As King of Freight stands poised to buy the abandoned Gander Mountain building in the WaterWalk for office space, the proposed land lease contract with the city leaves lots of flexibility for it to one day revert to a store or other commercial use.
As long as King of Freight keeps its promise to create 400 new jobs in Wichita and keeps them anywhere in the city, under the contract it could use the Gander Mountain building however it wants and still lease the city-owned land it sits on for $1 a year, City Manager Robert Layton said.
The original 99-year lease to the developers of WaterWalk has about 85 years left on it.
That flexibility was built into the deal because King of Freight may not want to stay there forever, Layton said.
The company, a freight brokerage with nationwide reach, has been rapidly growing for several years and probably will need more space a few years from now.
“If their growth continues and they may outgrow that building, we don’t know if they would keep part of their staff there or if they would move,” Layton said.
The city of Wichita has put $41 million of taxpayer money into developing the WaterWalk, including $6 million that was spent on constructing the Gander Mountain building.
The city was supposed to get 25 percent of the revenue, after expenses, from the WaterWalk developers subleasing property for stores, restaurants and other retail businesses.
But City Hall has never gotten any money from the profit-sharing agreement because the formula used to calculate the expenses heavily favors the developer.
If King of Freight did move, but kept its 400 new jobs anywhere in Wichita, the company would have the options of selling or leasing the building to another user without triggering the provision for the city to get 25 percent of the rental income.
After 10 years, the rent-sharing provision would be removed from the contract entirely.
Layton said it would be a better deal than the previous one, even without any theoretical potential for profit sharing.
“I look at it as I get additional payroll (the King of Freight employees) which generates additional taxes for us,” Layton said. “So that’s a million dollars (over 10 years) that I don’t have right now from those 400 jobs. And I get parking revenue that I didn’t get from Gander Mountain.”
The combination of the increase in taxes and the $70,000 a year for parking amounts to about $170,000 a year in increased city revenue, he said.
The Gander Mountain building, which is on the banks of the Arkansas River just north of Kellogg, is owned by hotel developer Jack DeBoer. King of Freight would buy the building from DeBoer for an undisclosed purchase price.
Bryant Parker, a lawyer representing King of Freight, said one of the things that attracted them to the Gander Mountain building is that it’s immediately available.
“We’ve hit upon a problem where we are just out of space altogether,” he said.
Parker said the company’s presence would benefit downtown even though it won’t generate direct taxes like the destination retail stores, restaurants and entertainment venues that WaterWalk originally promised.
Per the contract, King of Freight is guaranteeing it would pay the 400 new employees $50,000 a year on average. Also, its workforce skews young, with an average age under 35, Parker said.
“This space brings a number of things not only for our business but for downtown as well,” Parker said. “We’re talking about bringing young people with high-paying jobs to Wichita’s downtown, and that will kind of spur and catalyze all the other redevelopment efforts that are going on throughout the area.”
The plan was presented to the City Council and the community at last Tuesday’s council meeting. The council decided to delay voting on it for a week to give members time to examine the agreement.
It will be brought before the council again at 9 a.m Tuesday at City Hall, 455 N. Main, Wichita.