Developer of Arkansas River apartment project criticizes city’s handling of proposals

The Riv is a proposed development on the west bank of the Arkansas River on the southeast corner of First and McLean.
The Riv is a proposed development on the west bank of the Arkansas River on the southeast corner of First and McLean. HCW, LLC

A Wichita developer is crying foul over the city’s handling of a West Bank apartment project.

In a four-page letter to Wichita City Manager Robert Layton dated July 29, Clark Investment Group chairman Steve Clark accuses the city of backing off a “preferred developer” agreement with him to develop apartments on city land along the Arkansas River.

And after the city issued a request for proposals to develop the downtown land at First and McLean, Clark alleges that the city’s treatment of his company turned to “abuse.” He claims the city tightened its development specifications for the property and allowed Clark’s preliminary site plans to be misappropriated by a competing bidder.

Layton said Thursday that he has full confidence in the work done by city staff on the West Bank proposals, and denied that the city ever awarded the apartment project to the Clark group. Layton said the city was always required to seek proposals for the land under urban renewal law.

“From a staff standpoint, they never had the ability to commit to anything,” Layton said. “We had good faith discussions over a period of time while they were developing their project.”

Layton said the city staffers who worked with Clark’s group “believed that we clearly represented this was subject to council approval.”

Clark could not be reached for comment Thursday. Clark’s son, Stephen, said the letter is “honest, accurate and fully detailed.” He offered no further comment.

Clark’s company is proposing “The Riv,” a $17.8 million 140-unit apartment complex, featuring one- and two-bedroom units ranging from 657 to 1,321 square feet. Rents would begin between $850 and $900.

The competing bid from Bradley Fair developer George Laham and his partners – Dave Burk of Marketplace Properties, Dave Wells of Key Construction and Bill Warren’s Free Market Investments – is proposing River Vista Residences, a $22 million facility with 154 apartments ranging from 960 to 1,450 square feet, and 20,000 square feet of retail and office space. Rents would start at $970 a month.

Clark writes in the letter that he expects to lose the project – probably on Tuesday during the regular City Council meeting – because his proposal does not comply with requirements in the downtown master plan and the request for proposals. Clark’s group began working on the apartment proposal in January 2011, days after the downtown master plan was approved by the city. The city’s RFP went out in March of this year.

“Although we were never entitled to expect the project would ultimately be approved by the City Council,” Clark wrote, “we were entitled to expect and believe the City was acting in good faith, and we would be treated with fairness and integrity.”

Layton declined to comment on the evaluation of the competing proposals, done by an independent downtown board, but several sources close to the deal confirmed that Laham’s plan is likely to be recommended to the council.

Wichita Mayor Carl Brewer differed with Layton, saying he wasn’t satisfied with the way the city handled the proposals.

“I do have some concerns about going back out and doing an RFP after his plan was presented and different individuals saw what his plan was,” Brewer said. “I’d much rather set a particular day for proposals and have everyone deliver them that day.”

Laham was out of the country and could not be reach for comment on Clark’s allegation that the site plan was misappropriated. Wells and Burk did not return calls seeking comment.

However, Laham’s development company said in a statement Thursday afternoon that the developers followed city guidelines in their apartment proposal, called River Vista.

“We submitted our proposal in conformance with the terms of the Request for Proposal and incorporated all changes suggested by city staff throughout the process,” the statement reads.

The statement goes on to tout the group’s record of building in Wichita – Laham with Bradley Fair, Burk with Old Town, Wells with several projects and Warren’s theaters.

The Clark letter also proposes two major changes to the Riv: a $1 million company contribution to build a boathouse for Wichita Festivals offices and the Wichita State rowing team, and a $500,000 contribution to a regional medical simulation center being developed downtown by physician Paul Uhlig and Wichita developer Gary Oborny.

Both projects will seek substantial tax increment financing and STAR Bond incentives, the latter possible because the project falls along the river corridor between WaterWalk and the Keeper of the Plains statue. Clark and HCW are seeking a lease on the city’s property at Second and McLean, a long-term deal for $1 per year, similar to the WaterWalk land lease. Laham’s group is seeking a $350,000 discount on the purchase of land valued at $900,000.

Tax increment financing captures future tax gains to subsidize improvements. STAR bonds allow the state’s sales tax on purchases to be captured for certain development costs in a district, including land acquisition and public and private infrastructure.

Clark and Laham have been critics in the past of the city’s willingness to invest public money in private projects. In September 2012 – after his group began seeking the First and McLean deal – Clark wrote an e-mail blaming the city’s policies for his decision to seek the incentives.

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