Who’s behind the mysterious proposal for Wichita’s riverfront? Details start to emerge
The identities of two men behind a mysterious $1.5 billion proposal for Wichita’s downtown riverfront have been revealed after months of speculation.
Over the past year and a half, local politicians and residents alike had learned next to nothing about who is spearheading Penumbra International’s redevelopment efforts, which would undermine a publicly subsidized plan for the riverfront. But an Eagle investigation has identified at least two Penumbra partners, Eric Branstad and Gordon Schultz.
Branstad was a high-level campaign and commerce adviser to President Donald Trump before joining a lobbying firm that helped overturn U.S. sanctions on behalf of a Chinese state-owned tech giant while his father was the U.S. ambassador to China. The company, ZTE, violated export controls by selling to North Korea and Iran.
Schultz, a Wichita businessman and the former superintendent of Word of Life Traditional School, is part of Penumbra’s development efforts, according to multiple sources.
City officials say Branstad pitched influential Wichitans on Penumbra’s plan for downtown at a May 7 Campbell Castle event sponsored by the Kansas Chamber of Commerce and honoring his father, Terry Branstad, who served 22 years as governor of Iowa before becoming the country’s top diplomat to Beijing.
Eric Branstad did not respond to a list of detailed questions or multiple requests for comment as recently as Friday.
Open-air gondola rides over Arkansas River
Penumbra’s current plan for a Century II district includes an air and space museum, an aquarium, a new convention center, a performing arts center, a Legoland and a 700-room hotel, as well as a rollercoaster and open-air gondola rides over the Arkansas River.
The group’s interest in the east bank of the Arkansas River first surfaced publicly at a February 2020 news conference.
Penumbra didn’t attract much serious attention at the time due to the vagueness of its plans, unanswered questions about the funding, and project drawings that were more perplexing than illuminating.
“The Penumbra plan was never taken seriously from the beginning, both because it seemed amateurish and unappealing to most people, and because it posed a challenge to the Riverfront Legacy Master Plan, which was backed by some of the city’s most powerful players,” said Chase Billingham, a Wichita State University professor of sociology who closely follows development in the city.
The plan arrived during a heated battle between the Riverfront Legacy supporters, who represent many of the city’s major business interest groups, and members of Save Century II, a grassroots group that had started a petition drive seeking to tie City Hall’s hands when it came to tearing down Century II and the former Central Library.
Is international money involved in riverfront plan?
Penumbra has refused to name its investors, stoking more speculation about where the $1.5 billion would come from. The group insists they aren’t asking for a penny of taxpayer money to bring their ambitious development to life.
As currently envisioned, the Riverfront Legacy Master Plan proposal would be heavily funded by taxpayers.
The city of Wichita and Sedgwick County each spent $100,000 on designs for the master plan. Another $500,000 was committed by an array of private and quasi-public groups, including the Wichita Chamber of Commerce, Visit Wichita, Downtown Wichita, Greater Wichita Partnership, Wichita Community Foundation and W, an association for young professionals.
That money went to Populous, an international design firm that generated five potential development plans. Four of those designs, including the one that was finalized by the Riverfront Legacy Master Plan coalition, called for the demolition of Century II and the downtown library.
Previous consultants have recommended that as much as half of the funding for the roughly $1 billion Riverfront Legacy Master Plan project should come from a city- or county-wide sales tax.
A former Penumbra spokesperson said money has already been committed to the project but that investors must remain anonymous unless city officials approve the proposal, even though much of the riverfront land in question is either owned or controlled by the city of Wichita.
Terry Lowry, who co-owns Campbell Castle with his wife, Paula, said Penumbra plans to buy the historic building and re-open it as an operational bed and breakfast with a pub in the basement.
Lowry said he’s been told that Penumbra’s funding will come in the form of a massive loan from an international company, but that he can’t disclose the lender or its country of origin.
“It’s not from a subversive, you know, third world country or something like that,” Lowry said. “It is good money behind this in the form of a loan to Penumbra.”
Lowry told The Eagle that Gordon Schultz is in charge of Penumbra’s Wichita operations and that questions about funding should be directed to him.
“Be clear to tell him that I did not and would not tell you the actual country from which the bulk of the funds would be coming,” Lowry told The Eagle.
Schultz did not respond to repeated requests for comment and no one answered the door at his home Friday afternoon.
On Wednesday morning, someone answered a call to Schultz’s cell phone and said “hello,” but after being informed that he was speaking to an Eagle reporter, the person repeated the phrase “no comprendo” several times and hung up. A voicemail message recorded on the same number was entirely in English.
City Council member Bryan Frye, who attended the castle event, said he doesn’t have any more information than the general public about Penumbra’s financial backing, but he can see why Branstad’s involvement could stoke speculation about Chinese investors.
“I think there’s also that concern that, if there is Chinese investors, how soon do you make that known?” he said.
Lowry said that to his knowledge, no Chinese money is being solicited to fund Penumbra’s development.
“I wouldn’t want to bet my life on it, but from everything I’ve been told, the source of the money is absolutely not from China,” he said.
Lowry said his understanding is that the international lender is not part of Penumbra’s ownership and will not be involved in the group’s decision-making.
Rubbing shoulders at Campbell Castle
Mayor Brandon Whipple and council member Frye attended the May 7 event at Campbell Castle honoring Terry Branstad. The city officials presented the elder Branstad with a commemorative Wichita coin.
The former ambassador, who gave a presentation to the Wichita Pachyderm Club that afternoon, spoke to castle guests about navigating the diplomatic relationship with China during the global pandemic before turning the floor over to his son.
Whipple and Frye said they were surprised when Eric Branstad steered the conversation toward downtown development.
In addition to his work on the City Council, Frye serves as senior director of investor relations for the Kansas Chamber of Commerce, which sponsored the castle event. He said he attended in his role as a public official.
“Going into the event, I wasn’t told that this had anything to do with the presentation of an alternative plan for the riverfront,” Whipple said.
“When his son spoke, that’s when it kind of pivoted into what I might describe as kind of a side conversation or a side event about what they wanted to see happen with the east bank. He mentioned coming back to Wichita.”
A separate room of the castle displayed architectural drawings for Penumbra’s planned development, but Whipple said he got busy talking to people and didn’t have a chance to look at the renderings.
Frye said Penumbra organizers likely wanted to capitalize on the well-connected crowd at the castle that night.
“It was never presented to me as, ‘Hey, come meet the ambassador and learn about riverwalk and Penumbra.’ It seemed like this was the opportunity to meet the investors for that,” Frye said.
“And was that by design? Most likely, but it was never pitched that way.”
Alan Cobb, president and CEO of the Kansas Chamber, is a veteran of the 2016 Trump campaign and a longtime friend of the Branstads. That afternoon, he delivered an introduction of Branstad to the Pachyderm Club, a Republican group that brings in a wide variety of guest speakers.
Cobb said he had no prior knowledge that Penumbra’s development proposal would be on display for castle guests.
“The former Chinese ambassador is kind of a big deal, so it was like, sure, we’ll sponsor a reception, but I never had any conversations of any kind about downtown or river development,” Cobb said.
I’m going to Wichita
Penumbra made its most recent development pitch at a June 15 news conference after renting private space at the Wichita Boathouse and opening the meeting to the public.
There, after several minutes of confusion from the tech team involved in presenting the proposal, attendees were treated to a crowd-amping blast of The White Stripes’ “Seven Nation Army” and its refrain of “I’m going to Wichita” before a spokesperson came on stage to hype the group’s proposal.
Penumbra spokesperson Brian McHughes walked the crowd through Penumbra’s plan but deflected questions about backer involvement.
“We’re not going to put our customers through the whole game because what they can say is, ‘If it doesn’t get approved, we’re going to move to another city,’” McHughes said.
Then, four days after the presentation, McHughes announced his resignation from Penumbra in a mass email to media organizations, saying he performed the role “under a great degree of ignorance.”
McHughes, who has not responded to repeated requests for comment, was the only previously disclosed partner in the Penumbra venture.
“I expected our senior leadership to answer the questions everyone has been asking about our investment partners and the organization’s specific action items,” McHughes wrote in the statement.
“After reaching out to individuals who I was told were members of this initiative, the answers were not what I expected.”
At the news conference, McHughes said all of Penumbra’s partners live in Wichita except one who is based in Des Moines. That’s where Eric Branstad lives and works, managing an Iowa office for Mercury Public Affairs, a political strategy firm that he left government service to join in 2018.
McHughes and Branstad have a history that dates back at least four years. Branstad visited Wichita in July 2017 in his capacity as a Trump adviser to talk about economic growth and international business dealings — specifically in China. McHughes helped organize the event.
‘A gift to Wichita’
For now, McHughes is still listed as the only person with at least 5% ownership of Penumbra International LLC, which was formed in March 2021, according to secretary of state records.
Lowry, the castle owner, was surprised to learn that the former spokesperson appears to be the only Penumbra partner with an ownership stake in the company.
“Eric Branstad and/or possibly Terry Branstad, Eric’s father — it would surprise me if they don’t have some ownership in this, and it would surprise me if Gordon Schultz does not have a financial interest in this because he’s the overall Wichita connection,” Lowry said.
He said the private investment Penumbra is proposing would be “a gift to Wichita.”
Community activists hoping to save the buildings targeted in the Riverfront Legacy Master Plan started a petition drive to trigger a city-wide referendum vote on the buildings’ future. Organizers collected more than 17,000 signatures and the City Council signaled support for a referendum but ultimately took the Save Century II group to court, arguing that the vote shouldn’t be binding.
Last August, a Sedgwick County judge threw out the citizen petition, preserving the city’s right to raze the buildings regardless of the outcome of a vote. In February, Save Century II lost a bid at the state Legislature when the House Local Government Committee passed up a chance to vote on a bill calling for a binding referendum on the buildings’ future.
Penumbra’s plan calls for Century II to be converted into an air and space museum surrounded by an international market. The library would be repurposed as an aquarium.
John Todd, a volunteer with Save Century II who attended both Penumbra’s news conference and the castle event, said he’s impressed with the group’s efforts to shake up the status quo. But he said the public deserves to know more about who’s involved in the initiative.
“If you’re in a competitive market and you’re involved with public buildings like this, I believe that you should stand up and say who you are,” Todd said.
Whipple said Wichitans are right to be skeptical of development proposals with unnamed investors.
“When we talk about doing big and great stuff in Wichita, one of the things that we have to do as a city is earn back the trust of the public, who in the past has been promised the world and then either city government or developers hasn’t delivered,” Whipple said.
Frye agreed that developers should be thoroughly vetted but said the involvement of high-profile movers and shakers like the Branstads lends some credibility to Penumbra’s proposal.
“You have a lot of skepticism and a lot of concern and a lot of doubt. Can this really happen? But then you get connected people that are legitimate, like Branstad and some of the other names that have shown up at some of these events,” Frye said.
This story was originally published July 4, 2021 at 4:23 AM.