
That refinancing plan, on and off over the last nine months, is required to generate enough capital for the company to pay off about $1 million in unpaid creditors.
If those creditors aren't repaid, the company will lose $10.3 million in tax increment financing from the Wichita City Council.
And remaining incomplete is an application for $30 million from HUD, the foundational funding for the $46 million Exchange Place project.
A grocery store downtown is job one for dowtown revitalization, the public said loudly and often throughout the nine-month comprhensive planning process.
"The response we heard from our community during our downtown master planning process was clear," said Jeff Fluhr, president of the Wichita Downtown Development Corp.
"This is the one project that resonated strongly across the community. It can be a catalyst for residential development, it can enhance downtown livability, and it furthers walkability because it serves as a destination."
Michael Elzufon, a partner in Real Development, characterized the store as a food market that has "been in the works for more than a year."
"We have everything from the operator to the resident chef in place," Elzufon said. "Supply chain management, distribution, it's all there.
"This isn't to say that all the t's are crossed and the i's dotted, but we've put forth a very substantial effort and energy into this project over the last year."
However, the store would be "retail before rooftops," violating a common commercial development tenet that people must move in before business in an underpopulated area.
"We're going to need to draw on the downtown market and the growing first-ring neighborhoods like Delano so it has not only downtown to draw from," Fluhr said.
"As they (Real Development) develop and work on their concepts, the store will have to have the items to draw those people and the downtown office market."
Recovery Zone Facility Bonds and Recovery Zone Economic Development Bonds are two new bonding types created by the American Recovery and Reinvestment Act to help economically distressed areas.
The facility bonds are intended to encourage investment in privately owned or used projects, the state said.
The bonds are federal tax-exempt, which can provide the recipients with lower-cost capital.