KANSAS CITY, Mo. — Zona Rosa's revenue shortfall is affecting taxpayers, the Platte County Commission told 41 Action News.
Consistently for 10 years, the shopping district hasn't made the money developers and former county leaders said it would. Last year, it came up $500,000 short.
Zona Rosa not making enough money & NY owners didn't make payment. Platte Co setting aside $750k, taking money from other areas just in case. Get more details on @41actionnews at 6. pic.twitter.com/5XqDB17CIq
— Sarah Plake (@SarahPlakeTV) January 22, 2018
"Sales have just not been what they projected and, possibly, occupancy rate of leasers in there didn't hit with projections," First District Platte County Commissioner Dagmar Wood said.
Ideally, Zona Rosa would generate enough revenue to pay itself off, but even a one-percent sales tax isn't cutting it.
The county is ultimately on the hook for the bonds it took to build Zona Rosa and expand in 2007, which was around $32 million. A transportation development district (TDD) was established to finance the development.
The payments to the TDD are around $2 million a year, and will only get more expensive. Payments will increase up to $5 million in the next 15 years.
"It's already negatively affecting taxpayers because we've had to hire a bond counsel that we would not have normally. Hiring attorneys is not cheap," Wood said.
The commission says they're trying to come up with a long-term funding solution.
Zona Rosa's owners, New York-based company Olshan Properties, would always pay for the deficit in cash, but did not make the payment in 2017. Instead, they paid using a letter of credit that still needs to be replaced.
Olshan Properties declined to talk to 41 Action News.
The commission is now setting aside around $750,000 just in case. They had to take some money from a fund that would expand the county jail and a self-funded insurance account.
"Taking from law-enforcement possibly in order to fund this in the future - that's not something that this commission does lightly," Wood said.
The current commission says the leadership in 2007 made a bad decision to make Zona Rosa's bonds county-backed.
"Probably 10 years ago, the people who put together the revenue projections didn't expect Amazon and other online retailers to do as well as they're doing," Wood said.
According to 2007 bond documents, developers projected Zona Rosa would generate an excess of more than $300,000. Now, commissioners are seeing that number is far from reality.
Zona Rosa's issues are coming at a time when shopping centers and malls are dying off. Big-box stores have reported lower sales for years, such as Dillards, which is one of the additions Zona Rosa brought in with its 2007 expansion.
To make sure taxpayers aren't on the hook again, Wood said the commission is working on an ordinance that would let citizens vote on whether bonds would be county-backed or not.
